TaxGuyBill
Level 15

COST Basis is just that; cost.  Purchase price plus cost of improvements.

ADJUSTED Basis is usually the Cost Basis MINUS the depreciation.  In this case, it is the depreciation that SHOULD have been taken.

You probably need to separate out the land from the total cost, so you get the Basis of the building itself.

 

Form 3115 needs to be filed to "catch up" on the missed depreciation.