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13 Oktober 2008

Re: [taxchat] Form 3115 (Change in Accounting Method)

Thanx Debbie!  I will look at that page now!
 
Terri L. Ryman, EA
SOUTHWEST TAX & ACCOUNTING
503 Morton, Box 1367
Elkhart, KS  67950-1367
 
620.697.2422 Phone
 
620.697.4757 Fax
 
 
 
----- Original Message -----
Sent: Monday, October 13, 2008 7:56 PM
Subject: Re: [taxchat] Form 3115 (Change in Accounting Method)

Terri,
 
I wish I had more time to research this in more detail, but I'm in the middle of the Oct 15 deadline rush.  Hopefully this will help.  I believe that this is one of the changes to which the scope limitations do not apply, therefore you may be able to take it on the 2007 return. 
 
See the instructions for Form 3115, starting on page 9 - "Post disposition depreciation or amortization for an item of depreciable or amortizable property disposed of by the taxpayer during the year of change for which the taxpayer deducted less than the depreciation allowable...Complete Sch E of Form 3115.  Scope limitations do not apply....."
 
Hope this helps!!
 
Debbie Breedlove
Breedlove & Associates, LLC
1812 E 123rd St.
Olathe, KS  66061
Phone:  913-780-9995
Fax:  913-782-5570
Sent: Monday, October 13, 2008 6:36 PM
Subject: [taxchat] Form 3115 (Change in Accounting Method)

 
 
 
 
Amazingly enough, I've never had to do one of these before, but I have a new client this year whose former preparer has totally missed depreciating 6 different assets, and also did not start depreciating a building until 3 years after it had been put in service!
 
BUT, they sold this business during 2007.  If I'm reading the instructions correctly, they cannot make this correction if "the tax year of the change is the final year of a trade or business for which the taxpayer would be required to take the entire amount of the section 481(a) adjustment into account in computing taxable income."
 
This being the case, is there any recourse?  If I amend 2006 and make the 3115 adjustment on that year, they hardly get the benefit of it since their income wasn't as high as it is this year with the sale.
 
I'm thinking I can't prepare the 2007 return with the "allowed or allowable" depreciation on it (to figure the taxable capital gain of the sale), and then later amend the 2007 return to fix and take the missed depreciation (because it's already in the calculation for the sale).
 
I'm confused, and I'm sure I sound like it.
 
Any suggestions or ideas?
 
Thanx
 
Terri L. Ryman, EA
SOUTHWEST TAX & ACCOUNTING
503 Morton, Box 1367
Elkhart, KS  67950-1367
 
620.697.2422 Phone
 
620.697.4757 Fax
 
 
 


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