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Now you have got me wondering if I did the depreciation correctly. In this case the rental was placed in service in 1984 and depreciated using ACRS? 20 year S/L MM in effect at that time until fully depreciated in 2004.

OK. You pre-date MACRS and were under ARCS. IIRC (and I might not, as that was quite a while ago), there were several flavors of ACRS depreciation for real estate. 15, 18, and 19 year schedules come to mind. But at any rate, they were all considerably shorter than the current 27.5 years, so it makes sense that the property is fully depreciated at this point.

Yes there were improvements made in later years and they are being depreciated using the MACRS 27.5 S/L MM. Are you saying the current value of the improvements is the property basis to use on Form 4684?

Yes. Your current basis in the property should be the land value plus any remaining basis in later improvements. That is what you'd use to figure your gain if you were to sell the property.

Of course, we've already determined that Form 4684 isn't applicable in this case. But if you ever did need it for some other event you would include the improvements and land value in your basis.

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