Basically, here's how it works, and it's rather simple once you know. It's that "knowing" that's not intuitive.
First, keep in mind that only the structure is depreciated, and not the land. So the math is a bit tricky in the TTX program to get the figures right.
Say you've got a property with a cost basis of $100,000 that you put in service in 1990 and removed from service in 2013. That's 23 years of depreciation taken. In the TurboTax program up to the 2013 tax year, you had the COST as $100,000 and COST OF LAND at $25,000. The program "did the math" for you, in the background and figured the structure value at $75,000. That $75,000 is the amount that was depreciated over 27.5 years.
In 2013 you took the property out of service with 23 years of depreciation taken thus far. Up to that point your total depreciation taken was roughly $62,700.
Now, in 2020 you placed the property back in service. You do not continue depreciation from where you left off. You have to start over from square one and depreciate for the next 27.5 years. However, you have to account for that 23 years of depreciation already taken ($62,700). You do that on the 2020 tax return by reducing the cost basis of the structure only, by $62,700. The cost of the land will *NOT* change.
To do that, subtract $62,700 from your original cost basis of $100,000 and that gives you $37,300. So in turbotax 2020 you'll enter $37,300 in the cost box. Since the value of your land is not depreciated, it will not change. So enter $25,000 in the COST OF LAND box.
Now, the program does the math based on the adjusted cost basis of $37,300 and figures the structure value/cost at $12,300. So now, $12,300 will be depreciated over the next 27.5 years starting on the date you placed it back in service in 2020.
In 2020 you placed the property back in service.
