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Depreciation from new client missing

Level 7

A longtime tax preparer died in our town, and I'm getting his desperate clients who w/o depreciation worksheet in their packets, and no family member can access them from his computer. Most go back many years (Sch E, C, F). Any suggestions? From your experience, does the IRS leave you alone if my earnest guess is close 'nuff?

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Level 13

In the extremely unlikely chance the new clients have all of their tax returns, all of the information for the newly "placed in service" assets is on the 4562s.  So the first step is to try to get as many previous tax returns as possible.   Hopefully the client at least has the last few years; if not, ordering Transcripts of recent tax years should have that information.

The more 4562s you have, the easier it will be.  If you have most of the 4562s, then as was mentioned you can sometimes figure out the missing amounts by what is left of the depreciation.

Another thing to try is ask the family of the previous preparer to look through any paper-files.  Many tax preparers (including me) keep paper copies, and the depreciation schedules and/or previous tax returns (with the 4562s) may be available in the filing cabinet.

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3 Replies 3
Level 15

"does the IRS leave you alone if my earnest guess is close 'nuff?"

Depends on the agent.  Your options are to get returns as far back as you can and reconstruct assets to the best of your ability or to not take any depreciation because you don't have any backup.  You need to discuss the issue with the client and let them decide.  After they think about it for a millisecond and select option 1, remind them there is exposure and you probably want to get something in writing -------------------- just in case you don't get the "friendly" agent if the return is ever audited.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
Level 15

Is the client in Hawaii... just curious 😎

But seriously - someone likely took over the practice of the deceased & might be able to provide help.

If not, working with percentages - one can often back into cost basis.  But it's a tedious process.

Former Chump..umm... AllStar.
"the game of life is hard to play"

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Level 13

In the extremely unlikely chance the new clients have all of their tax returns, all of the information for the newly "placed in service" assets is on the 4562s.  So the first step is to try to get as many previous tax returns as possible.   Hopefully the client at least has the last few years; if not, ordering Transcripts of recent tax years should have that information.

The more 4562s you have, the easier it will be.  If you have most of the 4562s, then as was mentioned you can sometimes figure out the missing amounts by what is left of the depreciation.

Another thing to try is ask the family of the previous preparer to look through any paper-files.  Many tax preparers (including me) keep paper copies, and the depreciation schedules and/or previous tax returns (with the 4562s) may be available in the filing cabinet.

View solution in original post