That's exactly what happened to my parents! They never claimed depreciation on their rental for 12 years, then when they sold it, they got hit with depreciation recapture tax on depreciation they never benefited from. Huge tax bill they weren't expecting.

Form 8949 isn't the right approach here. That form is used when you're reporting the sale of a capital asset, not for catching up on missed depreciation. Form 3115 is specifically designed for changing an accounting method, which is exactly what you're doing when you start claiming depreciation that you previously failed to claim. The 3115 allows you to make this correction without amending prior returns. If you waited until sale to try to address unclaimed depreciation, it would be too late - the IRS would still reduce your basis by the depreciation you should have claimed, essentially taxing you on benefits you never received.

Do you know if this same process works in H&R Block's software? I'm having the same issue there and their support has been useless.

I haven't personally used H&R Block's software recently, but the general principle is the same. You need to make sure you've entered your non-deductible contribution information and completed the equivalent of Form 8606 before you enter the conversion information. The specific navigation and screens will be different, but the sequence is what matters. Most tax software struggles with backdoor Roth conversions if you don't follow the correct order of operations. Try looking specifically for the Form 8606 section in H&R Block's software and complete that first before handling the conversion.

This is such an important point! I got hit with an unexpected tax bill because of this last year. Had a small old IRA with about $12k in it that I forgot about, and it completely changed how my backdoor Roth was taxed.

Yes, you stop depreciating the property once you convert it back to personal use. The property is only depreciable during the period it's used as a rental/business asset. Keep good records of your depreciation deductions over the years because you'll need to recapture that depreciation if you ever sell the property. Even if you're living in it as your primary residence when you sell, the IRS will still want their depreciation recapture tax on the amount you've previously depreciated.

Thanks for the clear answer! I've been tracking the depreciation all along but wasn't sure if I needed to keep depreciating it or not. Good to know about the recapture too - that's something I hadn't considered.

No, property taxes and mortgage interest are generally not added to your basis - those are regular expenses. Closing costs that go into basis are things like title fees, attorney fees, recording fees, transfer taxes, and real estate commissions.

Wait, so are you saying I could sell some of my underwater crypto positions to harvest the losses, then immediately rebuy the same crypto, and it's not subject to the 30-day wash sale rule that applies to stocks? That would be helpful for offsetting some of the gains.

Yes, that's exactly right. Currently, cryptocurrency is treated as property by the IRS, not as a security, so the wash sale rules don't apply. You can sell crypto at a loss, claim the tax deduction, and then immediately repurchase the same crypto without waiting 30 days. Just be aware that this is a loophole that Congress has been talking about closing. There have been several proposed bills that would apply wash sale rules to crypto in the future, so this strategy may not be available forever. Always document these transactions carefully in case questions come up during an audit.

I switched to CoinTracker + H&R Block this year and it's working much better than TurboTax did for my crypto. You can export directly from CoinTracker to H&R Block and it handles all the specific identification stuff correctly.

I'm actually really into sports - are there any good tax topics related to sports that would work for a research paper?

Absolutely! Sports and taxation have several fascinating intersections that would make for an excellent paper. You could explore the "jock tax" where athletes pay taxes in each state they play games in - this raises interesting questions about income sourcing and multi-state taxation. Another great angle would be the tax implications of NIL (name, image, likeness) deals for college athletes - this is relatively new territory with evolving tax guidance. You could also look at how major sports franchises use tax incentives for stadium construction, or the tax treatment of sports gambling following recent legalization in many states including Illinois. These topics combine sports interest with substantive tax policy questions.

The SALT deduction cap topic sounds interesting. Did you find it had enough material for 20 pages? And did you focus more on the federal aspects or the Illinois impact?