Home office depreciation

Forum|Forum|3 years ago
April 11, 2023
3 replies
29 views

A previous preparer used 150DB depreciation for a home office improvement. I can't replicate this without getting an error. How do i continue to use the same depreciation method used in the past?

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abctax55

Level 15

A much better question is whether you 'should' continue with that (incorrect ?) method or not.

Read up on F 3115, and allowed v allowable depreciation.

It's a bit late to deal with this can of worms before the deadline; I suggest an extension.

HumanKind... Be Both

B

BentaxAuthor

Level 2

Can I apply for an automatice change request and file them with the correct depreciation and if so, does the IRS send them an invoice for the excess depreciation in the last 2 years?

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TaxGuyBill

Level 15

@Bentax wrote:

Can I apply for an automatice change request and file them with the correct depreciation

and if so, does the IRS send them an invoice for the excess depreciation in the last 2 years?

Yes, and no. Part of the change request on Form 3115 makes the adjustment, so you will be adding that "481(a) Adjustment" to the tax return.

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TaxGuyBill

Level 15

@Bentax wrote:

A previous preparer used 150DB depreciation for a home office improvement. I can't replicate this without getting an error. How do i continue to use the same depreciation method used in the past?

Just to double check, this improvement was to the structure of the house, that would be depreciated over 39 years, right?

If so, 150DB is not allowed. For the most part it can only be straight line.

If last year was the first year it was "placed in service", you can just report it correctly this year, and ideally amend last year to correct it.

If it was "placed in service" more than one year ago (and wrongly used 150%DB in the first two years), you need to file Form 3115 to correct the error and start doing it correctly.

As was mentioned, it is extension time.