From what i see in Turbo Tax, you cannot take something out of service for personal use without saying it was sold... seems to be a flaw.
No flaw, and you can take a property out of service by converting it to personal use, and you will not be asked for sales information. Read the "Special Handling Required?" screen. When you select YES on that screen, you will not be asked for sales information.
Still baffled on how to do this the correct way in Turbo Tax and now there is another option or method to consider.
That's because since you did not take care of this on the 2017 tax return originally, you can't do it correctly on your 2020 tax return without filing the IRS 3115 - Change in Accounting Method form. Even then, since the program includes practically no help or guidance for that form (because it's not simple) attempting to do it yourself without knowing what you're doing is a sure fire way of begging the IRS to audit you. (Maybe they will, maybe they won't.)
If this was the 2017 tax return you're working on, you simply remove the original entry from service effective on the date of passing. Then enter the original asset a 2nd time using half the values on the initial entry and all the original dates. Then delete that original entry you converted to personal use. That effectively "wipes out" 50% of the depreciation.
Then you enter another asset using the stepped up basis applicable (50% of the stepped up values) with the in service date being the date of their passing. Once that's done, there would only be two entries left concerning the property in the Assets/Depreciation section. One entry using half the values with the original in service date, which would "wipe out" the deceased persons half of the depreciation, and the new entry with the stepped up basis of the deceased' 50% using an in service date of their date of passing so that depreciation would start on that stepped up basis on their date of passing.
Unfortunately, that wasn't done on the 2017 return, which means the 2018 and 2019 returns are wrong. Therefore, the 3115 is the only viable way to fix things and correctly report the sale.
