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My in-laws bought a 2-flat dwelling 30 years ago for 30K. They rented it out the first 10 years and depreciated the property at a 3% S/L. Then they moved into one of the apartments and depreciated the rental half at half the annual rate. Father died 13 years ago, but his half of the original cost basis was not stepped up to the then FMV of 180K and, therefore, the original cost basis was used for depreciation, and it will end in 2001.
Q: Can we step up the cost basis retroactively? If so, how and on which tax form?
Q: Does the stepped-up cost basis start with date of death and is it depreciable for the next 27 1/2 years?
Q: Can we recover any of the stepped-up depreciations for the past years, and how?
Any help will be greatly appreciated. The IRS Email Tax Law Assistance couldn't help me. Too complex!
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