Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Hello, I was a non-filer from 2000 to 2006, the same years

Hello, I was a non-filer from...
Hello,
I was a non-filer from 2000 to 2006, the same years I owned a rental property.
I sold the property in July 2006 and the IRS just sent me a form 4549 which, of course, shows an outrageous amount owed.

Details:
I built the property in '99 and spent $200,000 cash (no improvements since).
In January 2000, I took out a small mortgage loan, about $100k.
I inherited the land which was valued at $150,000 at the time of the sale.
The property sold for $362,000.

Except for 2006, I've recently filed my late returns but didn't include the depreciation on the rental property from 2000-2005.

On my 2006 return, the year I sold the property, do I need to include the depreciation for each of those five years? How will the IRS calculate the depreciation recapture?
Show More
Show Less
Ask Your Own Tax Question
Answered in 15 minutes by:
7/2/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,151
Experience: Taxes, Immigration, Labor Relations
Verified

LEV :

Hi and welcome to Just Answer!
You should be able to proof your basis - and need to separate the basis of the land which is not depreciable and the basis of the building.
The basis for the inherited land - is a stepped up basis equal to its fair market value at the time the decedent passed away.

LEV :

For purposes of depreciation recapture - you should follow IRS regulations - when the property is sold - you must "recapture" depreciation that is "allowed or allowable”. Depreciation that you have actually deducted on your tax returns (and was not disallowed by the IRS) has been “allowed”. Depreciation that can be deducted on a tax return is “allowable”.
So far - the larger of these - "allowed or allowable” must me recaptured - but not more than your actual gain.

Ask Your Own Tax Question
Just in case you were not able to use the chat - I am switching to Q&A mode and porting the answer below.
Please feel free to communicate if you need any clarification or have other tax related issues.

Hi and welcome to Just Answer!
You should be able to proof your basis - and need to separate the basis of the land which is not depreciable and the basis of the building.
The basis for the inherited land - is a stepped up basis equal to its fair market value at the time the decedent passed away.

For purposes of depreciation recapture - you should follow IRS regulations - when the property is sold - you must "recapture" depreciation that is "allowed or allowable”. Depreciation that you have actually deducted on your tax returns (and was not disallowed by the IRS) has been “allowed”. Depreciation that can be deducted on a tax return is “allowable”.
So far - the larger of these - "allowed or allowable” must me recaptured - but not more than your actual gain.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,151
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,151
30,151 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I inherited rental properties. I got an LLC set up using an
I inherited rental properties. I got an LLC set up using an EIN number with a property management who no longet works for me.Can I remove their EIN number? legalgems… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I bought a rental property for 49000 and sold it for 29000
I bought a rental property for 49000 and sold it for 29000 many years later. During those years I depreciated it entirely. So do I it don't I have to pay capital gain on the entire 29000? … read more
abci168
abci168
Principal
27 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
My question is about depreciation for rental property. My
Hello. My question is about depreciation for rental property. My rental property had no income during one year. In this case, since there was no income, I do not need to claim depreciation for that sa… read more
Fred Rook
Fred Rook
Corporate Controller
BSBA
32 satisfied customers
My wife inherited a piece of rental property from a
My wife inherited a piece of rental property from a revocable trust that her parents had set up after her father and brother died her mom did an amendment that made her trustee and sole heir. Her mom … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
How to report cancellation of debt on rental property?
I received a 1099-C for my rental property that I held for over 1 year. According to the worksheet provided in IRS Publication 4681 I was insolvent just prior to the debt being canceled. My question i… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
IRS Experts Corporation changed name. 2016 tax return has
IRS ExpertsCorporation changed name. 2016 tax return has been filed with a new name. Taxpayer recently received notice which has old name. How do we change the name with IRS?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,483 satisfied customers
I got a 1099 A of a rental property with information on Box
I got a 1099 A of a rental property with information on Box 2 and Box 4 how do I report it on my tax… read more
Lev
Lev
Tax Advisor
30,151 satisfied customers
I have a rental property that required major repairs this
I have a rental property that required major repairs this year. The repairs minus deductible were covered by my insurance. Is the entire amount of repair an allowable expense or only the insurance ded… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Are you familiar with Capital Gain taxes on rental property?
Are you familiar with Capital Gain taxes on rental property? … read more
Lev
Lev
Tax Advisor
30,151 satisfied customers
I recently received a car as a payment for rental property
Hi, I recently received a car as a payment for rental property and I was wondering how the tax treatment would be … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
When bank refinance do they verify tax returns with IRS?
When bank refinance do they verify tax returns with IRS? Because I did the refinance and bank didn't ask me for transcript signature, or Can they do it without my authorization ?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
If my Schedule E loss is disallowed for a rental property
If my Schedule E loss is disallowed for a rental property (due to income level), can I take the mortgage interest and real estate taxes paid on Schedule A instead of on Schedule E?The entire expense a… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
Disposition of Rental Property. Rental property: Gross sale
Disposition of Rental Property.Rental property : Gross sale price: $600K Cost or Other Basis plus Selling Expenses: $300K Depreciation allowed or allowable: $100K (Form 4797 line 22)Adjustment: $300K … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
I own rental properties. If I purchased the property in
I own rental properties. If I purchased the property in early 2016, but haven't finished the remodel are marketed it for rental yet (because it's not ready for rental), do I list the property on my 20… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
I didn't claim depreciation on a rental property for 8
I didn't claim depreciation on a rental property for 8 years. I'm about to sell the property. How many years of the past annual depreciation can I claim? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I sold a rental property and fully depreciated furniture and
I sold a rental property and fully depreciated furniture and fixtures such as refrigerator/oven/doors etc. Would I have to recapture the FF&E depreciated amounts as ordinary income with the sale when … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,220 satisfied customers
If I'm depreciating a rental property for the first time, do
If I'm depreciating a rental property for the first time, do I have to do it over 27.5 years or can I do it over a shorter time span? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x