Stepped up basis on a rental - how to show in ATX

[BulldogTom]

TP has a rental for many years.  Fully depreciated under ACRS (remember that one).  Has some improvements (new roof, new flooring) still on the depreciation schedule.  Spouse passed away.  Now I need to step up the basis.  I have the new FMV of the whole home, but I am not sure how to put the difference in.

 

I think I should add another line and call it "DOD Stepped Up Basis" and start depreciating it for another 27.5 years from the DOD.

 

Is this the correct way to do it?

 

Thanks

 

Tom

Newark, CA

Edited March 11, 2015 by BulldogTom

[jklcpa]

Yes, that is what I would do.

 

If you want a cite, I believe it's Reg. §1.1250-3(b )(2)

[kcjenkins]

I agree, Tom, that's how I have done it in the past.  Never had a problem with it.

 

Just to clarify, Client gets a step-up in basis.  How much depends on who owned the rental before.  If the deceased solely owned it before, then client gets full step-up.  If they jointly owned it, client gets step-up of the deceased's half.

[michaelmars]

don't forget part of the step-up gets allocated to land.

[BulldogTom]

don't forget part of the step-up gets allocated to land.

Thanks for the reminder.

 

Tom

Newark, CA

[Max W]

I agree, Tom, that's how I have done it in the past.  Never had a problem with it.

 

Just to clarify, Client gets a step-up in basis.  How much depends on who owned the rental before.  If the deceased solely owned it before, then client gets full step-up.  If they jointly owned it, client gets step-up of the deceased's half.

It only gets full step-up if it is titled WROS (with right of survivorship). JT (joint tenancy) does not. At least in CA.