Rental stopped, New house will be built

Forum|Forum|3 years ago
March 11, 2023
1 reply
16 views

Hi!

I have an Illinos LLC reporting rental activity that ended in June. After that the house will be demolished and a new house will be built.(as od Dec 31 the house was still standing, but in March 2023 it was demolished)

I need the depreciation to stop accumulating as of June 16, but I don't know how to go about it in Pro Series. The carrying cost for the rest of the year I plan to capitalize.

The LLC files 1120S.

ProSeries Basic

This topic has been closed for replies.

Best answer by Frustrated-in-IL

On the depreciation entry worksheet, enter a sale date and nothing else. That will stop it as of that date. You will get a diagnostic about needing to complete the form but you can ignore it.

F

Frustrated-in-ILAnswer

Level 8

On the depreciation entry worksheet, enter a sale date and nothing else. That will stop it as of that date. You will get a diagnostic about needing to complete the form but you can ignore it.

C

Caroline 12Author

Level 3

That confirms what I thought, but it didn't sit well with me, because that property wasn't actually disposed of, but I guess that's the way to go. Now, when the house is built and sold, I will need to make depreciation recapture for the time during which it was rental. I was wondering where would be the best spot to do that in the pro series.

rbynaker

Level 13

@Caroline 12 wrote:

Now, when the house is built and sold, I will need to make depreciation recapture for the time during which it was rental. I was wondering where would be the best spot to do that in the pro series.

Unresearched but I'm not sure that's how it works. The structure that was being depreciated was demolished, not sold. Assuming this was a complete demolition, the demo costs and the remaining basis of the old structure get added to the basis in the land (see IRC 280B) The new structure will have its basis calculated based on the new building costs and, when sold, will have no accumulated depreciation to recapture because it's never been placed into service.

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