How do you report a 1031 Exchange of rental house for land?

[sthuttoncpa]

Client did a 1031 Exchange of a rental house for land.  Is this reported any different than reporting the exchange of a rental house for another rental house?  When I enter the information in Lacerte for the 1031 Exchange, it is showing taking depreciation on the replacement property, which is land.  Is that correct? 

[The_AntiTax_Man]

@IRonMaN  I'm out of the loop on this deal.  So, is @sthuttoncpa to be left for an Intuit Tax Advisor designated member of this community to respond to his question?  

[George4Tacks]

That sounds correct. Enter a depreciation code of 99.

[IRonMaN]

@The_AntiTax_Man - it's just those folks and George.  Everybody else in on break. 😁

[The_AntiTax_Man]

OK. So then, I'll refrain from commenting on the difference between 1231 and 1250 property.  And depreciation recapture on 1031 exchanges.

[abctax55 · Accepted solution]

IF you used the LKE Wizard, you may want to 'undo' any assets created by it and enter the replacement asset of land yourself.  There's also an 'election' in the Wizard to use that creates *carryover* assets which I have never, ever been able to get to work properly.  I develop what I want the F 8824 to show outside of the software & then force the software to report accordingly.

And nope - land shouldn't be depreciated.  You might be able to change the code(s) as all the assets created by the wizard to '99' (as George stated) and get it to work.

[abctax55]

@The_AntiTax_Man  - oh, go ahead 🤣

[Steve E]

I've too have entered a 1031 transaction several times and it hasn't come out properly. Each time I've deleted the assets created by the wizard and then tried again as I couldn't find a way to "undo" the previously entered transaction. Is there an actual way to "undo" the wizard's madness or is deleting the assets created by it enough?

[Steve E]

How do you "Undo" the assets created by the Wizard? Do you mean "Delete".

[George4Tacks]

There is no "undo". I would make a copy of the return before running any wizard or doing any import. You can then restore that backup and get back to doing things again. Many people do NOT use the Like Kind wizard and do direct input in the dispositions screen. 

[Steve E]

Thank you.