I have questions for how to file returns for my Mother who died in 2023, and who owned a rental home. I need to file a 1040 for the part of the year she was alive, and a 1041 form for her estate for the part of the year she was not alive. The rental home had both income and expense in both parts of the year. There are many separate assets contributing to the property’s tax depreciation. The home will sell this coming week and I will report that on the estate’s 2024 1041 return (which will be the final return for the estate).
My first thought was to enter the rental property income and expenses into 2023 1040 Turbotax for the entire year to get full-year figures for Schedule E and the other forms, but then to divide the full-year figures into two parts based on the portion of the year my Mom was alive. If I did that, I would have to manually enter numbers into both the 1040 and 1041 returns. Would that be proper, and would Turbotax allow me to enter numbers into the forms manually?
Another approach that came to mind was to fill in the 1041 form as if the Estate acquired the property at a cost equal to its stepped-up basis, and then have the Estate depreciate the property for the part of 2023 that it owned the property (all of it as a 27.5 year asset).
How should this be done?
