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rental property sale & depreciation issue

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U

unitdelta

Junior Member
Am I out of luck?

I sold rental property last year.

Starting back in 1999 I stopped taking the annual depreciation charge since it was always going to carryover anyway, not realizing then (or until now working on Sched D) that I should have continued to build the carryover up just the same as it would offset the "possible" depreciation I could have taken over the years.

I already have over $36K carryover on this property but the difference between the depreciation I took and what was possible is: $19k!!!

Can I just figure that in to my cost basis? Can I override the amount possible (I use turbotax) with the amount I took? Will the IRS see the good faith here?

Or....yuck!.....is my only resource to file amended returns back three years adding in the $3300 depreciation for each year and increasing my carryover at least by $10K?

I'm thinking the IRS will see my reasoning here as in my tax bracket I would never have been able to use the depreciation deduction.

Sure would appreciate an opinion.

Thanks,

Delta:eek:
 


S

seniorjudge

Senior Member
unitdelta said:
Am I out of luck?

I sold rental property last year.

Starting back in 1999 I stopped taking the annual depreciation charge since it was always going to carryover anyway, not realizing then (or until now working on Sched D) that I should have continued to build the carryover up just the same as it would offset the "possible" depreciation I could have taken over the years.

I already have over $36K carryover on this property but the difference between the depreciation I took and what was possible is: $19k!!!

Can I just figure that in to my cost basis? Can I override the amount possible (I use turbotax) with the amount I took? Will the IRS see the good faith here?

Or....yuck!.....is my only resource to file amended returns back three years adding in the $3300 depreciation for each year and increasing my carryover at least by $10K?

I'm thinking the IRS will see my reasoning here as in my tax bracket I would never have been able to use the depreciation deduction.

Sure would appreciate an opinion.

Thanks,

Delta:eek:
Click to expand...


snipes5 gave you good advice here:

https://forum.freeadvice.com/showthread.php?t=228793
 
U

unitdelta

Junior Member
BUT:

Seniorjudge,

Why does it say that you have to calculate it in even if you didn't use it? That's what is throwing me now.

Am I reading too much in to this?

sorry......I guess I'm only talking about $3K when all is said and done but I would rather keep that money for myself.

excuse moi!!!
 
S

seniorjudge

Senior Member
Wait for someone knowledgeable:

I have two goals in life --

1. Never use a vacuum cleaner

and

B. Never fill out a tax form you can give to your CPA....
 
U

unitdelta

Junior Member
seniorjudge said:
Wait for someone knowledgeable:

I have two goals in life --

1. Never use a vacuum cleaner

and

B. Never fill out a tax form you can give to your CPA....
Click to expand...
That's probably good advice.

However, my wife makes me run the vaccuum regardless of my dislike for it. :)

I spoke with my company CPA last year briefly about estimated taxes but even though I should have a pro do mine, I've been on the TT train for quite a while now.
 
S

Snipes5

Senior Member
Get it done by a tax pro who understands that depreciation is not required if you can prove it wasn't taken.

Tell them to thoroughly read Sections 1245 and 1250 of the code. I think it is actually 1250(b)(3), but I could be off on the subsections.

TurboTax will not do this properly!

Snipes
 
S

seniorjudge

Senior Member
Snipes5 said:
Get it done by a tax pro who understands that depreciation is not required if you can prove it wasn't taken.

Tell them to thoroughly read Sections 1245 and 1250 of the code. I think it is actually 1250(b)(3), but I could be off on the subsections.

TurboTax will not do this properly!

Snipes
Click to expand...
Do you vacuum?
 
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