Change in cost basis of rental property

[duanecpa]

Inherited rental real estate from spouse - appraisal was done in 2016 and was effective the date the spouse died.

Question: how is the cost basis of the residential real estate changed with the FMV as of the date of the spouse's death for prior years based on appraisal effective date of death?

Form 3115?

Amending open tax years?

Thank you.

[Burke]

Generally, if one owner dies then that ownership percentage gets a stepped-up basis. You would disregard the depreciation already taken, and set up 1/2 of the property at its increased basis. The other half would continue to show 1/2 the original basis and 1/2 of the accumulated depreciation. If in a community property state, it may receive 100% stepped-up basis.
There should be no need to amend returns as it only affects the property going forward if death occurred in 2016.

[duanecpa]

Death occurred in a prior year - prior to 2015 - community property state thus 100% stepped up basis - by what means is the inherited basis adjusted in the year of death such that the depreciation on the inherited basis is corrected? 1040X? or Form 3115? or another method?

Thank you.

[TaxGuyBill]

Amend with 1040X.

It was a "mathematical" error, so 3115 does not apply.