@KathyHe , it took me a little time to create your scenario -- what I have done ( and it works correctly ) using Windows Home & Business:
(a) what needed to be achieved --- 1. step-up value base...
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@KathyHe , it took me a little time to create your scenario -- what I have done ( and it works correctly ) using Windows Home & Business:
(a) what needed to be achieved --- 1. step-up value based on FMV on the date of passing of spouse; 2. recognize accumulated depreciation claimed/allowable for the period of rental use of the property for basis adjustment and for recapture ( ordinary gain treatment); 3.Home sale exclusion for both spouses ( section 121 -- spouse passed within the last two years and met all the all the eligibility before passing ).
(b)
1. In the personal information area, set up a new return naming the living spouse as primary, decedent as secondar filer, provided date of passing etc. ;
2. Entered incomes ( under personal income tab and choosing "I will choose what I work on " and then visiting the appropriate income categories);
3. Under sale of home entered details --- acquisition cost, cost of improvements over the years, sales price, sales cost (-- used a detail back-up sheet to detail, sales prep. costs, commission, title company / closing costs, transfer tax etc. )
4. for depreciation --- added all the depreciation amounts allowed ( from Schedule-E line # 18 of each year ) and entered these as a back up detailed sheet.
When all done, then moved to forms mode --
In Forms mode --- from the left side ( list of forms and worksheets being used :(
(A) Home Adj. Basis --- check/ confirm ( including the details sheets ) for lines 4 ( Cost of Improvements ), line 7 ( other increase to basis) -- add / confirm statement " Step-up -- passing of spouse" --- use a detail back-up sheet to show how you arrived at the figure, line 10 ( Depreciation .... ) -- again use a detail back-up sheet to show how you came up with the total figure, line A1 ( AMT ) --- this should be the same as line 10 -- but check from old Schedule-Es
(B) Home Sale Wks. ---- this is where all the details of the home sale is shown -- check and make sure all is good. Line 16 should be checked if the statement is correct --- decedent spouse's DoD is no more than two years from the closing of the sale date and was otherwise eligible for the gain exclusion. Checking of this box triggers the US$250,000 eligibility for both spouses/owners/users.
If all looks good then go back to step-by-step and allow TurboTax to do all the checks etc.
Hope this helps in your preparing a correct return.
Is there more I can do for you ?