Hi @ColeenD3, thanks so much for the quick response!
What type of property and are you still treating it as business or rental?
- It’s a residential property, and he had treated as a business before (he had QBI for this). Would I still qualify if I don’t put in 250+ hours of residential services though?
Each section of the program, Self Employed or Premier, has an asset section. You would enter the building there. When you put the basis of the building, the program will calculate the prior deprecation and ask you if it is correct. You can make adjustments.
- I think I did that, but the basis includes upgrades to the house too, correct? However, each upgrade or change to the property has a different depreciation schedule. If that’s the case, how do I reflect all these dofferent schedules that pertain to the same property?
Any gift of depreciated property will trigger the so-called dual basis rules under Section 1015(a).
Section 1015(a). This section states, in pertinent part, that for property acquired by gift, "the basis shall be the same as it would be in the hands of the donor...except that if such basis is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value."
- from my understanding of this, it’s that in this situation of a gift, the cost is either FMV OR adjusted cost basis, whichever one is lower. Is that correct?
Thanks for your time!
