@evelynacaldwell wrote:
The response from Critter (https://ttlc.intuit.com/community/user/viewprofilepage/user-id/17697) was really helpful, but I do you have a reference for adding the disallowed depreciation carryforward to the basis of the property upon sale? I just need that for my documentation.
Technically, it isn't "added" to the Basis. But the unallowed depreciation just is NOT "subtracted" from the Basis (depreciation that is used lowers the Basis). That is because was not "allowed" and it was not "allowable".
As a side note, there is a potential argument that the disallowed losses could be fully used in the year of the sale, just like Passive Loss Carryovers. It is an unlitigated "gray area", but I think most tax professionals lean towards that is NOT allowed.
