@mgc6288 wrote:
What if I were to simply depreciate the entire unit 2 over 27.5 years with the assumption that he wants to be eventually paid but then he never shows up within the 5 years?
Do I stop the depreciation once it is determined that I will **not** be paying him or do I continue but then have to make some kind of adjustment later on?
I'm attempting to watch my six in wasting 5 years of waiting to see if he wants to be paid, then at the last minute demands payment and now I've postponed a very long depreciation cycle another 5 years.
That is tricky. Maybe going to a tax professional to file Form 3115 to 'pay back' the depreciation deductions.
Yes, you would stop. And as my last paragraph said, you may need to 'pay back' the depreciation deductions.
You would not be postponing the depreciation cycle. If you did not claim depreciation and then he collects in year 5, you would go to a tax professional to file Form 3115. That would 'catch up' on years 1-5 and you would continue depreciation for years 6-27.5.
