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Subject Author Date
new roof on rental property way222 02-17-2007
Posted by A.G. Kalman on February 19, 2007, 8:26 pm
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 way222@gmail.com wrote:

> After looking over some old posts here, I've learned that
> replacing a roof on a rental property has been generally
> established as a repair, not a capital item:
>
> From Oberman (47 TC 471): "We think that the expenditure
> in question should properly be considered as a deductible
> ordinary and necessary business expense rather than a
> capital expenditure."
>
>
http://groups.google.com/group/misc.taxes.moderated/browse_frm/thread/a1a2831912d11d9b/2760be9ab5da6f54?rnum=1#2760be9ab5da6f54
>
> In 2004 I put a new roof on one of my rentals (removing
> old shingles, put on new shingles) in order to fix several
> leaks and other issues. On my tax return for that year, I
> capitalized the expense using SL 27.5 year period.
>
> Can I go back and amend my return for 2004 and 2005 and
> convert it to a repair? Or am I stuck depreciating it,
> since that is what I elected to do back then?

Lots of answers but none that address the question.
Depreciation is a method of accounting. As such, you have
to file Form 3115 and request a change to your method of
accounting for that item.

--
Alan
http://taxtopics.net

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Posted by Mark Bole on February 22, 2007, 2:08 am
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 A.G. Kalman wrote:
> way222@gmail.com wrote:

>> Can I go back and amend my return for 2004 and 2005 and
>> convert it to a repair? Or am I stuck depreciating it,
>> since that is what I elected to do back then?

>
> Lots of answers but none that address the question.

[...re-reading the thread...]

> Depreciation is a method of accounting. As such, you have
> to file Form 3115 and request a change to your method of
> accounting for that item.

But if it (let's say, "replacing the shingles on an existing
roof") was a repair expense, it never should have been
depreciated, therefore it is a posting error which is
eligible for rectification by amended return subject to the
usual amended return rules.

Definition: a "posting error" is an error in "the act of
transferring an original entry to a ledger."

-Mark Bole

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by A.G. Kalman on February 22, 2007, 5:26 pm
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Mark Bole wrote:
> A.G. Kalman wrote:
>> way222@gmail.com wrote:

>>> Can I go back and amend my return for 2004 and 2005 and
>>> convert it to a repair? Or am I stuck depreciating it,
>>> since that is what I elected to do back then?

>> Lots of answers but none that address the question.

> [...re-reading the thread...]

>> Depreciation is a method of accounting. As such, you have
>> to file Form 3115 and request a change to your method of
>> accounting for that item.

> But if it (let's say, "replacing the shingles on an existing
> roof") was a repair expense, it never should have been
> depreciated, therefore it is a posting error which is
> eligible for rectification by amended return subject to the
> usual amended return rules.
>
> Definition: a "posting error" is an error in "the act of
> transferring an original entry to a ledger."

Good try, but I believe under Sec. 446, its regs and various
court cases, this was not an error in the act of
transferring the original entry to a ledger. Whether or not
replacing a roof is a repair or a capital improvement is a
matter of all facts and circumstances. Back in 2004, when
the taxpayer capitalized the roof repair no error was made.
The taxpayer, based on all information on hand, made an
election to capitalize the expense. To change 2004 and 2005,
he needs the commissioner's approval for a change in method.

--
Alan
http://taxtopics.net

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Mark Bole on February 23, 2007, 6:50 am
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A.G. Kalman wrote:
> Mark Bole wrote:
>> A.G. Kalman wrote:
>>> way222@gmail.com wrote:

>>>> Can I go back and amend my return for 2004 and 2005 and
>>>> convert it to a repair? Or am I stuck depreciating it,
>>>> since that is what I elected to do back then?

[...]
>> Definition: a "posting error" is an error in "the act of
>> transferring an original entry to a ledger."

> Good try, but I believe under Sec. 446, its regs and various
> court cases, this was not an error in the act of
> transferring the original entry to a ledger. Whether or not
> replacing a roof is a repair or a capital improvement is a
> matter of all facts and circumstances. Back in 2004, when
> the taxpayer capitalized the roof repair no error was made.
> The taxpayer, based on all information on hand, made an
> election to capitalize the expense. To change 2004 and 2005,
> he needs the commissioner's approval for a change in method.

Thanx! I post here as much to learn as to try to help, and
this has definitely been a learning exercise for me. I'm
still wondering about depreciating vs. expensing those
tires, though...

-Mark Bole

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by way222 on February 20, 2007, 6:57 pm
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> Lots of answers but none that address the question.
> Depreciation is a method of accounting. As such, you have
> to file Form 3115 and request a change to your method of
> accounting for that item.

Holy cow, I just took a look at that form. It's like it is
written in a foreign language.

So what is the procedure - do I file a 3115 and wait for the
IRS to approve it, and then file an amended return; or do I
file everything together?

Or should I head to my friendly neighborhood accountant, as
this is to complicated for someone who is not a pro?

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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