You are not correcting an incorrect depreciation method, you are correcting your basis.
Explanation of the 2-year rule:
The use of an incorrect method of depreciation, which would include taking no depreciation, is considered the use of an incorrect accounting method. Once an incorrect accounting method has been used for two years, a Form 3115 is required to change accounting methods back to a correct method, or in this case, since not taking depreciation is incorrect, to begin taking depreciation a Change in Method form must be filed.
Outlined in my earlier post, the IRS states:
Depreciation errors that are NOT subject to the accounting method change filing requirements require amended returns and include:
Amended Returns:
- You claimed the incorrect amount because of a mathematical error made in any year.
- You claimed the incorrect amount because of a posting error made in any year.
- You claimed the incorrect amount on property placed in service by you in tax years ending before the statute of limitations has expired.
