mwpope Posted April 5, 2011 Report Share Posted April 5, 2011 I have a new client with a 1041 Trust that reports interest income and capital gains from the installment sale of a home. This transaction occured 5 years ago. The gross profit percentage is 100% which looked odd to me. I'm asking for the original 6252 to review the calculation but from what I can tell the home was sold for 132K with a 32K basis. (the mother sold the home to one of her daughters prior to her passing at FMV). I would expect a 75.75% gross profit margin (100K/132K). If the above is correct, can I go back three years to amend the returns and just state the correct gross profit margin and use that going forward or does a certain form need to be filed to show the correct calculation of the gross profit percent? Quote Link to comment Share on other sites More sharing options...
jainen Posted April 5, 2011 Report Share Posted April 5, 2011 >>can I go back three years << No. Right or wrong, after two years she had already established an accounting method. It can only be changed by permission of the IRS using Form 3115. Unfortunately, this type of correction is not eligible for the automatic consent procedures, so it requires a substantial user fee. Anyway, I would not be too quick in second-guessing the tax professional who apparently determined that the taxpayer could not support any basis. Quote Link to comment Share on other sites More sharing options...
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