Amending to NOT take bonus

Technical topics regarding tax preparation.
#1
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Taxpayer started a business in 2019 and the CPA took bonus on everything. Had a loss in 19 and 20. Had a decent profit in 2021 and subsequently owed a lot of self employment tax. If they had taken the depreciation over the life of the asset they would continue to have no tax liability.

Is there any chance I can go back and elect more to take bonus?
Last edited by TaxMan2020 on 12-May-2022 6:45pm, edited 1 time in total.
 

#2
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Not at this point, it's too late to elect out of bonus depreciation for 2019 & 2020.
 

#3
MilesR  
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I had the same thing happen. New 2021 client started a business in 2020 and the old CPA didn't pay attention I guess and allowed bonus on all the new assets to create a big Sch C loss and create an NOL. Completely wasted the depreciation deduction for SE tax in future years. Client is on extension but I was curious about fixing this too...
 

#4
Joan TB  
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MilesR - did your client elect to forego the 5-year carryback of that 2020 NOL? Or are you carrying it forward?
 

#5
taxcpa  
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Has 2021 been filed? On extension?

If extended, its the second year after the asset was put in place and Rev Proc 2020-50 may allow you to file a 3115 to make the election out of bonus. Read it very carefully, especially sections 3 & 5.

If 2021 is already filed, I think you are stuck.
 

#6
MilesR  
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On extension. TP is still getting books finished. That's some good info on looking into the 3115. Will definitely check that out.

I haven't looked super thoroughly since I'm still waiting on getting everything from the TP but the general info on their 2020 return had the NOL carrying over into 2021 so I assume there's probably an election in there to forego carry back.
 

#7
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taxcpa wrote:Has 2021 been filed? On extension?

If extended, its the second year after the asset was put in place and Rev Proc 2020-50 may allow you to file a 3115 to make the election out of bonus. Read it very carefully, especially sections 3 & 5.

If 2021 is already filed, I think you are stuck.


2021 was extended but has been filed
 

#8
Nilodop  
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If 2021 is already filed, I think you are stuck.

2021 was extended but has been filed

But can be superseded. https://www.thetaxadviser.com/issues/20 ... ation.html
 


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