Repayment of a credit

Technical topics regarding tax preparation.
#1
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New Client buys a principal residence home in 2008 and properly claimed the $7,500 tax credit on his 2008 which must be repaid over a 15-year period. A $500 additional tax has been reported each year on Form 5405 from 2010 through 2018.

In 2010, the house was converted to rental and, pursuant to Section 36(f)(2), the entire $7,500 should have been repaid in 2010 because it was no longer the principal residence. The full repayment of $7,500 should have been made in 2010 rather then the $500 amount claimed which means the 2010 tax return was understated by $7,000 and the 2011-2018 tax returns are overstated by $4,000. It's too late to amend the 2010 and report the additional tax that should have been repaid in 2010.

What is the course of action here....to amend 2016-2018 to recover the $500/year and call it a day? Can the IRS recover the unpaid balance of the $7,500 credit even though it should have been reported on the 2010 tax return and wasn't?
 

#2
HowardS  
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Any chance your client was military at the time of conversion?
Retired, no salvage value.
 

#3
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No. I saw that exclusion.
 

#4
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If the repayment of the Homebuyer credit was fully due and reportable in 2010 but was not done (or paid), is there any means by which the IRS could pursue that liability now?
 


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