ColeenD3
Expert Alumni

Deductions & credits

It doesn't matter if you take depreciation or not, it still has to be recaptured.

 

Basis adjustment for depreciation allowed or allowable. You must reduce the basis of property by the depreciation allowed or allowable, whichever is greater. Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). Pub 946

 

 

One solution is to elect an accounting method change and file a Form 3115 in the current year and take the  prior depreciation as a section 481(a) adjustment. [land  value is separated, land is not depreciated]

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

May be these will help

Form 3115, Application for Change in Accounting Method

Form 3115

Instructions for Form 3115 (03/2012) 

Instruction for 3115

Form 3115,

Form 3115 pdf