Schedule E Depreciation - Reduction in Basis

[Yardley CPA]

New client with Schedule E - Rental Property.  I'm attaching a copy of the Depreciation Schedule she provided. 

• Building - Cost Basis = $55,849
• Improvements - $31,913
• Land - $13,400

Can someone explain, in ATX, on the Fixed Asset screen, how to reduce the Building basis by the amount of the Land?

Thank you.  

[jasdlm]

I usually enter the Land as a nondepreciable asset separate from the building.  I'm not following the question.  I'm tired, so it could be that I'm just being thick.  You want to enter them both on one line?

[Lynn EA USTCP in Louisiana]

I do the same as jasdim, separate entries for each asset. 

[Yardley CPA]

jasdlm and Lynn, I believe your method is what is being done in the depreciation schedule I attached.  in the depreciation schedule, the building basis is 55,849 with a reduction in basis of 13,400 (basis of the land).  Should the building's unadjusted cost or basis just be entered as 42,449 (55,849 less 55,849)?  

 

.  Never saw it entered this way.  

[Lynn EA USTCP in Louisiana]

Yardley, in your example I would make three entries

Building at the $4x,xxx value ;

land at the $1x,xxx value , and the

improvements at their $3x,xxx value. 

[Yardley CPA]

Thank you.  That's what I'm asking.  May not have done it clearly.  

[jklcpa]

I agree with Lynn on how to enter.  It appears that the previous person may have entered the land as salvage value so that the reduce basis is what is depreciated.  The structure's depreciation will calculate correctly, but the problem with the way it was entered previously is that it would double up on the basis assigned to the land at disposition. Looks like they didn't know how to enter it properly.  Was this self-prepared?

[Yardley CPA]

Last years return was professionally prepared.  I just never saw a rental property's depreciation entered that way.  That's why I asked.  Appreciate everyone's input.