@AmeliesUncle wrote:
In the rental section, when going through the asset say YES when you get to the "Special Handling" screen. Then:
Option #1: Report the sale in the "Sale of Business Property" section. Adjust your Basis to result in $0 gain/loss (actually, if I remember correctly, that section of the program has a problem with that; if so, adjust so it shows a $1 gain).
Personally, I would go with option #1.
I agree; that approach appears to be the cleanest one with respect to entering this transaction in TurboTax. After all, this is part gift, part sale so the unadjusted basis in the hands of the transferee (family member) will be the greater of the amount paid or the transferor's adjusted basis at the time of the transfer (per Reg §1.1015-4(a)).
@DaveCVIS should note that the program will ask for the gross sales price and, later, the gross proceeds as reported on Form 1099-S and should ensure that both of those figures are the same when entered into the "Sale of Business Property" section.
