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?
