We have a few servers that we purchased about 3 years ago and never recorded any depreciation on those assets. We are organized as S Corporation in Texas and have 4 members. We're wondering what we should do to correct this problem?

ANSWER

Expert Neda Tafreshi's Answer:

Normally you can ot go back and take depreciation if you forgot to do that. The good news is that you can take higher depreciation deductions for remaining life of the asset. For example if the asset has a 10 year depreciation life and the original purchase amount was $10,000, you were entitled to a $1,000 depreciation deduction per year. If you missed 3 years of it, you can spread the future depreciation over the 7 years, the remaining life of the asset. Doing this will give you a depreciation deduction of $1,429 a year for the next 7 years until the asset is fully depreciated.

Neda Tafreshi, CPA

New York

8 yrs experience

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