Dottie Fauci
Level 2

I have a client that had a primary residence and converted it to rental property. They qualify for the exclusion with the ownership & use tests. I calculated the adjusted basis. According to Pub 523, they can exclude most of the gain but not the part of the gain regarding depreciation. And they must recapture the depreciation as well. I have that all done, but clients still insist they are entitled to the full exclusion.

0 Cheers