Sale of Residential rental

[VernonX]

Assume no adjustment to basis other than depreciation.

I'm trying to understand the programs handing of depreciation. On the disposition  area of the Asset Entry Wks it asks for Asset Gain (loss) basis, if different (enter 100% of basis). This item begins as empty. Should this be Cost - depreciation or left blank? I have taken this to be adjusted basis and so enter Cost - depreciation.

I ask because otherwise it uses Cost to calculate gain rather than Cost - depreciation.

I'm confused because on 4797 p 2 line 22 substracts depreciation to get 4797 Adjusted Basis. Is what I'm doing causing double subtraction of depreciation?

[TaxGuyBill · Accepted solution]

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@VernonX wrote:

On the disposition  area of the Asset Entry Wks it asks for Asset Gain (loss) basis, if different (enter 100% of basis). This item begins as empty. Should this be Cost - depreciation or left blank? I have taken this to be adjusted basis and so enter Cost - depreciation.

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In most cases, leave it blank because the amount on line 31 is the amount you need to use.

If for some reason the amount on line 31 is not the Basis to use for calculating a gain or loss, then you enter the UNadjusted Basis (don't subtract depreciation).

[VernonX]

I manually replicated the math and reconciled it with the 4797 instructions.  Your advice is correct. Thanks.