3115 help II

[ILLMAS]

Just to double check, I have a TP that over reported about $18K in depreciation on a Sch E (prior preparer error $6K per year for 2015, 2016 & 2017), I prepared the necessary adjustment on paper, my question is, would I include the access deprecation on Sch E or line 21?  Do I have to make a note that the TP would like to spread the amount over the four years on the workpaper that I will be submitting along with form 3115?

Thanks

 

Spread Periods for IRC 481(a) Adjustments

1. A net positive IRC 481(a) adjustment increases income and is often referred to as a "government-favorable" adjustment. A net negative IRC 481(a) adjustment decreases income and may be referred to as a "taxpayer-favorable" adjustment. When a taxpayer uses the voluntary method change procedures or a regulation provision, it generally takes a net negative IRC 481(a) adjustment into account in the year of change. A taxpayer generally takes a net positive IRC 481(a) adjustment into account over four years (year of change and next three taxable years). See also IRM 4.11.6.6.4.1.

[Lee B]

It looks like checking the yes or no box on line 27 takes care of this ?

 

[ILLMAS]

Sounds good, just wanted to make sure I didn't have to breakdown the computation for future years for the IRS.

[DANRVAN]

5 hours ago, ILLMAS said:

would I include the access deprecation on Sch E or line 21?

I would put on E so it retains the same character as originally reported.

[grandmabee]

to jump on the same topic  I have a new client with Schedule C for Bed & Breakfast from 1995 thru 2013 filed with no depreciation on the house.  2014 thru 2018 not business use.  they just let the son live in the home.  they kept as second home because they moved out of state.  In 2018 house sold.  If I do the 3115 the only place I can put it is on line 21 because no Schedule C since 2013.  Old preparer said he didn't want to how to mess with depreciation when they sold.  I said its allowed or allowable.  Now I am thinking maybe he meant he was going to disallow the depreciation because it wasn't exclusive use at that time.  Any thoughts on both questions?  line 21 for 3115 if I adjust or depreciation wasn't allowed.

[DANRVAN]

12 minutes ago, grandmabee said:

Now I am thinking maybe he meant he was going to disallow the depreciation because it wasn't exclusive use at that time.

That would depend in facts and circumstances  Were they also living in the house while it was B & B?

 

12 minutes ago, grandmabee said:

.  If I do the 3115 the only place I can put it is on line 21 because no Schedule C since 2013. 

I believe the proper place to report expenses for a closed business in on Schedule C and would offset any other income of the same character: like SE,  earned income......etc. 

In the same regard if there was a positive adjustment it would also go on C.