Can any expert please respond to my latest question?
I have one clarification on the over depreciation amount. If the amount of over depreciation in the prior years (2020 through 2023) is $14,000, to offset this what do I need to do?
1. Add $14,000 to the Rental income for 2024 or
2. Reduce my carryover losses from prior year by $14,000 or
3. Add $14,000 as other income on 1040 which increases my AGI and impact the refund amount?
I have never taken the benefit of any losses on form 1040 in any of the prior years and my rental property has always been in a net loss in each of the prior years.
I am thinking this is the guidance that applies to my situation but I am not able to fully understand what income is being referenced here. "A net positive IRC 481(a) adjustment increases income and is often referred to as a "government-favorable" adjustment. A net negative IRC 481(a) adjustment decreases income and may be referred to as a "taxpayer-favorable" adjustment."
