ColeenD3
Expert Alumni

Investors & landlords

You must take depreciation. If indeed, your prior preparer never took it, you need to file Form 3115. You can't just make up for it in one year. You should look back at every Schedule E that you have to make sure he never once took it before filling out Form 3115. It would be listed on Line18 Depreciation expense or depletion.

 

Unfortunately, the depreciation recapture is "allowed or allowable" meaning even if you never depreciated it, you would still have to recapture the depreciation. Depreciation taken would be on line 18 of Schedule E.

One solution is to elect an accounting method change and file a Form 3115 in the current year and take the prior depreciation as a section 481(a) adjustment. [land  value is separated, land is not depreciated]

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

Maybe these will help

 

Form 3115, Application for Change in Accounting Method

Change-in-Accounting-Method

 

Instructions for Form 3115 (03/2012) 

Instructions

 

Form 3115,

Form 3115