Section 481(a) adjustment

[RitaB]

Where would I enter a Section 481(a) adjustment for residential rental depreciation with all personal use 2020? Sold in 2020.  Depreciation never taken, a DIYer, and not rented 2020.  Husband lived in it, and wife lived at home, but that's another story.  Made it through Form 3115, but if I enter the expense on Line 19 of Sch E, it's disallowed.  First thing that comes to mind is Form 1040, Other Income.  

 

 

[jklcpa]

Right, it's supposed to be a one-line adjustment, but if it had been done correctly from the outset those entries would be on the 4562. In this case I might be inclined to enter the assets there with all of the pertinent data, date, depreciable basis and accum depreciation through 2019 with the labels something like "rental house-481(a)" and let the system handle the disposition correctly.  That might get you to the correct result anyway, I think.

If there is some other component of the 481(a) adjustment because of owner's use in previous years that limited other expenses creating a carryover that the program isn't handling correctly and there aren't many years involved, you could enter it in the original year and roll the Sch E and 4562 forward through each year's program.

Maybe that would work?

[Lynn EA USTCP in Louisiana]

In the sch E worksheet is the property marked 'complete disposition of passive activity'?  If that box is not checked then the losses created by entering the negative 481(a) adjustment on the 'other expenses' line will not be allowed.

 

[RitaB]

Thank you, Fine Ladies.   I am out of the office with my 97 year old mother who's in the hospital, hopefully getting settled in to our very fine Hospice facility today, Monday the 8th.  Great ideas, and I was about out of them, not gonna lie.  Appreciate your prayers.  

[Margaret CPA in OH]

Rita, so sorry to hear this about your mother but glad that you can be with her.  You know prayers and supporting thoughts are with you and your mother from this group and more.  Do let us know if we can be of other assistance.  We are here to help each other.  Remember to care for yourself, too.

[NECPA in NEBRASKA]

Rita, I am so sorry to hear about your mother. I will definitely send prayers, because I just finished hospice with my mom and they were wonderful. They told us to also take care of ourselves. It is not easy to do that when you are worried about your loved ones. 

[Catherine]

Rita, my deepest sympathies about your mom.  Many, maybe most, of the hospice people are really superb and hope that is the case for your mom as well.  I heard nothing but wonderful things from the wife of a client who just passed from cancer, about the hospice people.  Went to the wake just last week.  At least with hospice at home, there's no restriction on visiting, either.  Don't know what the TN rules are at the moment but around here folks are way better off going home to pass, where their loved ones can come without strict limitations.