Partial Asset Disposition is covered well here: https://www.thebalancemoney.com/partial-dispositions-3192873. Roof is the example they use. From the article:
What Are the Benefits?
You've disposed of the old roof—it no longer exists—but since you aren't selling it, there are no gross proceeds. The gain on the disposition will therefore be zero proceeds minus the remaining cost basis, which means you have a loss.
That's a negative income number that reduces your total income, adjusted gross income, and taxable income. When losses decrease income, they do so for purposes of measuring passive activity losses, the net investment income tax, the additional Medicare tax, the alternative minimum tax, and a whole range of other income-sensitive calculations.
Then, there's the accumulated depreciation. You remove both the cost and the accumulated depreciation from the original asset when you dispose of a partial asset. You get a currently deductible loss right now, and you have less depreciation to recapture if and when the property is sold in the future.
Question then is how to achieve this in TurboTax for an existing rental property.
Thanks, Michael
