Have a building that was owned by father and rented by S Corp over many years (before my time). Supposedly this building was fully depreciated by dad. He then gifted to two sons, which would retain the -0- basis. Over the year they have owned the building, no rent was paid to them from the S-Corp (which they owned with a third brother). I guess that is basically ok, as there would be no depreciation to take either.
During 2019, a different brother purchased one of the brother's 1/2 interest in the building/land, and the S Corp purchased his stock because he wanted out. Now one of the brothers has around $300,000 basis in his 1/2 of the property, which needs to be depreciated. No rent was paid in 2019 even though the building was used by the S Corp. Do I still need to set up and depreciate building on the new brother's tax return in 2019? I have advised they have to begin paying rent for the building going forward.
Also, regarding the sale of the building to the new brother. I have no idea the original cost of building when father purchased, or exactly what method was used for depreciation. Do I just show as LT capital gain with -0- basis?