Need Form 3115 Help - Missed Rental Depreciation

[SB2013]

Hi,

We missed claiming depreciation on our rental property from 2019 through 2024, except for one year (2021), which needs a small correction in the calculation.

We’re planning to file Form 3115 to correct this and have already filed for an extension for this year’s tax return. I’m using the desktop version of the software and trying to complete Form 3115.

Does anyone have guidance on which sections need to be filled out for this type of change? I’d really appreciate help, especially with the following sections. Thank you!

1. Part II, question 13 - I'm seeing mixed opinions of yes/no. Any thoughts here?

2. For 19a - Do we need to enter rental income for preceding years?

3. For 27 - No, as there is no prior change

4. For 28 - please help me understand 28.

Appreciate any guidance in filling this complex form. Thank you for your time!

Question 19a: Should we fill rental income from prior years?Question 13: Yes or No?

[M-MTax]

I am going to get @AmeliesUncle involved here, but you don't need to answer those other questions relating to rent received because you're just making a 481(a) adjustment. 

Also, Line 28 is for positive adjustments and your adjustment is negative (i.e., you're catching up for missed depreciation deductions).

https://www.irs.gov/instructions/i3115#en_US_202212_publink100035791

[AmeliesUncle]

First, let's back up a little.

Was 2019 the first year the property was "placed in service"?   Or was it placed in service before that (and had correctly claimed depreciation in the first year it was placed in service)?

[SB2013]

Yes, the property was placed in service in Nov 2019.  

[AmeliesUncle]

I'll start off with saying I think it is in your best interest to go to a good tax professional to do this and to review your tax returns.  If you missed claiming depreciation, it is quite possible that there are other errors or problems on your tax returns.  In my opinion, the most expensive way to prepare your tax returns is to do it yourself (including using DIY software like TurboTax).  A good tax professional will not only prepare your tax returns correctly, they can give you advice.

In answer to your questions:

1) 13 is no.

2) 19a, no.

3) 27, no.

4) 28 is no.  It does not apply unless you OWE more tax.

Side note:  You weren't allowed to claim ANY depreciation in 2021 on the house if you had not claimed depreciation in 2019 and 2020, and did not file Form 3115 with the 2021 return.

As I said before, it is opinion it is in your best interest to go to a good tax professional.  Over your lifetime, using DIY programs like TurboTax very frequently ends up with you paying more tax than any savings in tax preparation fees.