Here's how to make it correct for your situation. Follow the instructions next for TurboTax to treat it appropriately on your tax return.
When you are in the rental property you must indicate you converted it to personal use and enter the date. This will eliminate depreciation on the rental property as of the date of conversion which will be the date you gifted it to your son, This will also eliminate the sale on Form 4797, which did not occur.
Since you gifted this to your son, the cost basis in your hands will be the same in his hands as well (cost less depreciation for both the building and any other assets that belong to it). As indicated by @Cynthiad66, a gift tax return is required to be prepared if the gift is greater than $16,000. This will be very important for your son.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
