Sale of Rental property / Tax dispositions

[Mustapha Ratib]

Hi All,

I want to make sure I followed the right steps to dispose of Rental Property that has multiple Depreciation:

Building depreciation, Home Improvement depreciation, and Renovation cost depreciation.

At Check all that apply : I checked H: Complete Tax Disposition

Then to Assets worksheet : Dispositions: 1- entered date of disposition

,  2- Sales Price ( here I entered the total price from 1099-S

Then I went to the next asset ''Home Improvement : entered date of disposition but I entered ZERO in sales Price, and  I did the same thing for Renovation cost asset ZERO for sales Price.

Questions: is putting Zeros there the correct way, and if there is any steps I am missing?

Thanks

Mo.

[TaxGuyBill · Accepted solution]

No, that could potentially result in the wrong amount of tax due to Unrecaptured Section 1250 Gain.

You can either:

1. Allocate the sales price between the assets.  So the improvements will have an amount entered, even if it is the same as the Adjusted Basis (resulting in $0 gain/loss).
2. For all assets enter a sales date but leave the sale price BLANK.  Then manually enter the appropriate numbers on the "Enterable 4797".

[Mustapha Ratib]

So on the Asset entry worksheet, I used the adjusted Basis of each '' for both Improvement and renovation'' which will bring them down to zero, and the difference is used to the Building. all get reflected on 4797 form.

Thanks

[Mustapha Ratib]

Thanks Bill