Hi all,
My mother-in-law had just begun to rent her house out when she passed away in late 2023.
Because reasons, the house sat in the family trust for a year, earning rental income and depreciating, and the trust got an EIN and filed a 1041 return.
As of beginning of October 2024, we got the house re-titled, moving it out of the trust - my wife and her brother now each own half directly.
In my understanding:
- 27.5 year SL/MM depreciation began when my MIL passed away (rounds to the same day the house was rented), and the value that day becomes the basis
- Nothing about transferring the house from the trust to its beneficiaries resets the basis of the house, nor the depreciation schedule (???)
- The trust claimed the depreciation expense for 3 months of 2023 and 9 months of 2024 (including the weird half-month at the very beginning) on its 104, against the rental income for those months.
- My wife should claim half the depreciation for the last 3 months of 2024 (starting once it was retitled in her name) against her half of the rental income for those same 3 months.
But I can't figure how to get TurboTax Premiere to do what I want.
- In particular, on the Schedule E Worksheet | Asset Wks, it throws a fit if I say the Date Placed In Service is earlier than the Date Acquired.
- It also very much does not approve of me overriding the depreciation value on Schedule E Wks and just writing the correct value on line 18a. It'll refuse to e-file if I've configured it that way.
Do I have the underlying principles wrong?
If not, how do I get TurboTax to reflect what I'm describing?
