What it is
An automatic method change
Form 3115 is filed with the current-year return. The §481(a) adjustment carries the missed depreciation into that year.
Look-Back Studies & Form 3115
If you have owned a commercial property for years without a study, the deduction is not lost. A look-back study claims the depreciation you missed in the current year, without amending a single prior return.
Missed years land in one.
A look-back study analyzes a property placed in service in a prior year and calculates the difference between the depreciation you claimed and the depreciation you were entitled to. That cumulative difference is taken as a §481(a) adjustment through Form 3115, an automatic change in accounting method, and it lands on the current year's return.
The practical effect surprises most owners: a building held for several years can produce a larger single-year deduction than a study on a building bought last month, because every missed year of acceleration arrives at once.
And because it is a method change rather than an error correction, there are no amended returns to file.
Depreciation claimed, by yearShape of a look-back, not a projection
The catch-up is the cumulative difference between depreciation taken and depreciation allowable, deducted in the year of change without amending any prior return.
Who does what on the filing
The accounting method change is filed by your CPA. Everything that goes into it is prepared by us, and we work directly with your CPA throughout.
What we prepare
Everything but the signature
The narrative, the form, the calculations and the supporting schedules, prepared by us.
What your CPA does
Files and signs it
The client's CPA files and signs Form 3115 and adds the taxpayer information.
We have deep experience delivering Form 3115 for large look-back study portfolios.
What has to be true
Most commercial owners who have held a building without a study qualify. The proposal confirms it before anything is engaged.
You still own the property
A look-back will not help on a building you have sold. If a sale is contemplated, talk to us and your CPA first. Exit planning
It was placed in service in a prior year
The study is performed as of the original placed-in-service date and condition, and applies the bonus depreciation rules that governed the property.
No engineered study exists yet
If one does, the answer may be a renovation study, a disposition or a schedule review rather than a look-back. The proposal will say which.
Look-back questions
Still have a question? Ask Engineering.
How far back can we go?
Generally to the property's placed-in-service date, as long as you still own it. A §481(a) adjustment is not limited the way amending a return is, which is why the accounting method change route exists.
Do we have to amend prior returns?
No. The catch-up is taken in the current year through Form 3115, as a change in accounting method.
Who files Form 3115?
Your CPA files and signs it and adds the taxpayer information. We prepare everything else: the narrative, the form, the calculations and the supporting schedules, and we work directly with your CPA throughout.
Can you handle a portfolio of look-backs?
Yes. We have deep experience delivering Form 3115 packages for large look-back study portfolios.
What if we sold the property?
A look-back study will not help on a property you no longer own. If a sale is contemplated, talk to us and your CPA before it closes. Timing matters, and so does depreciation recapture.
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