is this the same method to use for step up of basis for rental property due to death of spouse?
Yes. Nothing what-so-ever is changed on the original asset entry. You just enter a new asset and give it a cost basis (cost and cost of land) that is equal to the amount of the stepped up basis. Depreciation starts on that newly entered asset on the "in service" date of that asset. The in service date is the date of the passing of the deceased. For residental rental property it's depreciated over 27.5 years. For commercial property it's 39 years. (Or 40 years, I never can remember which off the top of my head.)
If the property were to be sold, will this method provide the information necessary to determine correct capital gain/loss for tax purposes?
Yes. You will be reporting the sale of two assets, and you will have to split your sales price across both assets propertionately, so that the total sale price of each asset individually, is equal to your total sales price in the sales contract you will have with your buyer.
