For cost of a property acquired via 1031xc, do I put the actual cost of the sold property, or the cost basis adjusted for gains and depreciation of the previous property?

[dionwpi]

The description states: "The cost (basis) of an asset is the amount you paid for it plus what you spent to acquire the item, such as freight, installation, sales tax, and legal fees.".

From that, I'm struggling to understand if I should calculate outside of TurboTax the basis considering the previously sold property, and what should be included in that calculation (i.e. capital gains, operating losses, depreciation). I just don't know if there will be another spot to enter that information later and don't want to double-count something.

[dionwpi]

In case it's not clear, I am in the process of selling the property that was acquired through 1031 exchange, and am looking to specify its cost.

[Critter-3]

I highly recommend either upgrading to the LIVE help option or seeking local professional assistance if you don't feel comfortable doing this yourself.   The program requires you to understand what you are doing in this matter ... it will not simply do it for you.  Educate yourself ... here is some basic info to start ...

You depreciate property you received in a like kind exchange (Section 1031), as though you never gave up the original property.  You use the same adjusted basis as the property given up. If you paid money in addition to the property given up then you would depreciate the additional cost over the same recovery period.

• Where do you enter a like-kind  or Section 1031 exchange?
• IRS Fact Sheet for Section 1031 Exchange
• IRS Instructions for Form 8824

To be clear, you continue the depreciation as though there was no trade. Then with any extra cash that was paid for the replacement property (the property received in the exchange) you set up a new asset and begin depreciation in 2020 as residential rental property using 27.5 year recovery period (depreciation method).

If you buy up in your exchange (your New Property cost more than you sold your Old for), the answer is easy – you treat the additional cash part as you would a new addition to an existing property. In other words, you treat the amount of the buy-up the same as you would the cost of a capital improvement.

You can choose separate depreciation schedules or treat the replacement property as a new asset. https://www.fool.com/millionacres/taxes/depreciation/depreciation-after-1031-exchange-how-it-works/

[dionwpi]

Thanks for all this!

I understand how a 1031 exchange works and what it needs to look like in the end. Where I need help is understanding TurboTax's guided activities and what the field 'cost' is intended to represent. The description says one thing, but I suspect they mean something else.

[Critter-3]

If you know what it should look like then make the entries and then review the form.  This would be much easier to do using the downloaded program because of the FORMS mode option however it can be done with the online version as well.

Please follow the instructions below to preview your tax return before filing.

How do I preview my TurboTax Online return before ...

[Critter-3]

If you want to switch and use the Downloaded version you could  save a few bucks by using the Deluxe version instead of the Premier  version  (Basic if you don't need a state or importing from It'sDeductible).  You can buy it here :  https://turbotax.intuit.com/personal-taxes/cd-download/

If you have not yet paid for the Online program & want to switch ....

If you started your 2021 return in TurboTax Online and want to switch to the TurboTax software, here's how.

1.   Save your online return as a tax data file.
2.   Sign out of TurboTax Online.
3.   Install your 2021 TurboTax software.

>  Important: If your return includes a state, make sure you also install the corresponding state program(s), otherwise you'll get Error 539.

1.   Once installed, choose File > Open Tax Return in the software program.
2.   Browse to where you saved your .tax2021 file and click Open.
3.   If you get an error, delete your tax data file and repeat these steps from the beginning.
4.   (Optional) Once you've confirmed that your online return opens properly in the software, you can clear your online return.

[Critter-3]

This is my mini version of  a tutorial  that should be in the downloaded program: 

 

What is Forms Mode?

Forms Mode lets you view and make changes to your tax forms "behind the scenes."

If you're adventurous, you can even prepare your return in Forms Mode, but we don't recommend it. You may miss obscure credits and deductions you qualify for, and you may forget to report things that will come back and haunt you later.

Forms Mode is exclusively available in the TurboTax CD/Download software. It is not available in TurboTax Online.

Related Information:

• Why would I use Forms Mode?
• How do I switch to Forms Mode in the TurboTax for Windows software?
• How do I switch to Forms Mode in the TurboTax for Mac software?
• What is-the-meaning-of-all-the-different-colors-in-forms-mode

If you want to play around with different figures and tax scenarios without affecting your original return you can ….

• >>>In the TurboTax CD/Download software by creating a test copy: 
• 1.  Open your return in TurboTax. 
• 2.  From the File menu, choose Save As. 
• 3.  Give the copy a new name to distinguish it from the original (for example, by adding "Test" or "Example" to the file name). 
• 4. Click  Save. You are now safely working in the test copy and anything you do here will not affect the original. 
•  https://ttlc.intuit.com/questions/1900642-how-to-make-a-test-copy-of-your-return

• >>  use the WHAT IF tool: 
• - Click Forms Icon (upper right of screen) or Ctrl 2 (forms view) 
• - Click on the Open Form Icon 
• - In the “Type a form name.” area type What-If (with the dash), click on the name of the worksheet - click on Open Form 
• - You will see the worksheet on the right side of the screen; enter the information right into the form 
• - To get back to interview mode - click on the Step-by-Step Icon (upper right of screen) or Ctrl 1

Once you have filed successfully … you can shut off the auto updater function and then save the return &  .taxfile.

It's always a good idea to make a backup copy of your tax data file, in case your original gets lost or corrupted. Here's how:

1. From the File menu in the upper-left corner of TurboTax, choose Save As (Windows) or Save (Mac).
2. Browse to where you want to save your backup.
   • Tip: If you're saving to a portable device, save it to your computer first to prevent data corruption. Then, after completing Step 4, copy or move the backup file to your device.
3. In the File name field, enter a name that will distinguish it from the original tax file (for example, add "Backup" or "Copy" to the file name)
4. Click Save and then close TurboTax.
5. Restart TurboTax and open the backup copy to make sure it's not corrupted. If you get an error, delete the backup and repeat these steps.

If you make changes to your original tax return file, repeat these steps to ensure your original and backup copies are in-synch.

Related Information:                             

• Retrieve a Tax File from a Portable Device
• What's the difference between the tax data file and the PDF file?

AND save it as a PDF so you have access to a copy even if you don’t have the program still installed and operational :

• How do I save my return as a PDF in the TurboTax software for Windows?
• How do I save my return as a PDF in the TurboTax software for Mac?

AND protect the files :

• How can I protect the tax files on my computer?

*** Other clues to the downloaded program ***

In the forms mode ... double click  or right click on a box on a form to data source it ... sadly it doesn't work on all boxes. 

What's the meaning of all the different colors in Forms Mode?

When you look at an onscreen tax form using Forms Mode, you might wonder why one figure is blue and the one next to it is red or black.

These colors indicate the source of that data.

Color	Meaning
Blue	You entered this data, either in the interview or Forms Mode.
Black	The program entered this data or calculated this amount.
Red	This data has either been overridden or is invalid (for example, a ZIP code that doesn't exist).
Red italics	You marked this amount as estimated.
Black italics	The program calculated this amount from an amount you marked as estimated.
Purple	This information has supporting details.
Aquamarine	This data was transferred over from last year.
Green	This data was imported from Quicken or QuickBooks.
Yellow fields (Windows)	Yellow fields allow user input. Anything you enter here shows up in blue.