Back when you acquired this property in the 1031 exchange transaction, it should have been reported on Form 8824, Like-Kind Exchanges. So the IRS should already know that this is how the property was acquired. Additionally, in Part III of this form, you would have calculated the basis of the new property you received. Going forward from when you acquired that new property, you would have used that basis to calculate any required depreciation on the property. Now that you are selling the property, you use Form 4797 to report the disposition.
Selling a Like-Kind Property
Website: Fox Business
Original Article By Judy O’Connor
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http://www.foxbusiness.com/personal-finance/2014/04/29/selling-like-kind-property