Client was Sch C for many years. Died Jan 2014. Spouse took over business, filed for new EIN etc. Failure to step-up basis by 1/2 FMV on depreciable business assets discovered 2017. 2014 year of death is still an open year. I can’t determine if this is a “Change of Accounting Method” requiring a Form 3115 and a section 481(a) adjustment or if I need to just amend the returns before 2014 statute runs out in April.
I have beat my head in researching all of this and it’s not clear to me. I don’t see where this error was a “impermissible” method changing to a permissible one? My gut tells me I can’t amend and a 3115 is required but I can’t wrap my head around this. My biggest concern is if I file a 3115 and that’s not correct and it requires amended returns then my time may be out to amend in time before I know. I’m considering filing the amended, putting the client on extension for 2017, and if it gets kicked back then I’ll at least have time to file the 3115 by the extension due date???
I have beat my head in researching all of this and it’s not clear to me. I don’t see where this error was a “impermissible” method changing to a permissible one? My gut tells me I can’t amend and a 3115 is required but I can’t wrap my head around this. My biggest concern is if I file a 3115 and that’s not correct and it requires amended returns then my time may be out to amend in time before I know. I’m considering filing the amended, putting the client on extension for 2017, and if it gets kicked back then I’ll at least have time to file the 3115 by the extension due date???