Gain on Rental Property, Depr. Recapture

[CLT1990FC]

Client sold a mostly fully depreciated rental house. I used the asset entry worksheet, completed section on disposal. Data pulled onto form 4797 part III.

However, the software keeps calculating the entire gain as a capital gain on schedule D, and is not pulling out the amount of accumulated depreciation from the asset entry worksheet to be taxed at recapture ordinary income rates... Am i missing something obvious here? 

Any help would be most appreciated! 

[Camp1040]

Did you check Box H on the Sch. E worksheet?

[CLT1990FC]

Hi! Thank you for the suggestion! Yes i did... Box H disposition has been checked, though 

[sjrcpa]

SL MACRS depreciation only?

There's no ordinary income here.

There is unrecaptured 1250 gain subject to the max 25% rate.

[CLT1990FC]

Yes, standard S.L., 27.5 year property.

And thanks to your question I realized what was happening - there was a carryforward capital loss that was absorbing it. 

Thank you!