Technical topics regarding tax preparation.
12-Jun-2019 8:20pm
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Client’s books weren’t necessarily the cleanest the past two years (2018 is clean as a whistle). New bookkeeper uncovers a few assets (less than $25K in total cost) that were omitted from the balance sheet, and thus the 1120S returns we filed.
I know this isn’t a rare circumstance, but I’ve never run across it. Is a 3115 required to recoup the missed depreciation or can we file a 1120-X? And, since the 2018 was extended, but filed in April, can I amend it with a 3115?
Thanks for any advice.
14-Jun-2019 11:40am
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Amend if you have not filed the next year's return. 3115 if you have.
14-Jun-2019 11:42am
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How were they booked originally?
I'm guessing the balance sheet at least balanced, right?
-Brian
Director of Tax Accounting Methods & Credits
SourceAdvisors.com
Opinions my own.
14-Jun-2019 11:42am
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14-Jun-2019 11:58am
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re Post #3 - If the assets weren't on the Balance Sheet, did they get recorded as expenses on the P&L?
14-Jun-2019 12:32pm
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I'm thinking like sjrcpa. Sounds like they may have been expensed if they were reconciling the bank statement as of year end, and they don't show up on balance sheet; or were they each less than $2,500 and therefore deminimis?
14-Jun-2019 4:12pm
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How they were booked originally could have an impact on the type of method change, if any, that is available. If they were expensed and that rises to the level of a method of accounting, it would be DCN 192.
-Brian
Director of Tax Accounting Methods & Credits
SourceAdvisors.com
Opinions my own.
14-Jun-2019 8:01pm
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I know that some were DMSH, as some were under the $2,500 threshold, and I brought this up to the client.
The other assets were recorded on a defunct company (wrong QB file) in error. Their Balance Sheet was always off, negative liabilities, loan balances not properly adjusted. I took some liberties of making the appropriate adjustments on the return to force it to balance. Messy, I know, but I try to avoid IRS scrutiny as best I can with messy books.
16-Jun-2019 8:45pm
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I hadn't realized my old boss moved to Texas....LOL
17-Jun-2019 10:05am
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Sounds like a client we used to have. Construction company run by Albanians (I think).
17-Jun-2019 12:16pm
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Amending to claim section 179 would be the best strategy, even if it just results in a section 179 carryforward due to a loss.
-Brian
Director of Tax Accounting Methods & Credits
SourceAdvisors.com
Opinions my own.
17-Jun-2019 8:33pm
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Just some clients that got a little too big too fast and wanted to skimp on proper bookkeeping, happens all too often. Like the clients that don’t want to hire an attorney to properly create their business entity and formation docs.
Thank you for the replies all. Funny ones too.
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