@DianeW777
Hello Diane,
Thank you for all of those additional details!
From what I understand from your comments, you are suggesting to apply a "two schedule" depreciation method for each of the replacement properties. In this setup, each property will have 2 assets, as you described. The first asset can be replacement property A as it is tied to the exchange basis from the relinquished property, with its portion of the $90,000. The 2nd asset would be replacement property A as it is tied to its portion of the additional basis ($118,000) created by the added cost/FMV between the relinquished property and the 3 replacement properties. Did I understand that correctly?
Questions:
- Is the downside to leaving the relinquished property in tact, and continue as is with the original acquired date and remaining basis, the fact that whenever you eventually sell one of your replacement properties, you will have to break out the relinquished property's basis at that point? Is there any other drawback to this suggestion?
- Instead of using the "two schedule" approach, can I apply the "single schedule" depreciation method that first summarizes the original basis ($90,000) with the additional basis ($118,000), and then proportions out the total amount ($208,000) across the 3 replacement properties? Then I would only have 1 asset per replacement property? Correct? Or does the fact that one of the properties is Land only (Oil and Gas), that prevents me from using the "single schedule" depreciation method?
- If the "single schedule" method is still feasible, is the downside to using it the fact that the original basis ($90,000) would be spread across each new replacement property's depreciation schedule - which would be 39 years in the case of the Ford Distribution Center and 27 1/2 years in the case of the Senior Living Center? Whereas if I created individual assets for the original basis and the additional basis for each replacement property, then the $90,000 would have a much shorter depreciation schedule - 8 years in my case (to get to 27 1/2 years) instead of 39 or 27 1/2 years?
- In respect to setting up the asset for the Oil and Gas replacement property, I'd appreciate further details on your answer #8. What does this mean in respect to the original basis ($90,000) and the additional basis ($118,000) - "You would have a portion of the land from the original building and there would be no actual asset listed for the property" ?
- If the Oil and Gas property cannot leverage the additional basis ($118,000), can it be proportioned between the 2 replacement properties versus 3 replacement properties.
Again Diane, thank you so much for your must needed assistance!
Thanks,
Jamie
