Investors & landlords

@ajkrause You won't like my answer.  According to the IRS, “If you were entitled to take depreciation deductions b you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997.” https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/sales-trades-exchanges/sales...

Easiest but, not correct method is to apply for a change in accounting methods using IRS Form 3115 * and take the catch up depreciation this year.  the truth is it's not a change, just an error though but, easiest method  You’re changing from a depreciation method that’s not allowed to one that’s allowed...

OR

The really correct method is You would have to go back and amend all prior year tax returns.

The IRS says All allowed or allowable depreciation must be considered at the time of sale. So even if you did not take depreciation in the past, it was allowable, so you can't just adjust this year. 

How to amend in TT https://ttlc.intuit.com/community/amending/help/how-to-amend-change-or-correct-a-return-you-already-...

I don't work for TT. Just trying to help.

Hope this was helpful.

*

To file a Form 3115 in TurboTax program, you would need a TurboTax desktop version to complete the entries.  You cannot use the online version, unfortunately.  If you are currently using the online edition, please follow the instructions below in TurboTax online edition to switch to the desktop:

1. After sign into your account, select Take me to my return 

2.  At the right upper corner, in the search box, type in 3115 and Enter 

3.  Select Jump to Form 3115 

4.  On the screen, Change in Accounting Method, select CD/Download version of TurboTax to continue

5.  Once you are in the CD/Download version, use Forms View to enter Form 3115.

• At the right upper corner, select Forms 
• Under Forms mode, at the left upper corner, select Open Form, type in 3115 to open form to enter information