Business & farm

You are on the right track.  File her personal return selecting the property was disposed of, converted to personal use, then you will answer the 'Special Handling' question which will take care of all the proper information on your mother's return. TurboTax will handle the correct depreciation on her return and of course entering only the expenses paid while she was alive in 2023. The steps below will take care of your mother's return for 2023.

You need to dispose of the property by telling TurboTax how and when it was disposed of.  Follow the instructions below.

1. Click on Wages & Expenses
2. Scroll to Rental properties and royalties, click Edit/Add or Start/Revisit
3. Do you want to review your rental?, click Yes
4. Under Rent and Royalty Summary, click Edit
5. Click Update to the right of Assets/Depreciation.
6. Once you reach this screen for each asset, you must select 'This item was sold, retired, stolen, destroyed, disposed of, converted to personal use....' 
7. Next enter the date you stopped using the asset for rental purposes - her date of death. 
8. And answer 'Yes' you always used this asset 100% of the time for business. (The percentage of use doesn't change until after conversion from rental to personal use.)
9. Select 'Yes' for Special Handling due to 'You converted the asset to 100% personal use'.

Next, you will use the stepped up basis for the estate (Form 1041) and the date placed in service will be the date of death.  The depreciation for the remainder of the year will be correct by using the 27.5 year recovery period.  Enter only the expenses paid for the rental property for the remainder of the year.

@randy5419

[Edited: 03/11/2024 | 8:20 AM PST]