Hi All members,

I have a client who owned an investment house in his FLP. He converted it into rental house in 2012. I understand that basis of the house for depreciation purpose will be lower of adjusted basis or FMV at the time of renting the house. So in this case, basis is FMV as it is lower by around 15K than adjusted basis.

The question is related to books here. What would I do with that remaining basis in the cash basis books? The tax return will show FMV for depreciation and books has historic basis + improvements.

Thanks,

Sammie