1031 Exchange for Rental Property: end-to-end question

[Anonymous]

@mw29 , You could click the "forms" icon on the top-right corner in the blue bar.  Click it again, now "Step-by-Step" will return to the question/answer mode.

[mw29]

@Anonymous  Thanks Raymond, but I don't have a blue bar at the top, let alone "Forms" menu. This is what mine looks like at the top-right of my browser (TurboTax Premier):

[mw29]

Hi @Vic_R  - Reason I am asking is because I am confused by your statement here:
' I referred to the "new basis after the deferment" by "adjusted basis" which I understand was a poor choice of words.'

So if I understood you correctly, initially you wrote that "new basis after the deferment" was 42k, and if you meant that's from form 8824 line 25, that means you did end up with very small amount of depreciation?

Thanks for the clarification!

[Anonymous]

@mw29  The following are the worksheet records what I calculate and entered to TurboTax Premier for the 1031-exchange we did in 2019, one OLD rental property exchange for two NEW rental properties, adding a little cash out-of-pocket.  It took me a lot of time.  Hope it could help you.  WARNING:  this is understanding of myself about entering the numbers for 1031-exchange in TurboTax.  Refer to it on your own risk.

1. Enter OLD property in 1031 Exchange first.

-- Do the calculation for entries of "Like Kind exchange" first, then enter under Business Items --> Sale of Business Property.  

2. Do these calculations for OLD and NEW properties first3. Do these calculations for OLD and NEW properties first

-- In screenshot above, row 167, I made a mistake, I think.  I should include the Acquisition cost of NEW properties in the "Exchange Expenses" and all other expenses for 1031-exchange together with the cost of selling OLD.  In this way, I do not need to adjust Basis again in the property entry of NEW to include Acquisition Cost of NEW.

4. Add new property entry for NEW #1

[Anonymous]

@mw29 

Here is my TurboTax Premier.  Purchased on Amazon two weeks ago.

[Anonymous]

@mw29  Another way to open the forms in my TurboTax Premier is click  menu "View" --> Forms.  Or, the short-cut key combination:  Ctrl + '2'.  Ctrl +1 is Step-by-Step mode.

[mw29]

@Anonymous  - Thanks. I have a large spreadsheet much like this also. However, I still don't understand how you get the forms as listed in your 2nd picture. (I-105).
Thanks much though. This sheet really helps for comparison.

Reading form 8824 line 16 actually says "FMV of like-kind property you RECEIVED". In our calculation and in turbotax, it looks like all those adjusted basis from old property, exchange expense, etc. are all deducted from FMV of like-kind property you RELINQUISHED, or am I wrong?

Thanks again!

[mw29]

Oh, I think this is something you downloaded, not online?

[Anonymous]

@mw29 yes, it's PC download version of TurboTax Premier.

[Anonymous]

@mw29   The 3rd way, I am not sure if you can use it before finish Federal Taxes entries, is:  Menu  "File" --> Print/Save for your records --> Print, or button "Save a PDF", --> choose the form 8582, then Save as PDF.

Regarding the FMV of like-kind property you RECEIVED, I entered the purchase price of the NEW property.  Please see my worksheet starting from row 147.  Expenses of selling are input as Exchange Expenses in row 167 of my file.     <-- Here, I made a mistake, I think.  I should include the Acquisition cost of NEW properties in the "Exchange Expenses" together with the cost of selling OLD.  In this way, I do not need to re-adjust Basis in the property entry of NEW.

Actually, the changes in [Market Val - Mortgages] of NEW vs OLD is the Cash Received (may not put in your pocket but covered the closing cost of NEW properties which including non acquisition costs such as PREPAID tax, mortgage interest, etc.).  No adjustments nor expenses involved.  See row 131, row153, row 161, 165 in my screenshots.

[Vic_R]

@mw29 

See reply above, but basically remember the adjusted basis of the property given up (which you use to calculate the gain you intend to defer ) is carried forward into the new property, which is how the gain is deferred into the next property.

[mw29]

@Anonymous , @Vic_R ,  Thank you for the response.
I am able to get to the forms now from the Forms menu (but the instructions in this link - https://proconnect.intuit.com/community/individual/help/1040-completing-a-like-kind-exchange-of-business-property-1031/00/5827 to create new worksheets are very wrong/outdated I think).

However, now I am faced with the problem of entering the dates:

What should I enter as the "Date Placed in Service" (line 3) for the RELINQUISHED property to get the remainder depreciation schedule?
In my case the property was sold on 3/22/2019. According to the instruction, I HAVE TO put the date the property was sold in an exchange.  But this results in $0 depreciation because it essentially puts that property in service on the same date it was relinquished as listed in the "61b Date of disposition of relinquished property". 
On the other hand if I put in the actual service start date (2007 in my case) on line 3, Turbotax flags that as error and it says that I need to put date placed in service as the date property was relinquished. So I think the dates are correct, but I must be missing something somewhere because the depreciation is $0 and if I look at the Asset Life History (quickzoom), it has no depreciation listed at all!

Help!

Thanks!

[Anonymous]

@mw29 I do not know which section in TurboTax premier you referred "Date Placed in Service" for the RELINQUISHED property.  In my case, there are two places related to days in service. 

One is in Property Profile of the rental property. 

* New [ ] 2019 was the first year I rented this property.   NO CHECK.

*  Sold [ ] ... sold ... in 2019.   NO CHECK.  Remember "do NOT check "SOLD: I sold or disposed of this property in 2019"

Another place is "Assets / Depreciation" --> asset of your OLD rental property:

* Date purchased or acquired :  11/16/2012  (my case)  

* [x] I purchased this asset new

* [x] The item was sold, retired, disposed of, ....   --> checking this question leads to the following entry:

   -- Date you sold / retired  it from use:  01/29/2019

* Have you used this item 100% for this business since you acquired it?

  [x] Yes.  .... always 100%...

    -- Enter the date that you first started using it as business:  11/16/2012.

Please see row 70 to 90 in my screenshot #1.  In the screenshots, the entries I made in the TurboTax are highlighted in THIS COLOR.

[BillS2]

I had the identical question. I could not get rid of the alleged profit on the sale or the 4797. I think I got it now. Thanks very much. Now if I could just figure out how to get more than 2000 stock transactions from one broker downloaded, I will be finished.

[hzou]

@randoodle,  @Husam22 

......

"Then we arrive at Sales Information.  If I put in any info regarding the Asset Sales Price, Asset Sales Expense, Land Sales Price, or Land Sale Expenses - a form 4797 is generated.

Hence, I would have to leave them all at 0 for everything to work out.  And that makes sense because the property was exchanged - not Sold! "

Actually, I had to literally delete 0 out of the box to leave the sales box blank to get a correct form 4797.