I did not include a $17K kitchen improvement in the 2016 Form 8824 like-kind exchange nor Form 4562. Should I revise 2016 taxes or include it somewhere in 2019 Form 4797?

[GiseleD]

You will definitely not include it in 2019. As long as you:

1) Completed the improvement in 2016, and

2) Exchanged it via like-kind exchange the same year, and

3) You still are using the replacement property (the one you received in the like-kind exchange)...

You will need to file Form 3115. This form must be filed because there was missed depreciation for more than one year. The depreciation was missed for more than one year because depreciation of the replacement asset is only allowable for any remaining tax basis (that was transferred from the old asset) and for value representing additional capital investment in the new asset. Therefore, your replacement asset was incorrectly depreciated in the tax years following 2016.

TurboTax online products DO NOT support Form 3115. If you need Form 3115, you must use one of our Desktop/CD Download products.

Form 3115 Instructions

Form 3115 -  Application for Change in Accounting Method

 To correct an impermissible depreciation method (missed deprecation for more than one year), start at page 12 of this publication.

[qnwa01]

I sold the like exchange property in 2019. Would I need to use the same form 3115?

[GiseleD]

Yes, you will still need to file Form 3115 to correct the missed depreciation.

@qnwa01