kuesters
Level 1

This answer does not address my question. 

I know how to enter assets for a rental property, but there is nowhere in the asset entry form that specifically discusses assets that were not depreciated.  This matters because tax code requires when you sell a rental property the taxpayer must separate gain into two buckets: (1) the portion equal to depreciation you claimed or should have claimed, which is taxed as “depreciation recapture,” and (2) the remaining gain, which is taxed as long‑term capital gain. This rule applies whether or not you actually took the depreciation.

Type of Asset Code = "X - Non-Depreciated Asset" will not automatically include the depreciation not previously claimed in the gain taxed under the depreciation recapture rules.  How do I enter the undepreciated assets in the asset entry form to properly include the undepreciated amounts in the depreciation recapture compoent of the capital gain.

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