SALE OF RENTAL ASSET - HOW TO HANDLE LAND

[TAXATION]

Where to show the sale value of the land in SALE OF RENTAL ASSET - HOW TO HANDLE LAND?

Cannot be shown in Asset Entry worksheet - becuase

[IRonMaN]

"Cannot be shown in Asset Entry worksheet - becuase"

Because why?

[Waltpa]

at original purchase, break  out land$$ vs buildings/other assets. It's an "land" entry in column to right of asset entry, dates, $$ amounts, etc. ( you can go back even today and do that--but it will screw up all depreciation probably, unless you didn't add land to the building ). When recording sale on this tax return, go to asset/building and record sale--it asks if you want to record separately. I usually do an EXCEL sheet of original purchase to get %, multiply against sale $$.

[TAXATION]

Thanks but, here is what a tech support rep and I found:

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."

[sjrcpa]

I'd choose No.

If I buy a property that has land and building and I sell that property, I look at this as one sale.

Of course in Lacerte we can do a bulk sale of assets and the land can be included in the basis when we report the sale.

CAGMC.

[PATAX]

@IRonMaN 👍Ukraine.

[TAXATION]

What is the process in Lacerte to do a "bulk" sale of assets?  Like to see if possible in Pro Series Professional.

[IRonMaN]

The Ukraine kinda puts things in perspective.  We are all whining about forms not being ready and look at what they are dealing with.  When part of your day consists of making Molotov cocktails in order to protect your home, that little 8915F is pretty inconsequential in comparison. 

[IRonMaN]

"What is the process to do a "bulk" sale of assets? Like to see if possible in Pro Series Professional."

ProSeries doesn't have that feature.

[PATAX]

The Ukrainian government is also passing out AK-47 rifles and ammunition to civilians, so they can protect themselves, their families, and their homes. God Bless Ukraine...🇺🇦🇺🇦🇺🇦🇺🇲🇺🇲🇺🇲☝

[sjrcpa]

In the main asset - probably the building- you show sale date, sale price, exp of sale, and indicate Bulk sale.

Then in the other assets (land, improvements) you link it to the main asset.

[TAXATION]

How do you “link” the other assets ?

thanks

[sjrcpa]

It can't be done in ProSeries.

In Lacerte, you say this asset is part of the Bulk sale  I set up already (there's a drop down picklist).