Gifted Rental to son in 2022. Using Turbo Tax Premier, it asks if SOLD or disposed of, but says to answer as NO if gifted to related

[KHoskins]

I gifted a rental property to my son in 2022.

Premier version of turbotax tells me to answer "NO" when it asks if I sold or disposed of if to related party.

I'm completing the Gift Tax Form 709 to report the adjusted basis (my basis minus depreciation taken and the current Market Value.

My question is if I say NO to the question of SOLD or Disposed of, how does the depreciation get removed from my 2023 taxes.  Seems like it leaves an open loop.  The Gift Tax Form 709 is not filed with the electronic 2022 taxes and goes to a different IRS address.

[DavidD66]

There is a screen near the beginning of the rental section with an option for "I sold or otherwise disposed of this property".  Indicate that you did.  Continue with the section as through you still have the property.  When you get to the summary screen, enter all of your rental income and expenses, even if they are zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition, which in your case, your rental assets were given away, not sold.  

You will select the option for "I stopped using this asset in 2021."  Note that you MUST do this for EACH AND EVERY asset listed. For each asset you will have a screen that presents, "Special Handling Required?" You "must" select yes. If you select no, then you will be required to enter sales information.   

When you roll over your return next year, the program should not transfer any of the rental information into your new return.

Be sure to print and save (hard copy, PDF, or better - both) copies of all the related pages.  

[KHoskins]

Turbo Tax tells me to NOT check sold or dispositioned in 2022 if sold or dispositioned to a relative.  (On the learn more button).

when I go to worksheets and enter sales price as zero, it is giving me a large loss and making my return increase significantly.

I don’t believe this is right.

My son who was gifted the rental is living in the condo as his main residence.

lf if sells after 2plus years, he will calculate gain from my cost basis.

I should not have gain or loss now, but how do I keep turbo tax from automatically calculating.

I don’t see the “specially handling” requirement button you mentioned.

HELP!

[Carl]

YOu did ***DISPOSE*** of the property. Therefore you select that you *DID* sell or dispose of the property. If you don't select that, then I can give you a 100% guarantee that your taxes will be wrong.

Next, you have to work through each individual asset one at a time in the Sale of Assets/Depreciation section and indicate that you stopped using the asset in 2022. Then you'll be presented a "special handling required?" screen. Select YES on that screen. If you select NO you will be forced to enter sales information, and you clearly stated you did not sell it.

Turbo Tax tells me to NOT check sold or dispositioned in 2022 if sold or dispositioned to a relative.

TurboTax program is just flat out wrong.

[Anonymous_]

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@KHoskins wrote:

I don’t see the “specially handling” requirement button you mentioned.

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The Special Handling screen is in the Assets/Depreciation section which you will see after you indicate you disposed of the property (you need to indicate that in the Property Profile section and the Assets/Depreciation section).