How to manually change Asset Entry Worksheet

[dazz13]

Due to a 1031 exchange a rental property has inherited the deprecation schedule of the relinquished property. The number of years depreciation remaining for the new property is therefore not 27.5 years. How do I change this? The Asset Entry Worksheet doesn't allow me to edit the number of years.

[tagteam]

Review the threads below:

https://ttlc.intuit.com/community/taxes/discussion/re-1031-exchange-for-rental-property-end-to-end-q...

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/can-i-enter-multiple-properties-...

ProSeries (similar to TurboTax): https://accountants.intuit.com/support/en-us/help-article/form-8824/completing-like-kind-exchange-10...

[dazz13]

None of those threads help with my issue.

[tagteam]

You read all of the posts in those threads in under 20 minutes?

Are you aware that there are two methods of handling assets in a 1031 exchange with respect to the replacement property and the relinquished property? One is to continue depreciating the relinquished property and add the replacement property as a new asset, if necessary.

You might want to review the information at the link below.

https://www.journalofaccountancy.com/issues/2008/nov/depreciatepropertyinlikekindexchangesconsistent...

[tagteam]

I'm going to page @AmeliesUncle for input here (very knowledgeable about like-kind exchanges), although I don't believe he'll have a suggestion for the Asset Entry Worksheet other than doing a manual override.

The exchange needs to be entered properly during the interview and can require the use of Forms Mode but typically will not require an override in most circumstances. 

[AmeliesUncle · Accepted solution]

You continue to depreciate the 'old' house  (carryover Basis) using the original "placed in service" date of the 'old' house.  That will 'finish' depreciating that part.

You then create a second asset to depreciate the 'extra' money paid for the new property, using the new property's placed in service date.

[dazz13]

The only workaround I could think of is to work with the 27.5 years number and adjust the amount paid in previous years to twist TurboTax's arm to force it to produce the correct depreciation amount. This way, the details of the calculation are wrong but the end result is correct.

[dazz13]

I like AmeliesUncle's answer: use the original placed in service date (it's weird to have a placed in service date for a property years before the property was purchased ... but, oh well).

[tagteam]

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@dazz13 wrote:

I like AmeliesUncle's answer: use the original placed in service date (it's weird to have a placed in service date for a property years before the property was purchased ... but, oh well).

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Perhaps, but then that's the point of a 1031 exchange. You did not purchase the property, you got it in an exchange for the relinquished property.