Looking for a CPA referral: STR Cost Seg + 481(a) look-back

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Looking for a CPA referral: STR Cost Seg + 481(a) look-back

Jason Korpak
Member since 2022 · 2 posts · 2 votes

Hi all - looking for a referral to a CPA who specializes in short-term rental tax strategy, specifically cost seg look-back studies and Form 3115 Filings.

Our situation:

-Cabin purchased in 2023, placed in service as an Airbnb in 24, purchase price $310K

-Owned via a 50/50 husband/wife LLC taxed as a partnership

-High W-2 income household, planning to meet the material participation + 7 day avg. stay tests in 2026.

-Want to do a cost seg study now then file Form 3115 with our 26 return (in 27) to catch up depreciation via 481(a) adjustment.

-Current CPA didnt flag this to us so we're looking to switch

Specifically hoping to find someone who:

-Has actually filed the look back adj. for STR clients (not just year one cost seg)

-Is comfortable with partnership returns

-Can advise on other tax strategies

If you've worked with someone who's great at this please let me know! Happy to DM - Thanks

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    1w

    Good that you're asking for a cpa first. I'd first confirm material participation and that you meet the other requirements of the STR strategy with a cpa. Then, you will need to do a cost seg with a 3115, which usually the cost seg firm can handle.

    happy to help and see if we're a good fit!

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  • Jason Korpak
    OP
    Member since 2022 · 2 posts · 2 votes
    1w

    Thanks, Aaron. Yes, we'll meet the participation reqs. I'll reach out to chat through.

    1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    1w

    Jason, this is exactly the kind of situation where I'd want the cost seg, Form 3115, partnership return, and 2026 STR participation strategy coordinated together, not handled as separate items.

    Because the cabin is owned by a 50/50 husband-wife LLC taxed as a partnership, the accounting method change generally needs to be handled at the partnership level. The partnership would file Form 3115 and reflect the Section 481(a) adjustment on the Form 1065, with the tax impact ultimately flowing through to the partners on their K-1s. IRS instructions specifically contemplate Section 481(a) adjustments at the partnership level.

    Your basic look-back concept is also valid. When a taxpayer changes from an impermissible depreciation method to the proper method, Form 3115 can produce a negative Section 481(a) adjustment for depreciation that should have been taken in prior years. That negative adjustment is generally taken in the year of change rather than reopening the prior returns.

    The part I'd review very carefully is how the 2026 STR activity is classified. Under the passive-activity regulations, a negative Section 481(a) adjustment is treated as a deduction from the activity, and whether that deduction is passive depends on whether the activity is passive in the year of change. So your 2026 average-stay and material-participation facts matter a lot here.

    And if you’re using the 7-day-or-less average-stay exception, remember that getting outside the normal “rental activity” definition is only step one. You still need to materially participate for the activity to be nonpassive.

    This is absolutely something I’d have modeled before filing the 2026 return, especially because you’re high W-2 earners and the timing of the 481(a) catch-up could be meaningful.

    Feel free to DM me, I'd be happy to send over a few STR and cost-seg resources that may help.

    [email protected]941-914-7779
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  • Fulton Abraham Sanchez
    CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes
    6d

    @Jason Korpak

    I’d make sure the new CPA reviews the prior depreciation, placed-in-service date, material participation documentation, and the §481(a) adjustment together—not as separate issues. Getting the mechanics right is just as important as identifying the deduction.

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  • Fulton Abraham Sanchez
    CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes
    6d

    @Jason Korpak , hi. This is exactly the type of STR situation where the cost seg study and Form 3115 need to be coordinated carefully with the partnership return and your overall tax strategy.

    I’d make sure the new CPA reviews the prior depreciation, placed-in-service date, material participation documentation, and the §481(a) adjustment together—not as separate issues. Getting the mechanics right is just as important as identifying the deduction.

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