RE property sale with multiple depreciated assets

[chapguy19]

Rental property was sold.

How do "write off" the 3 different depreciated assets?

Thanks in advance, Christopher

[PhoebeRoberts]

Follow the steps here: 
https://accountants.intuit.com/support/en-us/help-article/federal-taxes/enter-bulk-sale-assets-proco...

Follow these steps to enter a bulk sale on the Depreciation screen:

If the client sold a building, land, and improvements, use the building as the main asset. In all other situations, use the lowest number asset as the main asset.

1. Go to Input Return ⮕ Deductions ⮕ Depreciation.
2. Locate the lowest numbered asset within the group.
   • For example, if assets #3, 5, and 7 were the group for the sale, asset #3 would be the lowest asset.
3. In the Quick Entry grid for the lowest numbered asset, select the blue Details button to expand the input section.
4. Select the Dispositions tab.
5. Under the General Disposition Information section, enter any applicable fields:
   • Date sold, disposed, or retired (MANDATORY)
   • Basis adjustment (land, etc.) [Adjust]
   • Expenses of sale or exchange
6. Scroll down to the Sale of Asset (4797/6252) section and enter the Sales price (-1=none) for the bulk sale.
7. Review the other fields for any other information related to the bulk sale for this asset.
8. Go back to the Quick Entry grid and complete only the following two entries for all subsequent assets associated with the same bulk sale:
   • Date sold, disposed of, retired
   • Bulk sale (multi-asset disposition: select the asset containing disposition amounts)
   • Remember to select the blue Details button in the Quick Entry grid to expand the input fields.
9. Review all other fields for possible required entries.
   • Keep in mind that all information regarding the sale is entered on the main asset.

All assets in a bulk sale must be the same type (for example, 1245, 1250, intangible, etc.). This classification is determined by which depreciation method is used. Prepare a separate bulk sale for each different category of asset.

Troubleshooting diagnostic ref. 2000274 when entering a bulk sale

When you enter a bulk sale in the Individual return, all assets included in the bulk sale must be the same type of asset. Otherwise, the following critical diagnostic will generate:

• Depreciable asset has a depreciation recapture method (1245, 1250, etc.) that differs from the main asset of the bulk sale in which it is included. For the depreciation recapture to be correctly reported on Form 4797, this asset should be input as a separate sale. (ref. #2000274)

This diagnostic, while critical, isn't a critical e-file diagnostic that would prevent e-filing the return. However, you can fix it by creating a separate bulk sale for Section 1250 property and Section 1245 property.

Follow these steps to create separate bulk sales:

1. Go to Input Return ⮕ Deductions ⮕ Depreciation.
2. Create one bulk sale for the 1250 property (nonrecapture) and one bulk sale for 1245 property (recapture).
   • The depreciation method used determines the type of property. 

Methods 34-69, and 88 = Section 1245 (recapture). Methods 85 and 87 = Section 1250 (nonrecapture). Sometimes, depreciation methods have been used for several years that technically mark the asset(s) as section 1245, 1250, etc. property, but when it's time to dispose of them there shouldn't be any recapture.

If the above solution doesn't work, you may need to override all assets as Section 1250 property.

Follow these steps to override all assets as Section 1250 property:

1. Go to Input Return ⮕ Deductions ⮕ Depreciation.
2. Select the Details button for the asset.
3. Select the Disposition tab.
4. Scroll down to the Sale of Asset (4797/6252) section.
5. Under the Miscellaneous subsection, enter a 1 in Blank=1245, 1=1250, 2=1252, 3=1254, 4=1255 [O].

If you're entering the asset disposition on the Depreciation screen, there's no way to override allowed depreciation. The only solution for this situation is to check the Form 4797 Part I [O] box in the Sale of Asset section for the bulk sale's primary asset. This will force the transaction to print on Form 4797, page 1, Part I, rather than on page 2, where it would try to calculate recapture based on allowed depreciation.