This year I did a 1031 exchange. I went round and round and round with it trying to get it to defer the gain. One thing that I have not gotten it to do is use an asset in the new property to track the original depreciation schedule of the relinquished property. I was on the phone with TurboTax support for hours. It seems all they could do was to include the old property basis in the basis for the replacement property so that the new property has only ONE asset. This forces you to amortize any remaining basis in the old property over the much longer time frame (depending upon your situation) associated with the new asset.
It is simpler to do that way. But I am disappointed that with Turbo Tax Support, they either did not understand - or care to implement a method to implement a second asset in the year of a 1031 exchange. The result is that it won't defer the gain - and simply treat the gain as income in the year of the 1031 exchange. Otherwise, I have had multiple assets associated with other properties for many years without a problem. I fail to understand why it is a problem now in the year of a 1031 exchange. It is not a change in tax law.
