Question
Where do I enter reduction in basis of a depreciable asset for a rental property?
I'm taking over a client's return, and last year's depreciation report has a $2,250 asset showing with a $1,125 "reduction in basis" and a Basis for Depreciation of $1,125. I don't see anywhere on the Schedule E worksheet to specifically indicate the reduction in basis amount. Is the proper way to record this simply to enter the Basis for Depreciation amount in the Cost or Basis block, instead of the actual $2,250 cost?
