CA Schedule E line B Net Fed profit (loss) Allowed

[DallasS]

I had a rental property that I stopped renting last year and gave to my daughter. I didn't sell it and I did not rent it all year. So i figured that there was no profit or loss, I simply repurposed the use of the house.  But I cannot file my CA return because  Line B of CA Schedule E says I need an entry. Where does this come from? I tried clicking on the form but it does not let me access it; and the TurboTax review question does not have a 'fill in the box' box.  I am at a loss.  Help!

[AmyC · Accepted solution]

Once you have the house properly converted to personal use on your sch E in federal, it should flow over to your CA and be correct. You have to let the IRS and CA know what has happened to the house through these forms. Since you are no longer using the house as a rental then you need to mark that you converted everything to personal use. You "disposed" of the rental on your tax return by converting it to personal use. See About Publication 544, Sales and Other Dispositions of Assets. Follow these steps to dispose of your rental:

1. Enter your return
2. Go into the rental section.
3. Edit the property being disposed of
4. Edit the Property Profile
5. Continue through the screens until you reach Do Any of these Situations Apply? Select converted it to personal use in 2021
6.  click continue until you get back to Review your Rental Summary
7. Look down to Sale of Property/Depreciation, select Update
8. Do you want to go directly  to your asset summary?
9. Select yes
10. Your property assets screen
11. you may have several things listed here, each needs to be disposed. Let's work on the house. Select Edit 
12. Describe - rental real estate property, continue
13. Tell us more - residential rental real estate, continue
14. Tell us about this rental asset:
15. description - whatever you have had in there for years, continue
16. Tell Us More About This Rental Asset
17. Mark that the item was retired and the date
18. Then mark if it was always business or converted, and the date
19. continue

For a more complete picture, see my answer here for entry help.

Once the house became your property as a non-rental, you gifted it to your daughter. That involves a gift return since you are gifting above the allowed limit to your daughter. Her basis in the property will now be your basis. Alternatively, had you kept the house in your name, when you pass, she would have received a stepped up basis to the value on date of death. However, life is messy and we do what we must.

See 

• About Form 709, United States Gift (and Generation-Skipping  for details on the gift tax. 
• The Gift Tax Made Simple - TurboTax Tax Tips & Videos

[DallasS]

This is outstanding guidance. I like the step-by-step!! Thank you so much.  I'll give it a try.

DallasS

[DallasS]

So is the Property Profile in the Business or the Personal Deductions area?

[DawnC]

It depends on which version of TurboTax you are using.    You can search for rentals in either version and use the Jump to rentals link.