Per the Tax Help for 1040:

"REPORTING LAND SEPERATELY

The IRS instructions for Form 4797 state that building and land must be reported separately when there is a gain on the sale.  Therefore, you should allocate the sales price and expense of sale between the building and land based on their respective fair market values.

In addition, if only one part of the sale qualifies for installment sale reporting, you must enter the building and the land on separate Asset Entry Worksheets. The program alerts you when this is necessary.

To separate the building and land, follow these steps:

• Remove the amount in the land included in cost field on the Asset Entry Worksheet
• Reduce the amount in the cost field by the amount of the land value
• Remove any entries in the land sales price and land expense of sale fields
• Make sure that the asset sales price and asset expense of sale fields include only the amounts allocated to the building
• Create a new Asset Entry Worksheet for the land
• Enter the same date placed in service that you used for the building
• Enter the value of the land in both the cost and land included in cost fields
• Select Type "O" (Other)
• Enter the same date sold that you used for the building
• Complete the land sales price and land expense of sale fields using the amounts allocated to the land

If you choose to report building and land as a single sale, check "No" to "Report land separately."

Common questions on the Asset Entry Worksheet in ProSeries

"REPORTING LAND SEPARATELY

If the asset has land included in the cost or basis, IRS instructions require that if a gain is realized the disposition of the depreciable asset and the land must be reported separately.  The program's default is to treat the sale of each type of property separately.  To treat the sale of both items jointly, select "No" to Report land separately."