You have the option of continuing the depreciation (deferring depreciation recapture) on 1.6 with at least 150,000 of the improvements, and placing the remaining 1.6 as "in service" as of the exchange date, therefore starting the depreciation on that portion at that time (with no more than 50,000 improvement)
If you are electing out of Reg. § 1.168(i)-6(i)(1), you will recognize the 150,000 accumulated depreciation as Tax Year 2023 Ordinary Income, and place the property in service with the full 3.2 basis (200,000 improvement)
You would need to be creative to enter this scenario into the TurboTax program.
In order to claim the depreciation in 2023, report in TurboTax that it was sold for the same price as the unadjusted basis.
All the depreciation will be recaptured as ordinary income.
Enter the new property at full (3.4) basis no prior depreciation.
You would also need to attach a statement stating "Election made under Regs. Sec. 1.168(i)-6(i)," and a description of the "disposed" property.
Reg. § 1.168(i)-6(i)(1)
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
