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@MikeHuston1 wrote:

If no depreciation was taken on the rental property in previous years, then:

• No depreciation recapture is needed when you sell the property.

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Unfortunately, that's not what the tax law says in this situation.  I don't know if you read any of the previous messages, but I explained the tax law and cited references.  I'll explain it again here:

Even if you didn't claim depreciation when the property was a rental, you are still required to recapture the deprecation that you were supposed to have been claiming.  This is defined by tax law under § 1250(b)(3) and § 1245(a)(2) and the terminology "allowed or allowable".  Notice that "allowed or allowable" is repeated multiple times in the tax code, and in IRS publication 544, for example:

"Depreciation allowed or allowable. The greater of the depreciation allowed or allowable is generally the amount to use in figuring the part of gain to report as ordinary income. ... If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight-line method."

This is a significant and common issue and they were misinformed or unaware of the depreciation requirement.  And then when they go to sell the property they face this issue of depreciation recapture of the "allowed or allowable" depreciation even though they failed to claim it for all the past years should have.  To address this situation, the IRS established that this mistake can be fixed with a DCN 107 accounting method change using form 3115.