Where is depreciation capture reported?

[freshy70]

My client used his home for business. I have calculated the depreciation recapture amount on Form 4797 line 7. The rest of the home sale gain is excluded. Where does that number get factored into the tax calculation. I understand its taxed at 25%. Does it flow to another Form?

[sjrcpa]

Why use the 4797?

Why not use the home sale worksheet and enter the depreciation there?

[freshy70]

Not sure how to do that. I just reported the asset sale on the disposition screen from depreciation and form 4797 generates. Is there some other way I'm supposed to do this?

I did notice after my original post that this diagnostic triggered: "Depreciation asset #1: Sale of Home Worksheet - Gain or (Loss), Exclusion and Taxable Gain were not completed because the home was used for business in the year of the sale. See Publication 523 for more information. US - Ref #2008379"

[sjrcpa]

I would skip "the asset sale on the disposition screen from depreciation".

Enter the sale where you enter a home sale/stock sale, etc.

But that's me.

[TaxGuyBill · Accepted solution]

If it is showing up on line 19 of Schedule D, you should be good.

[George4Tacks]

https://accountants.intuit.com/support/en-us/help-article/form-8949/reporting-sale-home-individual-r... MAY help

If you have the full value of the asset, but it is only some % being taken in the Schedule it goes to, then I do not think the link covers that.

[freshy70]

Thanks for everyone's input. Ultimately the reason why this was not showing up on line 19 of Schedule D is because on line 16 there was a capital loss. So the depreciation recapture amount just reduced the capital loss rather than showing up on line 19. The net capital loss on line 15 reduced from $1,238,510 to $1,231,611 resulting in a $3k loss for the year. 

So doing this disposition from the depreciation screen works, it's just that it will only show up on Line 19 if there is no net capital loss coming from line 16.

[Accountant-Man]

If the home office was 10% of the total home, then 10% of the total gain would not be excluded.

The Home Sale w/s should handle this.

[TaxGuyBill]

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@Accountant-Man wrote:

If the home office was 10% of the total home, then 10% of the total gain would not be excluded.

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Not unless the office is a separate building.

If it is part of the same building, everything is still excluded, except the depreciation.