Q&A Regarding Filing Late Elections for Dispositions

If we make an election/statement in 2013 and discover in 2015 that a retirement of an asset from 2008 should be made, is the loss taken in 2015 or would we file an amended 2013 return to claim the loss?

Rev. Proc. 2012-20 is the guidance that is supposed to be updated by the IRS soon. In fact, the late election for dispositions is one of the issues that is supposed to be addressed in the forthcoming guidance. So we should hear more about this in the coming weeks.

With that said, given the rules and my guess as to what the forthcoming rules will say, the disposition will probably need to be identified in 2014 at the latest or the taxpayer will have elected a method and need to get the IRS's consent to change it. A 3115 will probably not be available at that point. The taxpayer will probably have to submit a ruling request or live with the capitalization method.

To be complete, we would also like to note that not using the temp regs might be easier. The partial disposition election there can be made for 2012 or 2013 on an amended 2012 or 2013 return or by filing a 3115 for the first or second tax year succeeding the applicable tax year.

 

***The purpose of this post is for informational & discussion purposes only and is not intended to be used as tax advice. Answer provided by Kreig Mitchell, Tax Attorney.

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