Depreciation Question

Though there may be some hoops to jump through, it would seem to be worth doing so, since you're goind to be _charged_ for the "imputed" depreciation when you sell the property, whether you took it or not.

You are also allowed to go back and file 1040X returns for the years when you didn't claim and could have. There is a full explanation in Pub 527, under "Claiming the Correct Amount of Depreciation."

If changing your accounting method is involved, while getting the consent of the IRS is mentioned, in some instances, that consent is automatic. See chapter 1 of Pub 946.

Bill

How does the accounting method affect the depreciation?

But you can go back only 3 years.

That document is awfully long.

One theory, and I do not buy it in this instance, is that once you have used a particular accounting method for two tax years in a row, you have established your method of accounting.

So going from not claiming depreciation two years in row, to claiming it, could be taken as a change in method. But since the original "method" is not a reasonable one, I would think the two years in a row rule would not hold. If you disagree, then a 3115 is needed to notify the IRS of a change in method.

I can't quite see that failure to claimed allowable depreciation in previous years and then resuming it is a change in accounting method. The "method" was there from the first, although the error was "forgetting" to claim depreciation officially.

Therefore no form 3115 is called for.

ChEAr$, Harlan Lunsford, EA n LA

I agree here. No depreciation => no prior method, therefore no change.