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@Babak wrote:

It immediately showed up when I started working on 2024 return. Would it work if I delete the old asset, manually enter the new asset bases as the old asset adjusted basis and start depreciating the new asset over 27.5 years?

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If the election out wasn't made on the timely filed 2023 tax return, you need to depreciate it as two pieces:  (1) Continue to depreciate the old asset (the exchanged/carryover Basis) and (2) Start depreciating the 'extra' Basis (excess Basis).

You didn't say where this gain is showing up on the 2024 return, but you'll need to track down where that is coming from.