What is the proper way to adjust an improper basis of a depreciable asset.

[meoleson]

The former preparer understated the basis of the asset by $50,000 when put into service in 2002.  Tax payer was not aware of the problem until this year when he moved his account as the tax preparer never provided copies of the depreciation schedules.

[Just-Lisa-Now-]

2002 is a long time ago, are you sure the client is remembering the correct amount?  or is it real estate and its the land value that hasn't been deprecated?

[meoleson]

He provided me with the documentation and copies of checks.

[Just-Lisa-Now-]

ok, just checking...I have clients that cane remember what they paid for something a year ago, let alone 17 years ago!

[TaxGuyBill · Accepted solution]

Start using the proper amount, and amend the 'open' years.  Otherwise, there isn't anything else that can be done.

[Terry53029]

Can't he use 3115 ?

[TaxGuyBill]

No, using incorrect Basis is a "mathematical or posting error", not a "change in accounting".

[rbynaker]

What asset?  Could the $50K have been allocated to non-depreciable land?

[Just-Lisa-Now-]

that was my comment as well  😉

[rbynaker]

I would think it's gotta be real estate if it's still depreciating after 16 years.

[meoleson]

It is a shop building

[Just-Lisa-Now-]

has anything been allocated to land?  Land isn't depreciable....so if the land is 50K, that why the basis is short by 50K

[meoleson]

It is the building only that is understated.  The purchase price of the land is correct!!!!!!!!!!!!