Actually this is not difficult, however, it may not be an easy result for TT:
- The basis of the gifted property is the lower of FMV at the date of the gift or the donor's adjusted basis. In most cases, this means it is the donor's adjusted basis.
- While there are no MACRS regulations dealing specifically with this, old proposed regulations make this a step-into-the-shoes transaction.
- This essentially means you will continue on with the same depreciation method as your father.
- So once again, depreciation will need to be computed on your father's side up until the date of the gift.
- Then you will need to add the asset inputting your father's basis (taking into account bullet #1) and enter the accumulated depreciation up to that point; so his original cost basis and his accumulated depreciation.
- Based on that, I would think when you input the date of the gift for depreciation on your return, TT should compute this correctly.
- Keep in mind, that you also step-into-the-shoes on any Section 1250 recapture upon a sale.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
