The property was inherited in 2018. The basis is likely $485,000. See IRS Publication 551 page 10.
Inherited Property
The basis of property inherited from a decedent is generally one of the following:
The FMV of the property at the date of the individual's death......
In 2020 the property was converted to rental property. The asset was depreciated and rental income was reported on Schedule E.
See also IRS Publication 551 page 10 Property Changed to Business or Rental Use.
You will report the sale of the rental property by selecting The item was sold, retired, stolen, destroyed..at the screen Tell Us More About This Rental Asset. The gain or loss will be reported on Part I and Part III of IRS Form 4797 Sale of Business Property. Depreciation previously taken will be recaptured.
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