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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4669
Experience:  35 years tax experience, including four years at a Big 4 firm.
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The S corp has never been depreciated its lease hold improvement

Customer Question

The S corp has never been depreciated its lease hold improvement for the past ten years. Last year the S corp has been sold. We are now preparing the s1120 tax return. Can we claim the depreciation for the past ten years and report in the 2015 tax return?
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.
Hi from Just Answer. I'mCustomer I'll assist. You can't just catch up on a 4562 in the year of sale. And, depreciation not claimed is still recaptured at sale. You can, however, file 3115, change of accounting method, to claim the prior year depreciation. Depending on your fact pattern, IRS will give automatic approval for the change, and you can claim all the depreciation in the year of sale. The 3115 instructions describe the methods and reasons for automatic approval of the depreciation catchup. We call it a change in accounting method because you are changing from no depreciation to allowed depreciation. Thanks for asking at Just Answer. Positive feedback is appreciated. I'mCustomer