dd4vols
Level 10
Level 10

Got a new client. (don't most of our questions begin with this statement)

They bought a car wash 12/15/2022 for @$248k.

Form 1065.  The client's previous tax preparer set up $223k as building (39 yr. property).  I'm supposing the other $25k was land, but the schedule L kinda sorta maybe doesn't really reflect that.  He took $239.00 depreciation expense in 2022 for this asset.  Fast forward to about 48 hrs before the new preparer (i.e. me) needs to file the 2023 form 1065, and I learn that the proper breakdown of that purchase was Land $50k, Building $50k, and equipment $148k.

What are my remedies?  I've done a couple of 3115s for switch from to cash to accrual, but that is the extent with that process (and also several moons ago).  Is misclassification of an asset and depreciation correction something that I can do amended Form 1065 (and personal), and get by??

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