Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Sale of inherited rental commercial property

kirkavery
Level 3

Client inherited a commercial rental property upon the death of her mother. Client obtained an appraisal as of the date of death of $800,000. Intent is to sell the property as soon as possible but it will continue as a rental property until sold. The tenant is month to month. It is my understanding the property would get the stepped up cost basis to $800,000 and any gain would be considered long term, even if held less than one year, because it is inherited property. Since the asset is depreciated for the rental period on Schedule E it is entered on the Asset Entry Worksheet. It appears to me ProSeries will calculate a short term gain on Form 4797 unless I adjust, or override, the dates somehow. My question is how to have the gain calculated as long term since the dates will show as a short term holding period of less than one year.

Also, I would like to know if the property is sold for a loss, after deducting the selling costs, is the loss deductible?

0 Cheers
1 Solution

Accepted Solutions
Accountant-Man
Level 12

Because it is a rental asset, and PS doesn't provide for entering "inherited," you will have to force it to be long term. There's no way to type in D or E or F for Schedule D.

Change the acquisition date to make it long term.

Yes, you can have a loss since the basis is DOD, but the sale date is later and the market value can go down.

** I'm still a champion... of the world! Even without The Lounge.

View solution in original post

4 Comments 4
Accountant-Man
Level 12

Because it is a rental asset, and PS doesn't provide for entering "inherited," you will have to force it to be long term. There's no way to type in D or E or F for Schedule D.

Change the acquisition date to make it long term.

Yes, you can have a loss since the basis is DOD, but the sale date is later and the market value can go down.

** I'm still a champion... of the world! Even without The Lounge.
Just-Lisa-Now-
Level 15
Level 15
If you type the word INHERITED in he purchase date, it will make it LT.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
Camp1040
Level 10

My understanding is that the OP is trying to report the sale on form 4797, but if the asset is placed in service and removed in the same year it would not be subject to depreciation and would then be reported on Sch. D and entering "inherited" to force long term treatment. Form 4797 does not lend itself to an "inherited" entry. If the rental does not sell in a timely manner then form 4797 with an adjusted date for LT treatment does seem to work.

kirkavery
Level 3

I tried that first but I believe the purchase date in the Asset Entry page in Proseries will only accept a numerical entry.