This question involves a rental property purchased by brother and sister in 1981. Brother (my client) filed MFJ with his wife, claiming his half of depreciation expenses; sister filed her own tax return, claimimg her half of depreciation expenses. Sister died in 1995 when house was re-appraised. Brother inherited her half of rental property and a stepped-up basis. Brother sold house in 2006.
- Normally, for the capital gains computation, the basis is reduced by depreciation "allowed or allowable." Now that the house has been sold, does brother reduce the basis by the total amount of depreciation claimed by both he and his sister separately or just the amount of depreciation claimed on his own tax returns from 1981-1995?
- Without any other information, I am assuming the depreciable (house) portion of the property is two-thirds of the total, with the undepreciable land being the remaining one-third. Is that a reasonable estimate?
- In 1981, was this 15 year real property ACRS depreciation? Thank you.
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