Amend return Form 3115 missed depreciation

[Sarah Huang]

Good morning tax experts!

I just found out I need to amend my client's return because Form 3115. On Form 3115, I didn't check "yes" but checked "no" on box 3 Part I (page 1), and didn't check "No" on Schedule E on questions 1 to 4 (page 8). The return accepted on 1/29/2025 for federal, AZ and OK states. By the way, Form 3115 has not mailed to IRS yet. Questions:

1. Is ok for me to amend the return now while my client is waiting for the refund? Today is 2/8/2025, which is 10 days from accepted day.

2. Form 3115 is required to mail to the IRS, correct? if so, is there any form or document need to be mailed with Form 3115?

3. When is the timeframe to mail to the IRS? within 3 business day after e-file? or any time within the filing year?

Thank you for your help tax experts!

[TaxGuyBill · Accepted solution]

1) Yes, you can probably file a Superseding return now.  Some preparers wait until the client gets the refund though.

2 & 3)  Here is the direct link in the 3115 Instructions that answers that:

https://www.irs.gov/instructions/i3115#en_US_202212_publink63215hd0e217

[abctax55]

It's been a long time since I handled a F 3115 (not since TPRs came out).

Here's what I used to hone my skills.   Hope it helps.

https://brasstax.com/products/form-3115-line-by-line-correcting-depreciation/

[Sarah Huang]

Thank you very much!

[Sarah Huang]

Thank you very much! I will wait until my client gets her refund. Good point.

[Joni T EA]

In reviewing a 2021 tax return for a client we found Sec 179 depr was mistaken entered as prior period depr.  The amount that should have been taken is $7,000.  Can an amended return for 2021 (2022/2023 also) be filed to take the depr or do I file Form 3115 and make correction on the 2024 return?  This is an S-Corp which would mean filing amended for the shareholder also.

Would prefer to file From 3115 and take the depr this year if possible.

[TaxGuyBill]

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@Joni T EA wrote:

In reviewing a 2021 tax return for a client we found Sec 179 depr was mistaken entered as prior period depr. 

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The asset was correctly placed in service before that, right?  If so, any corrections need to be done on an amended return.

[Joni T EA]

The 2 assets were placed in service in 2021.  The preparer wanted to take 179 depr for both in 2021.  the tax preparer accidently put the amount in the prior depr field, not the Sec 179 field.

I was thinking it would be an amended return.  Everything I read says do not file Form 3115 to make an election for 179.

 I looked at the return I saw they had a loss on the 2021 (covid), therefore, there should be no sec 179 in that year.  Now the issue is there are two assets put in place in service in 2021 that have not had any depreciation taken for 3 years (2021-2023).  The costs combined are around $7500.  At 7 yr mid quarter conversion the depr exp is $1339, a tax savings for the s-corp shareholder of $240 for 2021. It's appox $784 tax savings for the 3 years.  Amended returns for those years should be filed...but is it worth the hassle?

[Sarah Huang]

Hi tax experts,

Regarding my first question: On Form 3115, I didn't check "yes" but checked "no" on box 3 Part I (page 1), and didn't check "No" on Schedule E on questions 1 to 4 (page 8). 

1. I have made the changes, and have client signed the updated Form 3115.

2. My client received her refund.

Question:

Is it ok Not to file Superseded return and just mail updated Form 3115 to the IRS since the changes do NOT affect any numbers on the original return? 

All the answers are greatly appreciated!

[Sarah Huang]

 Silence is gold! Thank you for no response! Indeed, that forced me to do more research, and I conclude the answer is "Yes". Per Form 3115 instruction, when doing accounting method changes for depreciation, Schedule E must complete, which is on page 8.