Fixing a intangible amortization error

[LOM006]

We discovered that we have made an error when setting up the Amortization for a Renewal Franchise Fee.  The Amortization term was set at 15 years on a $12,500 payment in 2019.  It should have been done on a 5 year term which is the renewal term in the contract.  We are a little unsure how to correct this and do we have to file a 3115.  Are we just able to adjust the amortization this year and take difference on this years tax return?  The result of this is the same as amending 3 prior years as no tax was paid and the loss would be carried forward to this year.

[Mike9241 · Accepted solution]

a 3115 is required because it's past the two-year mark to amend returns.   what you do is compute the correct amortization through 2021 and from that subtract what you took. the difference becomes a section 481 adjustment on the schedule where the intangible is reported. then in 2022 you take the correct amount. 

[LOM006]

thanks mike