Step up basis & sale of asset (ATX)

[ILLMAS]

Scenario:

Couple has various joint properties, spouse B passes away in May 2019:

1.  Building one - Cost $25,000 fully depreciated, not appraised yet

2.  Building two - Cost $23,000 fully depreciated, not appraised yet

3.  Building three - Cost $18,000 fully depreciated, appraised and sold

4. Building four - Cost $13,000 fully depreciated, not appraised yet

Most buildings were bought in the late 70's, early 80's, building three was appraised in August for $330K and was sold in November 2019 for $365K.

Step-up basis for building three:

Spouse A:  0

Spouse B: $330K x 50% = $165K

Gain on sale:

Spouse A: $182.5K - 0 = $182.5K

Spouse B: $182.5K - $165K = $17.5K

Question

In ATX, do I go back to the asset and change the original purchase price by 50% and then create a new asset on the DOD May X, 2019 for the $165K?  I am trying to figure out how to split the sold property in ATX, any help would be appreciate it.

Thanks

[Pacun]

Since the building was depreciated to 0, I would sell that building with an adjustment of cost of 165K and you will get the same results. Remember that you have to recapture depreciation allowed or allowable.

[DANRVAN]

18 hours ago, ILLMAS said:

In ATX, do I go back to the asset and change the original purchase price by 50% and then create a new asset on the DOD May X, 2019 for the $165K?

Sounds like you are on the right track.  Surviving spouse has a two part basis in the assets: 1/2 of original basis less accum depr. and 1/2 fmv on date of death.

In the case of building #3, it is reported by surviving spouse on the final joint return. Surviving spouse basis will be $174,000 ($9,000 + 165,000) with accum. depreciation of $9,000 + amount  allowable on $165,000 from date of death to date of sale.