Ok, so I need to know how the taxable basis is determined in a partial 1031 (like kind) exchange. Lets forget the ad libs about whether the exchange is valid or not. It does not appear that Turbotax makes this calculation for you, nor, does it know to adjust the values in Form 4797 for the reductions for the partially exchanged real estate.
Right now when I followed all the prompts, I have an exchange of the two pieces of property with a made up tax basis (I just put in a number when requested to see where Turbotax would take me), and, in the Form 4797, the full tax basis of the original property being subtracted from the original property's net proceeds to determine gain and recovered depreciation.
It would appear that I need to proportionately allocate the original property's tax basis, and accumulated depreciation, to the cash proceeds and the FMV of the replacement property. Then I would need to override the Form 4797 to put in the correct numbers. This seems like Turbotax cannot handle....
