Thanks for questioning this as it raises a very important topic- depreciation recapture taxes.
What was meant by "All previous depreciation amounts are irrelevant" was the amounts counted as depreciation for the tax years between 1970 to the date of father passing in 1989 isn't counted for depreciation recapture taxes. Is it correct that the 19 years of depreciation is not to be counted?
And so is it correct that depreciation starts all over for the next 27.5 years using the 1989 FMV of the property (less the FMV of the land since only the structure can be depreciated)? With the numbers used, this is 60,000 of depreciation taken from 1989 to 2016. By selling in 2022, the 60,000 is counted for depreciation recapture taxes (in the story, it totaled 70,000 since there was 10,000 more in depreciation taken for carpeting).
The next step is how to input this in TT correctly so that my conceptual understanding of all this is reflected with the appropriate numbers in the the correct tax forms. But I think that's best discussed in a new thread!
Again, thanks for any feedback and educating me on how this is suppose to be done!
