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Quick tip - don't forget to separate out the land value! I made this mistake my first year with a rental property and had my depreciation rejected. You can only depreciate the building, not the land. Most tax assessor records break this out. Also, keep in mind that gifted property has different holding period rules for capital gains when you eventually sell. The holding period includes the time your dad owned it too!
I thought rental properties were depreciated over 27.5 years regardless of the actual building's age? My accountant took the purchase price minus the tax assessed land value and divided by 27.5. Is that wrong?
You're absolutely right about the 27.5 year depreciation period for residential rental property - that's correct! What Yuki was emphasizing is that you need to make sure you're only depreciating the building portion, not the land. So your accountant's method of taking the total basis minus the land value and then dividing by 27.5 is exactly the right approach. The key point is that land never depreciates (since it doesn't wear out), so it has to be separated from the depreciable building value. Most people use the same ratio that the tax assessor uses - if the assessor says the land is 20% of the total value and the building is 80%, you'd apply that same ratio to your cost basis.
This is a really complex situation, but you're asking the right questions! Based on what you've described, it sounds like you have a mixed gift/inheritance scenario which does complicate the basis calculation. One thing I'd suggest is checking if your dad filed Form 709 (gift tax return) when he added you to the deed in 2016. Even if no gift tax was owed (due to the annual exclusion or lifetime exemption), he may have filed one anyway. If he did, that form would show the fair market value of the property at the time of the gift, which would be incredibly helpful for your basis calculation. If you can't find a Form 709, using the 2016 tax assessment as a starting point isn't unreasonable, but as others mentioned, you might want to adjust it upward since assessments are typically below market value. You could research what similar properties in your neighborhood sold for in 2016 to get a sense of whether the assessment was in the right ballpark. Also, don't forget to account for any improvements your dad made to the property after his original purchase - those would increase his basis, which would then carry over to you for the gifted portion. The depreciation calculation can definitely be overwhelming, but taking it step by step and documenting your reasoning will serve you well if you're ever questioned about it later.
Great question about Form 709! If your dad didn't file one when he should have, that's actually his issue, not yours. The IRS statute of limitations for gift tax returns is generally 3 years, so if this happened in 2016, that window has likely closed. More importantly, his failure to file a gift tax return doesn't invalidate the gift or affect your ability to calculate basis - you just won't have that helpful documentation. As for adjusting the tax assessment, there's no standard percentage since it varies by location. However, you don't need to spend weeks on this! A quick approach is to look up 3-5 comparable sales from 2016 in your neighborhood (you can often find this on Zillow, Realtor.com, or your county's property records website). Calculate the average ratio between those sale prices and their tax assessments, then apply that ratio to your property's 2016 assessment. For example, if comparable homes sold for an average of 15% more than their assessments, you could reasonably use your assessment plus 15% as your fair market value. Document this methodology and keep the comparable sales data - that's usually sufficient support for the IRS.
Great question about Form 709! If your dad didn't file one when he should have, that's actually his issue, not yours. The IRS statute of limitations for gift tax is generally 3 years from when the return was due, so for a 2016 gift, that window has likely closed. More importantly for your situation, the lack of a filed Form 709 doesn't invalidate your basis calculation - it just means you have less documentation to work with. Regarding adjusting the tax assessment, there's no official standard percentage, but in my experience, assessments are typically 70-90% of market value depending on your area. A quick way to check is to look at a few recent sales in your neighborhood and compare them to their current tax assessments - this will give you a rough ratio. For example, if recent sales are averaging 25% higher than assessments, you could reasonably apply that same adjustment to your 2016 assessment. The key is documenting whatever method you choose. Keep records showing how you arrived at your basis (assessment records, any comparable sales you found, the calculation method you used). This documentation is more important than having the "perfect" number, especially given the limited information available for older transactions.
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Has anybody had problems with the refund advances causing delays with their actual refund? My brother used HR Block's advance last year and when his real refund came, there was some mix-up with the repayment and he ended up waiting an extra month to get the rest of his money.
I used TurboTax's advance program last year and had zero issues with the remainder of my refund. The advance portion was repaid automatically when my refund arrived, and the rest hit my bank account on the same day. I think most problems happen when people change banking info between filing and when the refund arrives.
I've used both TurboTax and HR Block refund advances over the past few years, and honestly, TurboTax has been more reliable in my experience. The direct deposit to your existing bank account is a huge convenience factor - no need to mess around with prepaid cards or setting up new accounts. One thing I'd suggest is making sure your tax return is as accurate as possible before applying for the advance. I learned the hard way that any discrepancies between your projected refund and actual refund can cause headaches. Last year I overestimated my refund by about $800, and while I still got approved for the advance, the process of getting the remainder took a bit longer. With your expected $5,400 refund, you should easily qualify for the maximum advance amount from either service. Just read the fine print carefully - some advances have limits on how much you can get upfront (usually around 70-80% of your projected refund). Also, if you run into any issues with the IRS during processing, having that advance can actually be helpful since you'll have some money upfront while working through any delays with your full refund.
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Per Internal Revenue Manual section 21.4.1, which covers refund inquiry procedures, the status change you've described indicates your return has cleared the initial verification requirements under IRC §6428. This section specifically notes that verification notices are removed only after positive identity confirmation. May I ask if you received any letters from the IRS during this two-week period? Sometimes they send notice CP01H even while updating the online status.
This is really encouraging to hear! I had a very similar experience last year when I first started reporting cryptocurrency gains. The WMR tool showed that same "still being processed" message with ID verification for about 10 days, then suddenly switched to just "being processed" without the verification notice. My refund hit my account exactly 6 days after that status change. The investment income definitely seems to trigger additional scrutiny, but once you're past that verification hurdle, the process typically moves pretty smoothly. Keep checking daily - you should see it move to "approved" status soon!
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make sure to check if they're using a legitimate PTIN (preparer tax identification number)! many of these sketchy tax preparers dont even have proper credentials. you can verify if they have a valid PTIN on the IRS website. if they dont, thats another violation to add to your report!!
Great point! Last year I discovered my "tax professional" had an expired PTIN and was operating illegally. That single piece of information made my case much stronger with authorities. You can verify this at irs.gov/tax-professionals/ptin-requirements-for-tax-return-preparers
This is exactly why I always tell people to be extremely cautious with tax preparers who promise unusually large refunds. As a general rule, if someone is guaranteeing you'll get way more money back than you've ever received before, that's a huge red flag. Beyond filing police reports in both jurisdictions (which is solid advice), make sure you also report this to the IRS Office of Professional Responsibility if the preparer claimed to have any professional credentials. They take unauthorized filings very seriously, especially when preparers are intercepting client refunds. Also document EVERYTHING - save all text messages, emails, voicemails, and any promotional materials they used to advertise their services. The more evidence you have of their fraudulent practices, the stronger your case will be. This kind of documentation can help other victims too if this becomes a larger investigation. You might want to check if there are other victims by searching online reviews or social media for complaints about this company. Sometimes these operations target multiple people with the same scheme.
Connor Murphy
Has anybody ever had issues with creditors after revoking a dissolution? We filed Form 966 for our small consulting corp last year and sent notices to creditors about the pending dissolution. Now we're considering continuing operations due to new opportunities, but I'm worried that we might have created expectations with our creditors that could create legal issues.
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KhalilStar
•This is actually something to be careful about. When you notify creditors of dissolution, they have certain legal rights that arise - including accelerated timelines for making claims against the corporation. If you've sent formal dissolution notices to creditors, you should definitely send follow-up notices about the change in plans. In some cases, creditors might have taken actions based on your dissolution notice (like accelerating payment terms or initiating collection procedures). I'd recommend consulting with a business attorney to make sure you properly communicate the abandonment of the dissolution plans to all relevant parties, not just the IRS and state authorities.
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Connor Murphy
•Thanks for the heads up! We did send formal notices to a few larger creditors, so I'll definitely need to follow up with them. I'll reach out to our business attorney to draft appropriate communications. Really appreciate the advice - that could have created some serious problems.
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Luca Esposito
This is such a helpful thread! I'm dealing with a similar situation where my client filed Form 966 but now wants to continue operations. One thing I wanted to add from my experience - make sure to document the timing of when the abandonment decision was made versus when any liquidating distributions might have already occurred. If partial distributions were made after the Form 966 filing but before the abandonment, those might need special treatment. The IRS could view those as liquidating distributions even if the overall plan is later abandoned. I learned this the hard way when a client had already distributed some assets to shareholders before changing their mind. Also, keep detailed records of the corporate decision-making process. The IRS may want to see evidence that the abandonment was a legitimate business decision and not just tax avoidance. Board minutes, shareholder resolutions, and documentation of the changed business circumstances can all be important if you're ever questioned about the abandonment. The guidance about sending a statement to the IRS service center is spot on - just make sure it's comprehensive and references all the relevant dates and corporate actions.
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