Golfer2016
Level 2
12-07-2019
06:31 AM
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Client did a 1031 of their rental real estate. For the basis, should I include the adjusted basis of everything they've depreciated? Or, just of the structure? Also, how do I find the adjusted basis? I assume for each asset, i need to denote that it was disposed.
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TaxMonkey
Level 8
12-07-2019
06:31 AM
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1245 assets are not like kind with 1250 assets, and only 1250 assets are eligible for IRC 1031.
Golfer2016
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12-07-2019
06:31 AM
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So would you just not include that on the 1031? To figure out the adjustable basis I used the prior depreciation and added the depreciation for the current year.
Golfer2016
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12-07-2019
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For exampple, I am guessing furniture will have to be recaptured? How about furnace?
TaxMonkey
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12-07-2019
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I would allocate a portion of the gross proceeds = adjusted basis for all 1245 assets - so no gain or loss. Then transfer the basis in 1250 assets, and determine the deferred gain.
Golfer2016
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12-07-2019
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SO you are not doing a 1031 on 1250 assets? The only depreciated thing is furniture, which is fully depreciated. I could just list it being sold at $0?
Golfer2016
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12-07-2019
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So if you are doing 1031 exchange, you could only do like for like if they were buying new furniture.
TaxMonkey
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12-07-2019
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Only real property qualifies for 1031 now. I would simply abandon any fully depreciated 1245 assets.
Golfer2016
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12-07-2019
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How do you abandon? Just put sales value at 0 and say fully taxable disposition?
TaxMonkey
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12-07-2019
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yes
Golfer2016
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12-07-2019
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On the 1031 entry if asks for adjusted basis. I just put the amount that was prior depreciated and added the current year depreciation. Do you think that’s right?
Golfer2016
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12-07-2019
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Taxmonkey, what do you think? The instructions for 1031 (https://accountants-community.intuit.com/articles/1608733-1040-completing-a-like-kind-exchange-of-bu...) indicate that you would use the excess basis from Line F of the Replacement Property Depreciable Basis Components Smart Worksheet and enter it as the cost basis for the new asset. However, what would I put for land value on the new asset? Or, do I keep it blank because it's already included?
Golfer2016
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12-07-2019
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Taxmonkey, was I correct in adjusted basis?