How to count stepped up basic cost of rental property after spouse deceased? How to code "mass out of service or retired property prior dod of spouse?

Forum|Forum|3 years ago
March 20, 2023
2 replies
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My client has four rental properties. I indicate one sample here. The other three would be the same

The taxpayer and spouse own the property together as joint tenancy in CA

The cost of basic property was in service 2013 $100,000 and prior depreciation $80,000 before spouse's death in 2022

2022 spouse passed away. The taxpayer appraisal the property DOD (or alternate value in 6 months) $300,000

Q1: How correctly to count the step up basic cost of the property: her part $50000 ($100000/2 still remain the same) + spouse part (she inherited $300000/2) $150000=$200000

Or it is automatic to step up $300000 on 2022

Q2:

Per my understand, prior depreciation before spouse's death is NOT relevant any more? How to code "mass out of service or retired property" related to prior DOD of spouse OR just delete that asset prior DOD in Proseries Professional and just input the new asset on DOD

Q3. When the surviving spouse sells the property, we dont have to worry about prior depreciation prior dod of spouse any more (before 2022). Am I correct ?

Any advice would be appreciated, specially in tax seasoning

ProSeries Professional

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Best answer by jeffmcpa2010

Answers will probably vary depending on whether you are in a community property state, I am in comm. prop., and surviving spouse starts over at 300K.

I usually enter the date of death as sale date on old asset with no price to stop depreciation and

then add a new asset with DOD as acquisition date.

J

jeffmcpa2010Answer

Level 10

Answers will probably vary depending on whether you are in a community property state, I am in comm. prop., and surviving spouse starts over at 300K.

I usually enter the date of death as sale date on old asset with no price to stop depreciation and

then add a new asset with DOD as acquisition date.

M

MybesttaxserviceAuthor

Level 5

Dear Jeffmcpa2010

I appreciate this .

That meant in community property state like CA, we use $300000. Some other tax expert advised to keep track half of tax payer basic and depreciation as normal and stepped up half cost basic FMV on DOB part of deceased spouse. LOL

Can you please tell me a little more detail how to enter the date of death as sale date on old asset with no price to stop depreciation? Did you enter on sche E /dispose property /sale price $0/(must purchase price also, right?)?

Again thank you for your time