Lanny,

Interesting question.

1. I think it would be right and fair to start claiming
depreciation as of 2005.

2. I believe that the basis for depreciation and the
depreciation method would be similar to the rules for
property converted from personal use to business or
income-producing use. That is,

a. The basis would be the lessor of (1) the original cost or
other basis plus any capital improvements less any
deductions for casualty losses or (2) the fair market value
of the property at the time of its conversion to business
use.

b. The method would be (1) MACRS if the property was
converted from personal to business use after 1986 or (2)
whatever depreciation method applied when the property was
first placed in service for personal use.

I would assume that converting or first placing in service
would be analogous to when the taxpayer bought the rental
property.

Rudy
www.LizcanoTaxServicesLLC.com

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I'm curious if anybody has had a similar situation: My
clients have a situation I have never had to deal with
before. The husband is a US citizen by birth; his wife, of
several years, became a naturalized citizen in 2005. They
are both residents of Thailand.

Because the wife was not a green card holder, she has never
filed a US return before. The question I have involves a
rental property she owns in her native country. Does she
have to calculate depreciation for the years when she was
not required to file a US return? Or, does she start
claiming depreciation for 2005? If the event she ultimately
sells her property, it doesn't seem right that she should
have to recapture depreciation for her non-resident years.

Anybody have any thoughts? Thanks

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >