My accountant forgot to divide in half the purchase price and land price of the rental property on my 2003 return. Can I fix this by adjusting in my 2006 return? Also, the depreciation amounts are now wrong for all years going forward, do I need to correct that as well? We are planning to sell the house real soon, so if anyone could please advise. Purchase price was 277500 - 25000 for the land. 252500 is what it says on my 2003 return and my brothers return, when it should say half that, as we are equal partners. Someone please help if they know....Do I need to amend some or all returns or can I fix it on the 2006 return.....Thanks in advance...Vincent
2007-02-11 00:49:09 · 7 answers · asked by Vincent G 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
Yes, you'd need to amend all the years that showed wrong amounts. If you don't, you'll run into problems figuring gain or loss when you sell it. Adjusting your 2006 return would not fix it all, although if you haven't filed yet, be sure the right depreciation amount shows for 2006, so it's one less return to amend.
If you are still using the same accountant and if it was his mistake (if you told him it was half your brother's, and he just forgot to divide) then he should probably do the amended returns without charging you.
2007-02-11 05:24:05 · answer #1 · answered by Judy 7 · 1⤊ 0⤋
Technically, you do need to go back and amend all returns. IRS can go back more than three years if they suspect fraud, inadvertently, this could be called that. You have paid less taxes than you should due to the error, so there could also be interest and penalties involved. However, I have seen people in similar situations, file their current return by adjusting their numbers to make up for the errors......have not seen any of them penalized or audited. Worst case, you do the latter and get audited...at least you have paid all that is due, and that would be in your favor.
It's your call...the question you have to ask yourself is: "Am I feeling lucky?".
2007-02-11 09:00:09 · answer #2 · answered by domers13 2 · 0⤊ 0⤋
Your accountant messed it up, he should sort it out.
You'll both need to file amended returns for all affected tax years. There will almost certainly be taxes and penalties due.
In the future, pay closer attention to your tax returns! YOU are responsible for filing a correct return and need to double-check the accountant's work before you sign.
2007-02-11 09:01:34 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 1⤋
Don't monkey around with the mighty IRS - you will be sorry, better be sure, and go to a "tax specialist" and let them figure the laws out and be sure the IRS won't come a looking for you. Then you will not have this question hanging over your head.
2007-02-11 08:57:01 · answer #4 · answered by taraloti 2 · 0⤊ 0⤋
Bostonian has once again provided an excellent answer. In addition to his answer -
You accountant is liable for any penalties (not interest) if the mistake was his/her fault. Any reputable CPA will gladly foot the penalties. They may not immeadiately offer to but if you ask they will.
2007-02-11 09:56:00 · answer #5 · answered by smh60437 3 · 0⤊ 0⤋
Make your accountant set up a 1040X which is the amendment form. and see if its worth filing, he should do it as he made the error. You could also ask this question at www.irs.gov.
2007-02-11 08:58:38 · answer #6 · answered by Tapestry6 7 · 0⤊ 0⤋
i wouldnt bother it isnt much money
2007-02-11 08:51:07 · answer #7 · answered by john t 4 · 0⤊ 1⤋