With Turbotax business how do you enter carryover basis for rental real property transferred to a multi-member LLC

Forum|Forum|6 years ago
January 26, 2020
2 replies
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I am trying to enter a rental property contributed by the LLC members in equal proportion that has been depreciated for 20 years. In TurboTax business, I have to enter an acquisition date for the property, but if I use that date and the adjusted carryover basis as of that date, the annual depreciation amount is incorrect because TT thinks its a new asset for the full 39 years rather than the remaining life of the transferred asset which should be 19 years.

Is it possible to enter the original date of acquisition and original acquisition amount, so the depreciation amount is correct and depreciated for the correct remaining life? How is that done?

TurboTax Business Windows

Anonymous_

Level 15

You can enter Forms Mode and input your dates and figures directly on the Federal Asset Entry Worksheet (see screenshot).

Note, however, that you will be entering the prior accumulated depreciation and the current deduction will change accordingly (i.e., you need to enter an accurate figure).

kwanfam1Author

Level 3

Tagteam you are the bomb. Thanks

Carl

Level 11

I am assuming you own the property *AND* that you are a member of this multi-member LLC that was established in 2019.

The start date of the multi-member LLC ***MUST*** be the same date that the rental property was originally placed in service, or a date before that date. It ***MUST***, or you'll be audited. Doesn't matter if it was years ago either.

The fact is, the "rental business" started years ago when that rental was first placed "in service". Then "the business" became a multi-member LLC. So "the business" started long before it became a multi-member LLC, even if years before. Therefore the start date of "the business" on the form 1065 ***MUST*** be the date that rental property was placed in service, or before that date.

The only legal way around this is if you actually sell via a formal mortgage loan, the rental property to the LLC. But with you being a member of that LLC, the tax reporting on the sale will be an absolute nightmare.

If you sell it to the LLC, then you as the seller are required to recapture all prior depreciation on the property and pay taxes on it in the year of sale. Then for the LLC it would be newly acquired property and depreciation would start all over from year one.

kwanfam1Author

Level 3

Yes, the property was inherited by my two other siblings and myself. The rental property was placed in service decades ago, and contributed by the siblings to the LLC in March 2019. For the period in 2019 prior to the March transfer date, it was owned by each sibling as TIC, so for TT home and business I converted the property to personal use as of the calendar day before the March transfer date.

In Tubotax business, I did not see where you enter the start date for the property vs. the LLC.

kwanfam1Author

Level 3

I used the same date for both the start of business for the multi-member LLC and the date the contributed property was placed into service. It was the date the deed was recorded in the name of the LLC. The LLC has no other asset of any significance.