I'm almost there, so thanks for your help! Here is the math as I now understand it.
My new basis is $140,000 (100,000 inherited + 40,000 original interest).
Since we purchased the property in 1985, the building has been fully depreciated ($60,000). The land ($20,000) doesn't have depreciation. 1/2 of the depreciation is $30,000.
So, my new basis is $140,000 - $30,000 = $110,000.
Is that right?
