You Make the Call - Feb. 5, 2026

Question: Lena realized that her new client failed to depreciate her fixed assets in the first year of her business. Now in year two, Lena recognizes this as an impermissible method of accounting and wonders if she needs to file Form 3115, Application for Change in Accounting Method, to correct the situation. Must Form 3115 be filed to correct the missed depreciation or is there another remedy?

Answer: No. Form 3115 is not required. Because the impermissible method was used on only one filed return, the client is not considered to have adopted an accounting method. The missed depreciation can be corrected by amending the first-year return.

A change in accounting method generally requires Form 3115 only after a method has been adopted. Under the two-year rule, a method is considered adopted when it is used consistently on two filed tax returns, even if the method is impermissible (Reg. §1.446-1(e)(2)(ii)(a); Rev. Proc. 2015-13).

Here, the client failed to claim depreciation on only one return. Because the method was not yet adopted, the omission is treated as an error – not a method change – and the correction can be made by filing an amended return to claim the allowable depreciation.