On June 17, the US Internal Revenue Service provided guidance (Revenue Procedure 2021-28) explaining how a taxpayer changes its method of computing depreciation for residential rental property held by an “electing real property trade or business” to comply with a legislative change enacted last year.
Legislation enacted in December 2020 retroactively provided a recovery period of 30 years under the alternative depreciation system in Internal Revenue Code Section 168(g) for such property placed in service before January 1, 2018.
To help taxpayers comply with the retroactive effective date, the IRS guidance permits taxpayers to file amended federal tax returns or a Form 3115 to apply to change their method of computing depreciation for affected property.
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