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Author: HarpoN Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Depreciation Question Date: 6/5/1999 12:35 PM
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Situation:

- You have a rental property on which you begin taking depreciation (15 year ACRS, if it matters).

- After 5 years because of your overall income levels you are no longer required to file a tax return (independent of whether the depreciation was taken).

- Now, after several years of no tax returns this year you have to file again.

Questions:
- Do you continue using the depreciation schedule right where you left off on the last year you took the depreciation?
- Is your basis reduced only by the years you took depreciation or do you have to include all the years where you did not take the depreciation because you didn't have to file?

TIA for any light you may be able to shed.

H
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Author: satpc Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16037 of 121219
Subject: Re: Depreciation Question Date: 6/5/1999 5:19 PM
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This is a great question, and you're probably asking it here bacause you already got an answer you didn't like very much. The answer can be different depending on your circumstances. First off, if you continued to rent the property during the years you weren't filing a return, then the depreciation continued, whether or not it reduced your tax liability. This is because depreciation deductions are recorded to the extent they are "allowed or allowable". So whether they did you any good or not, the depreciation reduced your basis.

On the other hand, if the property ceased to be rental property, then the depreciation stopped at that time. If now you have started renting the property again, you have a different situation entirely. Best to consult a qualified tax professional such as a CPA or attorney.

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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16066 of 121219
Subject: Re: Depreciation Question Date: 6/6/1999 9:41 PM
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Questions:
- Do you continue using the depreciation schedule right where you left off on the
last year you took the depreciation?
- Is your basis reduced only by the years you took depreciation or do you have to
include all the years where you did not take the depreciation because you didn't
have to file?


SATPC is correct.

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16078 of 121219
Subject: Re: Depreciation Question Date: 6/7/1999 12:51 AM
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[[- You have a rental property on which you begin taking depreciation (15 year
ACRS, if it matters).
- After 5 years because of your overall income levels you are no longer required
to file a tax return (independent of whether the depreciation was taken).
- Now, after several years of no tax returns this year you have to file again.

Questions:
- Do you continue using the depreciation schedule right where you left off on the
last year you took the depreciation?]]

Nope...if the property was still in rental use, you would continue to depreciate the property, and the depreciation schedule would continue onward. You don't get a "break" on the depreciation just because you were not otherwise required to file the return.

Depreciation works on the rules of "allowed or allowable", and must be taken if the property in question is used in a depreciable method.

[[ - Is your basis reduced only by the years you took depreciation or do you have
to include all the years where you did not take the depreciation because you
didn't have to file?]]

Your basis will be reduced by ALL of the years that the property was in service...regardless of if you were required to file or not.

I know that this is not the answer that you wanted to hear, but it's the best that I can give you. For additional information on depreciation, see IRS Publication 946 at the IRS web site.

TMF Taxes
Roy

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Author: TaxService Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16085 of 121219
Subject: Re: Depreciation Question Date: 6/7/1999 1:54 AM
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- You have a rental property on which you begin taking depreciation (15 year ACRS, if it matters).

- After 5 years because of your overall income levels you are no longer required to file a tax return (independent of whether the depreciation was taken).

- Now, after several years of no tax returns this year you have to file again.

Questions:
- Do you continue using the depreciation schedule right where you left off on the last year you took the depreciation?
- Is your basis reduced only by the years you took depreciation or do you have to include all the years where you did not take the depreciation because you didn't have to file?

***The rules read that depreciation "allowed or allowable" must be factored in. Without checking, I believe the property would be fully depreciated. The only thing that might have increased your basis would be improvements made during the period in which you did not have to file. Of course, those improvements would have to be depreciated, using MACRS, over a period of 27.5 years in the case of a residential rental.

"Jack"

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