Kirk Carpenter" <kirkc1[at]cox.net> wrote:

- quote -

How did you have a casualty loss? The loss is typically
limited to the lower of basis or the decrease in fair market
value. Although I will freely admit that Congress made a
lot of changes specific to Katrina that I have not had to
deal with.

So then did you exchange the damaged/destroyed rental
property for a new property? If so it seems you would have
probably had to add some cash to the deal (who would want a
damaged townhouse?), how much?

I really think you need to sit down with a professional who
has all your facts, including your 2005 return.

--
Drew Edmundson, CPA
Cary, NC

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Thanks to all who responded. The casualty loss was claimed
on 2005 return and represented loss after insurance
reimbursement.

Kirk

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sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

I'll admit I hadn't considered the land value -- a problem
that comes from shooting from the hip, so to speak.

However, this was an exchange of real property. Exchanges
of personal property, such as a business, are considered to
be a series of individual exchanges and you must look at the
composition of the exchange package. However, real estate
is not treated this way, i.e. you exchange one unit of real
property for another unit. I interpret this to mean that
the basis of all items in the exchange is taken as a whole
and must be apportioned to the newly acquired assets. I've
never seen this issue addressed and have always treated my
client's exchanges this way. So, you are right, there would
be some basis allocated to the new buildings, etc. and that
would be depreciated.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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Kirk Carpenter" <kirkc1[at]cox.net> wrote:

- quote -

This sounds like a 1033 involuntary conversion not a 1031
like kind exchange. Note the reference to Hurricane Wilma.
I am confused by the term "casualty loss". Have you already
claimed a loss on your return? How much did you receive
from the insurance company? What were the steps taken to
accomplish transaction? It looks like we are missing facts.

--
Drew Edmundson, CPA
Cary, NC

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sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

It's all in the land, and land has no depreciable basis.

There might be a different when trading a rental house for a
rental condo - is that considered like-kind?

If so, condominiums generally are considered to have little
or no non- depreciable land basis.

Stu

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L K Williams <lanny[at]loxinfo.co.th> wrote:

- quote -

The building was fully depreciated, but the land wasn't. So
there's basis in the new property. Is that considered all
in the land, or can some of it be depreciated (and if so,
how much)?

Seth

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Kirk Carpenter" <kirkc1[at]cox.net> wrote:

- quote -

Unless you paid "boot" to complete this transaction, you
don't seem to have a basis in the new property.

This is one of the disadvantages of 1031 exchanges. You
transfer the basis of the old property to the new one. Only
if you have to contribute more ("boot") to the transaction
do you get to increase the basis. Here, you old property
had been fully depreciated and your basis was $-0-.
Transfer this to the new property, and your basis is still
$-0-. FMV has no bearing on the allowable depreciation.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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How do you determine the basis for a property received in a
like-kind exchange?

Scenario: Residential rental townhome with basis of
50,000.00 placed in service in 1985 under ACRS/19 years.
Property has depreciated out. 2005 casualty loss of
43,000.00 due to Hurricane Wilma. Property exchanged for
another residential rental townhome in different state (FMV
106,000.00) in 2006. How would you go about calculating the
depreciable basis of the property received in the exchange?

Thanks, Kirk.

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