If You Owned Property Prior to 2014, You Are Required by Law to File Form 3115 This Year

[Brandon Hall]

Hey BP Investors,

I wrote a blog post about the new IRS final regulations enacted January 1, 2014 and I followed it up with another blog post on a special requirement that some landlords may not be aware of - being that they need to file IRS Form 3115 Application for Change in Accounting Method with their timely filed 2014 tax returns. The blog post can be found here. 

I am not intending to self-promote via this forum post, I simply want to make investors aware of something that is absolutely necessary this year. IRS Form 3115 is very complicated, and if you don't have an REI savvy CPA or accountant, you may find yourself in hot water come April 15.

IRS Form 3115 takes an estimated 82 hours to learn the law, prepare and file with the IRS. Learning the law takes about 20 hours, so the preparation really takes approximately 62 hours. We can deduce two things from the amount of prep time: 1) the form is extremely complicated and 2) assuming a bill rate of $100/hr, it will be costly. 

If your accountant has failed to inform you about the new IRS regs, their implications, and Form 3115, I strongly recommend you evaluate your relationship with that accountant and their professional competency. It may be time to find one that is more REI friendly and one whose client base is primarily RE investors.

DO: Get VERY organized, educate yourself, ask intelligent questions, and provide as much support to your accountant as possible. 

DO NOT: Fail to get organized, wait until the last minute, fail to broach this subject with your tax professional. 

If you have questions, please post on this forum and I and the other accountants on BP will do our best to answer. If you'd rather ask a question in confidence, feel free to connect with me and shoot me a pm.