I have a couple who sold a rental property.  They have a capital gain of 157,000 they also have a rental loss of {157,000}.  Their other taxable income minus standard deduction is 143,000.  The schedule D worksheet is deducting the 80,800 exclusion from the 143,000 and taxing the difference at 15%.  Nothing is being taxed as ordinary income.  I am so confused.  Hopefully one of you great minds can give me some guidance.