Prior preparer used FMV of $360,000 for rental property depreciation basis instead of cost = $130,000 since 2005. Now accum depr greater than cost. How to fix?

Forum|Forum|6 years ago
December 7, 2019
7 replies
37 views

Lacerte Tax

This topic has been closed for replies.

Best answer by TaxGuyBill

From what I understand, using incorrect Basis is a "mathematical or posting error".

That means that Form 3115 does not apply, and the only thing that can be done is to amend the 'open' years.

Other than that, it can't be fixed, and the Basis is now $0 with no further depreciation.

T

TaxGuyBillAnswer

From what I understand, using incorrect Basis is a "mathematical or posting error".

That means that Form 3115 does not apply, and the only thing that can be done is to amend the 'open' years.

Other than that, it can't be fixed, and the Basis is now $0 with no further depreciation.

T

toddcbadAuthor

Level 4

Thanks Bill. $0 basis was my first thought as well. This means that when taxpayer sells there will be a larger depreciation recapture than if it had been done correctly - essentially "negative basis" which we all know doesn't really exist in our world.