Discussion:Mis-stated Depreciation and how to Re-capture
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| Revision as of 13:44, 3 February 2007 Bottom Line (Talk | contribs) (I'd probably ame) ← Previous diff |
Revision as of 14:01, 3 February 2007 DR BRISKET (Talk | contribs) (I would expect t) Next diff → |
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| {{ForumReplyPost|UserID=Bottom Line|Date=3 February 2007|Text=I'd probably amend and pay the tax.}} | {{ForumReplyPost|UserID=Bottom Line|Date=3 February 2007|Text=I'd probably amend and pay the tax.}} | ||
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| + | {{ForumReplyPost|UserID=DR BRISKET|Date=3 February 2007|Text=I would expect the IRS would want the 2005 return to be amended. Assuming there are no other corrections, this would result in a lower depreciation deduction and higher taxable income. Of course, this would generate additional SE tax as well as fed/state income taxes (plus penalties and interest). But, consider the following: Apparently, the TP did not claim a Section 179 deduction on either asset in 2005. If this is true, you could Section 179 the remaining asset up to the amount of the depreciation taken on the duplicate asset. This would result in no change on an amended return. The undepreciated value of the asset that gets carried forward to 2006 should produce the same amount of 2006 depreciation as your Option B. Accordingly, that is the approach I would choose.}} | ||
Revision as of 14:01, 3 February 2007
Discussion Forum Index --> Tax Questions --> Mis-stated Depreciation and how to Re-capture
Truthseeker (talk|edits) said: | 3 February 2007 |
| TP last year(2006)inadvertently took depreciation for same listed property under different asset names. This resulted in a overstated depreciation amount for asset on TP SchC. My question is how does one go about correcting the situation:
A) File an Amended return for tax year 2005, correcting the error(removing one of assets) B) Remove duplication asset from 2006, ADD the over-stated amount to the "Prior Depreciation Taken History", thus shorting future "to be taken" depreciation C) Close-out and Recapture the overstated asset depreciation amount on the 2006 return Any insight here would be greatly appreciated. | |
Bottom Line (talk|edits) said: | 3 February 2007 |
| I'd probably amend and pay the tax. | |
DR BRISKET (talk|edits) said: | 3 February 2007 |
| I would expect the IRS would want the 2005 return to be amended. Assuming there are no other corrections, this would result in a lower depreciation deduction and higher taxable income. Of course, this would generate additional SE tax as well as fed/state income taxes (plus penalties and interest). But, consider the following: Apparently, the TP did not claim a Section 179 deduction on either asset in 2005. If this is true, you could Section 179 the remaining asset up to the amount of the depreciation taken on the duplicate asset. This would result in no change on an amended return. The undepreciated value of the asset that gets carried forward to 2006 should produce the same amount of 2006 depreciation as your Option B. Accordingly, that is the approach I would choose. | |
