MTW wrote:
- quote -

The "clock" is reset mid-year, so a proration between the
two bases is appropriate (and needed). I don't know if the
publication addresses that.

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Vernon V Chatman III wrote:

- quote -

I believe you would step up the depreciation basis as of the
date of death (properly allocated between land and building,
of course). What I'm not clear on is whether (a) you must
prorate the deduction for 2004 before and after the DOD, and
(b) whether the "useful life" clock is reset. Does IRS Pub
946 address these issues?

MTW

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Property inherited by husband with FMV of $174,000 (25% is land) in 1989.

1.. This inherited property held as community property
instead of separate property in CA.
2.. Property placed in service as Residential Rental in
1995 using 75% ($130,500) as basis for depreciation:
straight-line 27.5 years.
3.. Husband died 5/29/2004.
4.. FMV of property on 5/29/2004 is $400,000 (25% is land)
and there is no plan to use alternate valuation date.

Basis for sale for wife is $400,000 on 5/30/04. What is
basis for depreciation for 2004 given that property
continues as residential rental? For 2005?

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