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Correcting Basis to Rental Property at time of Sale

acctgtaxmatters
Level 3

Client sold rental property in 2020 that she owned and rented for 8 years. Prior tax accountant was not carrying correct purchase price and was understating by $8,000. Cap Gains savings to my client of $1,000. Is the best fix to add to Asset Entry as a separate amount with a date placed in service of 01/01/2020?

 

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3 Replies 3
dkh
Level 11

Was that $8000 possibly the land allocated out of the purchase price ?   

If you have time, look back through recent posts.   I do recall a conversation with this same problem.

TaxGuyBill
Level 15

The best fix is to just correct the Basis on the Asset Entry Worksheet.  There is no need to add another one.

While you could amend the last 2 or 3 years to claim the proper depreciation, it would only be a minimal amount of tax saving so it probably is not worth it.

acctgtaxmatters
Level 3

Thank you both for your replies. Land wasn't the issue. I think it was just a mistake carrying wrong value. I added as a separate asset calling it "to correct purchase price) since I didn't have any replies as of yesterday. I also didn't want to raise red flag with a different value than in prior years. All is well and client is happy with result.