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Can we choose rather to or not to deduct depreciate? is this an option?

iri
Level 1

Can we choose rather to or not to deduct depreciate? is this an option? also, how do we calculate the realized gain / loss when no depreciation were ever deducted in the pass?

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abctax55
Level 15

You *can* choose not to depreciate...but you still get dinged for it upon sale.

Search for "allowed or allowable".

Form 3115 can often be used to fix prior depreciation issues.

"*******Tax software is no substitute for a professional tax preparer*******
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4 Comments 4
abctax55
Level 15

You *can* choose not to depreciate...but you still get dinged for it upon sale.

Search for "allowed or allowable".

Form 3115 can often be used to fix prior depreciation issues.

"*******Tax software is no substitute for a professional tax preparer*******
( Generic Comment )"
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TaxGuyBill
Level 15
In my opinion you can't even choose to not claim depreciation, as you would be intentionally filing an incorrect tax return.  In connection with the Earned Income Credit, there is a Revenue Ruling (or something similar) that states you are required to claim all valid deductions (which includes depreciation).
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Just-Lisa-Now-
Level 15
Level 15
and don't try and NOT recapture depreciation when you sell...IRS DOES catch this.  New client last year is still paying off the bill from a few years prior when they did their own return on TurboTax and sold a rental property, never took depreciation and didn't recapture it either.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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abctax55
Level 15

Bill is correct...there can easily be other areas of the return impacted by making the "bad" choice of not taking depreciation.  Plus, it is just wrong.

"*******Tax software is no substitute for a professional tax preparer*******
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