Asset Entry/inherited half interest

[Lucho]

How do you handle the asset entry input information for a rental property, (owned by a married couple as joint tenants with right of survivorship) where husband died and surviving spouse inherits that half interest?

If I read correctly, the law instructions says that for the period before husband died, the property is depreciated using the same depreciation method, basis and life used in previous years. For the period after husband died I have to make two computations: Figure surviving spouse basis and continue depreciating it using the same method and life as was originally used for the property; and for the other half inherited use a depreciation method acceptable for property placed in service in that year (2009).

It looks to me that I have to use two separate asset entries, one for survivor’s interest and the other for the inherited one.

Any guidance will be appreciated.

This is not for an actual return at this time but I feel like I need to be ready for the future.

Thank you

Lucho

God bless this forum

[mcb39]

Lucho.....if they were filing a Joint Tax Return, the basis would not change., and you would not have to make any adjustments.

[Lucho]

Lucho.....if they were filing a Joint Tax Return, the basis would not change., and you would not have to make any adjustments.

Thank, Marilyn

[kcjenkins]

Marilyn, I have to disagree. She gets a step up in basis, and can depreciate the 'new' basis going forward, assuming the property has increased in value. Lucho is correct, he'd set up the inherited increase as a new asset.

[Kea]

I'm going off the top of my head, here. But if it's a community property state, wouldn't the basis of the whole property step-up? I know that may depend on the original designation of how the property is held.

[jainen]

>>assuming the property has increased in value<<

The answer is correct even if the property value has dropped. The new asset is the amount included in the gross estate, presumably 1/2 of current FMV. The other half continues the same depreciation schedule as before, although of course the adjusted basis would be split to reflect the partial interest.

[Lucho]

Marilyn, I have to disagree. She gets a step up in basis, and can depreciate the 'new' basis going forward, assuming the property has increased in value. Lucho is correct, he'd set up the inherited increase as a new asset.

Thank you KC. Now the question is still how would you enter the information in the Asset Entry/ies.

Because I see three situations:

1- depreciation for the time between Jan. 1rst. and the time husband dies, 2- continuing survivor's interest depreciation starting on date after husband death and 3- starting a new asset depreciation for the inherited interest

Is it possible to combine step one (1) and step two (2) in one Asset Entry record? If possible, How can I do it?

Thank you again Kcjenkins

Lucho.

[mcb39]

I'm going off the top of my head, here. But if it's a community property state, wouldn't the basis of the whole property step-up? I know that may depend on the original designation of how the property is held.

If the propety was purchased after 1985 receives a full stepup in basis (if there is one) on both halves of the property in a CPS. This results in less capital gain when the property is sold. You are correct about the original designation, but if they have been filing jointly, it would be "Survivorship Marital Property".

This thread has presented a new learning process and back to the books.

[Kea]

Thanks for the reminder. However, I didn't remember the 1985 stipulation at all. Even though I'm in TX, I don't see this situation very often.

[mcb39]

Thanks for the reminder. However, I didn't remember the 1985 stipulation at all. Even though I'm in TX, I don't see this situation very often.

I am in WI and have never seen it......until now.