Depreciation recapture for equipment

[sffdib]

Please let me know what I am missing in calculating capital (loss), and depreciation recapture on 4797 this is all long term. Help please. 

Equipment was purchased for $100,000, depreciation is $10,000, sold for $1000. Capital Gain (loss) is $89,000 ($100,000 - $10,000 depreciation - $1000 sale price). 

Is this considered section 1245 property?

Gain (loss) goes on Part I, form 4797 $89,000?

Recapture goes on Part III line 25b $10,000?

ProSeries Professional is not calculating the anything on page 2 form 4797. 

[TaxReturnPros]

Sale is $1,000

Remaining Cost Basis is $90,000

Sale $1,000 minus the basis $90,000 = $89,000 loss

As a Long Term Capital Loss, the Loss of $89,000 shows on the tax return.  How the LT Cap Gain Loss applies this year and/or possibly future years depends on the type of tax return:  Personal or Corporation return, etc.? Business and/or Rental property? No matter, there would be no recapture in this case and yes, from your base description, it is Section 1245 property (trade or business property).

[rbynaker]

My first concern would be that this simply does not pass my sniff test.  Was there a related party involved?  Did the equipment get damaged somehow and was sold as scrap?  It obviously wasn't in service for very long if it only had 10% depreciation.  Something that's maybe worth $50K-$70K was sold for $1K?  I smell a disguised gift.

But to answer your question, no depreciation recapture if there's a loss.

[TaxGuyBill]

I agree with Rick ... something about that transaction seem suspicious, and you need to find out why it was sold for such a small amount.

[sffdib]

Equipment was used for 5 years. The numbers that I presented were not actual. I just wanted a simple answer. 

Do we have recapture depreciation?

Is it cap at 25% like real estate?

Where does it go on the form?

Why ProSeries is not calculating page 2 of 4797?

[sjrcpa · Accepted solution]

Depreciable property used in a trade or business sold at a loss goes on Part 1 of Form 4797.

Depreciation is only recaptured when property is sold at a gain.

Equipment used in a business is 1245 property.

[TaxGuyBill]

---

@sffdib wrote:

 I just wanted a simple answer. 

---

It makes thing simpler when you give us REAL information.  When it comes to taxes, there are too many variables when you use random information that doesn't make sense.