Thanks for the reply.
We never received the sales funds directly because we used OREXCO as the intermediary.
I did find a TT answer to my first question as follows:
"Enter the renovations as a new asset:
Since the placed in service date and the sale date are in the same year, TurboTax does not depreciate it.
Depreciation for the year, for that asset, is zero.
The asset will be properly reflected on the Income Tax return
The IRS will not question the sale of an asset but they may question a large expense or deduction."
So, following this advice, I entered the renovation assets and entered them as sold on the same date the property was sold. The result produced zero depreciation and calculated the allocated gain for each asset. Assuming this is correct, I also entered as Sold the earlier depreciable assets producing gains for those. All the gains were entered in Asset worksheets and on forms 4797. The gain just from these assets are about 57000, so I hope this is correct. If so then my second question is resolved.
3rd question: Something is not clear with form 8824. How is the above asset gain accounted for. If it is not, ultimately tax is paid on a lower adjusted basis for the New property. Am I missing something?
Could it be something to do with the way my allocation was figured? I first calculated the original % Land and Building at 39/61. Then I allocated the building plus remaining assets among the 61%. Since the building only is exchanged, Its allocation never gets adjusted. My adjusted basis used for form 8824 was sum of purchased building value
