1031 Exchange...I have to create a new Asset Entry Wks for the new property. And it has to start depreciating for the remainder of 27.5 years and has to carry forward

Forum|Forum|2 years ago
June 21, 2024
1 reply
15 views

all the Acc. Dep. from the initial property.
I can't enter the AccDep in the new Asset Wks since PS won't allow AccDep for a property "acquired" this year.
Also, the depreciation length has to be lowered to 18.5 years because  the exchanged property already had 9 years of dep.
I don't see where I can accomplish either of my requirments.
Thanks in advance, C

ProSeries Professional

This topic has been closed for replies.

Best answer by TaxGuyBill

I think you could be misunderstanding how it works.

Option #1 (the default rule), part 1: Continue reporting the old asset, using the original place in service date (so it depreciates for 18.5 more years)

Option #1 (the default rule), part 2: Any excess/additional Basis, start depreciating using the new "placed in service" date.

Option #2: Depreciate the entire Basis (both Adjusted old and new) using the current "placed in service" date. Manually keep track of prior depreciation for whenever it sells. Be sure to check to box on the Asset Entry Worksheet to elect out of §1.168(i) rules.

T

TaxGuyBillAnswer

Level 15

I think you could be misunderstanding how it works.

Option #1 (the default rule), part 1: Continue reporting the old asset, using the original place in service date (so it depreciates for 18.5 more years)

Option #1 (the default rule), part 2: Any excess/additional Basis, start depreciating using the new "placed in service" date.

Option #2: Depreciate the entire Basis (both Adjusted old and new) using the current "placed in service" date. Manually keep track of prior depreciation for whenever it sells. Be sure to check to box on the Asset Entry Worksheet to elect out of §1.168(i) rules.

C

chapguy19Author

Level 5

Thank you for your quick response.

First, this issue is more complicated because the 1031 exchange involves one property being relinquished for two replacement properties. The two new properties are $600,000 more in value, so I have both an exchange basis and an excess basis.

I understand that the excess basis has a new separate 27.5-year depreciation schedule.

Can I check "Yes" to elect out of the 1.168 rule which would allow me to treat the excess and exchange basis as the same 27.5.

Doesn't Notice 2000-4 allow this?

I very much appreciate your patience.

Thanks, Christopher

qbteachmt

Level 15

@chapguy19

I see three topics running on what appears to be the same issue. In addition to this one, you have:

https://accountants.intuit.com/community/proseries-tax-discussions/discussion/1031-one-property-for-two-exchanged-property-had-a-gain-of-900k/00/302028

https://accountants.intuit.com/community/proseries-tax-discussions/discussion/1031-exchange-with-one-property-sold-and-two-acquired-how-do-i/00/302025

If you keep it to one topic, everyone trying to help will be able to see all questions and replies so far, and that reduces the redundancy, saves you time, and saves time for the peers users who volunteer to try and help here. Thanks.

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