Upon selling the vacation rental, I have to sell the 10 year old roof, for more than I paid 10 years ago?
"You" said you sold at a gain. So yes.
And I have to sell the TV, Fridge, Stove, Hot water heater (and landscaping items) for more than I paid 10 years ago?
Yep.
My first question, who would believe anyone could sell a 10 year old worn out item, for even 1 dollar more than it was at new, 10 years ago?
Bottom line. If you show a gain on some assets, and a loss on other assets, then your depreciation recapture will be wrong. The TTX program will not catch it as an error, because mathematically there is no error. But the IRS will catch the fact that all prior depreciation was not recaptured. Usually 3-5 years down the road. Sometimes even longer. When they do catch it, the back taxes, fines and penalties will not be cheap. It's your call.
