If I change lessee/s corp leasehold imprvmnt deprec asset class in TT from 15 to 7yrs to match lease term(10/2014 to 12/2021) in 2017 tax yr do I need to amend prior yrs?

MRM1 · ‎June 6, 2019

Our s corp had leasehold improvements of $21,825 on space that we moved into on 10/1/14 (lease ends 12/1/2021). Based on a 15yr term, we had depreciation on the leasehold improvements of $182 in 2014 and $1455 in 2015 & 2016 ($3092). It seems that we could or should have used a recovery period to match the term of the lease (7 yrs). If I change our leasehold improvement depreciation recovery period from 15yrs to 7yrs in TT (on the 4562- asset entry wks form) in 2017 tax yr do I need to amend prior yrs and/or file a 3115 form or will TT in the future make the adjustment to depreciate the remaining balance over the subsequent years remaining on the lease?

PatriciaV · ‎June 6, 2019

Yes, if you change your depreciation method, you need to amend all prior tax returns that used the previous method.

While TurboTax will continue to depreciate the asset according to the options you choose when you first set up the asset, there here is no adjustment available going forward.

Because you are changing only the useful life of a previously reported asset, you do not file Form 3115. See IRS Pub 946 "How Do You Correct Depreciation Deductions?"

For help amending a previous TurboTax return, see How to Amend (Change or Correct) a Return You Already Filed

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If I change lessee/s corp leasehold imprvmnt deprec asset class in TT from 15 to 7yrs to match lease term(10/2014 to 12/2021) in 2017 tax yr do I need to amend prior yrs?

After you file