Inputs to organize
- Original cost
- Capital improvements
- Depreciation allowed or allowable
- Casualty and other basis adjustments
- Allocated land and building basis
What the worksheet shows
- Estimated adjusted basis
- Input schedule
- Missing-document warnings
How the model works
Start with the applicable original basis rather than assuming it always equals the purchase price.
Add documented capital improvements and other permitted basis increases.
Subtract depreciation allowed or allowable and other required basis reductions.
Keep land, building, and component allocations visible where they affect depreciation or later calculations.
Produce a reconciliation schedule, not only a final number.
Checks before relying on the output
- Require a description and date for every adjustment.
- Warn when depreciation records are missing for rental years.
- Do not allow an unexplained negative basis.
- Flag inherited, gifted, converted, or previously exchanged property for specialist review.
Converted residences, inherited or gifted property, prior exchanges, and component depreciation require professional basis work.
Common questions
Is adjusted basis just purchase price minus depreciation?
No. Improvements and other additions can increase basis, while depreciation and other adjustments can reduce it. The complete schedule matters.
What if depreciation was available but never claimed?
Basis calculations can be affected by depreciation allowed or allowable, not only the amount shown on a return. A tax professional should resolve missing depreciation.
How is land handled?
Land and depreciable improvements should remain separately allocated because land is generally not depreciated and the split affects later calculations.
Can the worksheet handle a prior 1031 exchange?
It can preserve carryover-basis inputs, but the prior Form 8824 and supporting schedules should control the amount entered.
Does the worksheet determine taxable gain?
No. Adjusted basis is one input. Amount realized, exchange expenses, boot, depreciation character, and other transaction facts are still required.
