BASIS FOR RENTAL PROPERTY DISTRIBUTED FROM TRUST

[admin1]

ADMINISTRATOR OF  TRUST THAT FILES FORM 1041 CONTINUED RENTAL PROPERTY OPERATION

AFTER DEATH OF ORIGINAL OWNER TO MID-YEAR THIS YEAR.  STEPPED-UP BASIS WAS USED FOR

DEPRECIATION ON 1041.  THIS YEAR THE TRUST WAS CLOSED AND THE PROPERTY WAS DISTRIBUTED

 TO THE HEIR. FORM 706 WAS NOT REQUIRED. IF PROPERTY'S STEPPED UP BASIS WAS $500,000

(EXCLUDING LAND)  AND ACCUMULATED DEPRECIATION WAS $16,666 AT DATE OF DISTRIBUTION, ,

DOES THE HEIR CONTINUE  THE DEPRECIATION USING  BOTH THE STEPPED-UP BASIS AND THE

ACCUMULATED DEPRECIATION AND IS THE DISTRIBUTION DATE THE ACQUISITION DATE TO THE

HEIR.  KNOW AN HEIR IS SUPPOSE  TO RECEIVE THE STEPPED-UP BASIS  UPON DECEDENT'S DEATH,

BUT IF PREVIOUSLY DEPRECIATED I THE TRUST,  HOW DOES THAT WORK? 

[Max W]

Apparently it can be treated one of two ways by making, or foregoing, election 643(e)3.

See para 4 of this link

https://www.cpajournal.com/2017/09/29/tax-planning-distributions-kind-estates-trusts/