I have clients who gifted a rental property to their daughter mid-year. I will be filing a Form 709 to report the gift, but I am unsure how to enter the disposition properly in ProSeries to make sure the capital gains and depreciation recapture do not flow to the tax return.
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@Randy Haynes Give your client a printout of the final depreciation with YTD depreciation for the year of gift. The daughter will need that to set up the rental on her return, or for future reference when she sells.
Here's wishing you many Happy Returns
Thank you. One of my pet peeves is new clients with rental properties whose previous preparers did not provide the taxpayer with complete depreciation details. I always provide that along with an explanation of the importance it carries upon disposition of the property.
@DJRogers Be sure you are on the schedule E worksheet. Under heading "Check all that apply" is a box H, Complete taxable disposition. you must check that box. That would release the losses, but see what sjrcpa has to say. Also, When a taxpayer transfers an interest in a passive activity by gift, suspended losses increase the basis of the interest. The increase is deemed to take place immediately before the gift (Sec. 469(j)(6)(A)).