Election Out Planning
Under Treas. Reg. § 1.168(i)-6(i)(1), a taxpayer may elect to opt out of the final regulations, which otherwise are mandatory for any MACRS property involved in a like-kind exchange or involuntary conversion. By electing not to use the two-basis approach of the regulations, the entire basis in the replacement property is deemed to have been placed in service at the time of replacement, while the adjusted depreciable basis of the relinquished property is treated as disposed. The election is made by a partnership, not the partners separately, and by an S corporation rather than its shareholders separately. A separate election is required for each like-kind exchange or involuntary conversion. Once made, the election may only be revoked with the consent of the IRS, and such consent will be granted only in extraordinary circumstances.
the only way to handle the two-asset approach in TurboTax is to leave the original property so that it can be depreciated over the remaining life. and then add the new additional basis as a separate asset so it can be depreciated over 27.5 years.
i think by default Turbotax uses the optional one asset method allowed by the regs.
