My wife inherited
a 12.2% share in a foreign partnership
(this is the correct designation for US tax
purposes) in France (Societe Civile Immobiliere or SCI) whose sole business is a to own and manage a commercial rental property
, from which the partners derive an income
. The partners in the SCI remain liable for its debts and expenses. My wife inherited the 12.2% bare (or naked) shares in 2000 and obtained the usufruct rights to her shares after her grandmother died in 2011.
1. For US tax purposes, when would my wife have needed to report the inheritance
in 2000 or 2011 (and consequently, in what year would her cost basis be calculated)?
2. Can my wife deduct depreciation
for this rental property? If so, would the placed-in-service date for her start in 2000 or 2011 and where would we report the depreciation deduction
on our 2012 return
(i.e., no form 4562
needed since the placed-in-service date was in a prior year)? If she cannot depreciate the value of the rental property, can she depreciate the value of her shares (754 election)?
Note: For French tax purposes, the SCI has most likely already depreciated the cost of the rental property since it has been in business since around 1960.