There is a special rule that one must use when computing depreciation on converting your home to a rental. You must use the lower of FMV or adjusted cost basis on the conversion date. I have not found any reference to having to use this special rule for the contents if you rent the home furnished. Am I correct that the contents (appliances, carpeting, furniture, office F&F, etc.) use the cost basis and not the "lower of rule"?
Upon selling the property one uses a special rule for computing gain or loss when the FMV is less than cost basis on the conversion date. Gains are computed using the normal cost basis and losses are computed using the lower FMV. Depending upon the sales price, you could find that you have neither a gain or loss. Regardless of the facts, the IRS will use allowed or allowable depreciation upon the sale. This means that even if you never took depreciation, the IRS calculation for gain/loss will assume you did. Is this assumption also true for the contents if you rent the home furnished? I.e., the IRS will assume you depreciated the contents or is there some election you can use to not depreciate the contents and avoid the allowed or allowable rule for the furnishings?
Lastly, am I also correct that if you rent the home with artwork, there is no depreciation allowed for the artwork, as artwork has no determinable life?