Changing from a capital lease to an operating lease

[Bart]

Client purchased equipment in 2019 and 2020. All equipment was set up as capital leases and bonus depreciation and section 179 were taken on those assets. In 2021 we find out that these are actually operating leases. Can we amend 2019 and 2020 or should we file a change in accounting method?

[Lee B]

It depends, when do you want deal with the reduced deductions and the potential increase in taxable income, 2019 and 2020 by amending.

Or if you choose the 3115 you get a 4 year forward spread.