Please see if you dont mind answering the below.
Much appreciated. Thanks.
line 20: $100,000 <-- Is the gross sales prices.
line 21: $130,000 <-- Is the correct cost basis, which is Fair market value (not original purchase price) plus selling expenses. Or was this the amount made up to cause a zero affect (which is what the original post suggests to be done)?
line 22: $30,000 <-- Is the total depreciation taken.
line 23: $100,000 <-- line 21 minus line 22
line 24: $0 <-- line 20 minus line 23
What I was expecting to see in your example was that the sales prices (line 20) was indeed more than the adjusted basis (line 23), which means one made a gain but that gain was not more than from perspective of original purchase price (as a real gain would have been if one had sold at more than thier original purchase price and not more than the fair markert value at time of conversion) and thus it is not a real gain and zero is to be used instead.
Below is the Snapshot from Pub 544, page 4 (2020 version)
Figure the loss you can deduct as follows.
1. Use the lesser of the property's adjusted basis or fair market value at the time of the change.
2.Add to (1) the cost of any improvements and other increases to basis since the change.
3.Subtract from (2) depreciation and any other decreases to basis since the change.
4.Subtract the amount you realized on the sale from the result in (3). If the amount you realized is more than the result in (3), treat this result as zero.The result in (4) is the loss you can deduct.
