Form 3115 for Cost Segregation and Missed Depreciation
An existing property needs more than a new depreciation report. Establish the correct correction procedure, reconcile the asset history and assign responsibility for the filing.
How to prepare Form 3115 for a cost-segregation change
Use the current IRS instructions and subsequent developments together with the applicable method-change procedure. The form is not completed from the study total alone.
- Identify the applicant and year of change. Match ownership and the return being filed.
- Confirm the consent procedure. Determine eligibility and the applicable designated change number before choosing automatic treatment.
- Complete the required parts. The instructions distinguish automatic and nonautomatic requests; depreciation changes also require Schedule E and property information.
- Attach the reconciliation. Explain present and proposed methods and support the Section 481(a) calculation.
- Coordinate the return. Reconcile the application with the asset schedule and relevant owner-level limitations.
- Verify signatures and submission. Follow the applicable return-attachment and duplicate-copy requirements; retain filing evidence.
A blank form or a study spreadsheet is not a completed filing package. Ask the preparer to resolve eligibility, exceptions and current procedures for the specific year.
When a cost segregation lookback needs a filing review
A lookback study revisits depreciation for an existing property. Form 3115 requests a change in accounting method or the treatment of an item, but it is not the correct procedure for every error. Begin with the filed returns, acquisition and service dates, ownership, elections and depreciation actually claimed. See IRS Form 3115 instructions.
AE Tax Advisors can discuss the study, reconciliation and filing work needed for the particular property. The proposal should identify who determines the correction procedure and who prepares the return and any method-change application.
Form 3115, amendment or current schedule?
| What the file shows | Review before choosing a procedure |
|---|---|
| A treatment carried through prior returns | Whether an accounting method was adopted and a change procedure applies. |
| A first-year error or isolated mistake | Whether an amendment or another correction is appropriate. |
| Property sold or ownership changed | Whether eligibility and disposition facts affect the available procedure. |
| Report completed after a filing deadline | Which year and filing route remain available; do not assume a late report cures a missed requirement. |
Use the amended-return versus Form 3115 guide for the comparison and the after-deadline guide for late-report questions.
Reconstruct the depreciation history
The review file should reconcile the purchase documents, supported land allocation, building basis, separately purchased assets, improvements and every prior depreciation schedule. Resolve duplicates and missing records before applying a new classification.
- Original acquisition and placed-in-service dates.
- Ownership entity and relevant changes in ownership.
- Depreciation schedules and filed returns for prior years.
- Improvement invoices, earlier studies and asset dispositions.
- Any elections or prior correction work affecting the assets.
See the study document checklist and report-to-basis reconciliation.
Understand the Section 481(a) reconciliation
Where the method-change procedure applies, the workpaper compares the relevant prior treatment with the proposed treatment to prevent omission or duplication. The calculation and timing depend on the change and applicable procedure. It is not simply a percentage of the purchase price.
The preparer should use the rules applicable to the assets and tax years involved. Ordering a study today does not replace historical depreciation rules with today’s bonus percentage. IRS Publication 946 provides depreciation guidance.
Agree on the preparation and filing deliverables
Ask the preparer to identify the governing procedure, eligibility conditions, applicable change number, required form sections, statements and adjustment workpaper. Confirm the taxpayer, year of change, return deadline and any duplicate-copy requirement using current IRS guidance.
A completed study is not evidence that the application was prepared or filed. Request a final signed packet, the return attachment and records of the required submissions. See current Form 3115 instructions and updates.
Study pricing and implementation scope
Published standard cost segregation pricing is $1 per square foot, with a $2,000 minimum per study. Complex work may be quoted separately. Advisory, Form 3115 preparation and tax returns require their own confirmed scope. Compare study pricing and deliverables.
Confirm separately whether the engagement includes prior-schedule reconstruction, method-change analysis, Form 3115 preparation, state adjustments and tax-return filing. A catch-up calculation in the study scope does not automatically include every implementation task.
If your existing CPA files the return, establish the preparer handoff before ordering the study. Discuss suspended losses and future disposition consequences as part of the owner-level review.
Bring a property summary to the first call
Summarize when you acquired and first used the property, how it is owned, which returns have been filed, whether a study exists and whether a sale is planned. Identify the preparer who maintains the depreciation schedule. The next step is to define the records and work required, not to promise a refund before reviewing the file.
Frequently Asked Questions
Can Form 3115 recover missed depreciation?
It may be the appropriate method-change procedure for the facts. The preparer must establish eligibility, calculate the adjustment and evaluate deduction usability.
Does a new study always require Form 3115?
No. The correction route depends on the prior treatment, returns, assets and applicable procedures.
Is the catch-up amount an immediate refund?
No. An adjustment or deduction must be evaluated with the owner’s return and applicable limits.
Is preparation included in the study fee?
Do not assume it is. Confirm the distinction between a catch-up calculation, Form 3115 preparation and return filing in the written scope.
What if I am selling the property?
Disclose the sale timing before the review. Eligibility, correction procedures and disposition consequences need coordinated analysis.
Related Reading
Sources and content updates
By AE Tax Advisors Team. Content updated November 8, 2026. Read our editorial policy.
General information; planning and filing decisions depend on your facts and the applicable tax-year rules. Examples are illustrative, not guaranteed outcomes.
Evaluate a study for your property
Ready to move from research to a property-specific review? Compare AE's study deliverables, published fee and implementation responsibilities before ordering.
Talk Through Your Situation
Discuss your priorities, upcoming decisions and whether a study or advisory engagement fits. Detailed analysis, implementation or filing work follows an agreed written scope.
My study is finished, but my CPA will not prepare Form 3115
First ask whether the concern is missing records, eligibility, the study's classifications, available capacity or work outside the CPA's engagement. Those are different problems. Hiring another preparer does not resolve an unsupported basis schedule or make an ineligible method change qualify.
- Confirm the actual filing need. Have a qualified preparer assess the prior treatment and applicable procedure before ordering a form by number.
- Complete a reconciled packet. Supply the study, original acquisition and service dates, prior returns, depreciation schedules, improvement and disposition records, ownership changes and relevant elections through an approved secure channel.
- Agree who owns the return. If a specialist prepares the application while your CPA files the return, confirm both accept the assignment and timetable. The adjustment must reconcile to the depreciation schedule and the return.
- Define signatures and submissions. Identify the applicant, authorized signer, application preparer, return filer and person responsible for any duplicate copy. Use the current instructions for the actual procedure and year; do not assume an emailed PDF is a filed application.
- Keep completion evidence. Request the final packet, adjustment workpaper, return attachment and required submission records. Resolve any unresolved eligibility or documentation issue before signing.
Ask whether the proposed fee excludes reconstruction of missing schedules, state adjustments, a new study, nonautomatic-consent work, annual returns or later examination support. A specialist's involvement is not a guarantee of acceptance or a currently usable deduction. Book a Cost Seg Discovery Call.
Sources and update notes
Source references and the changes described in this guide were checked November 8, 2026. Published by AE Tax Advisors; see our editorial policy. Examples are illustrative and require review of your records before filing.