Do we enter $3000 on schedule F form 4797 as 1231 loss? Do we enter ($3000/yr) loss on schedule D with our 1040 going forward?

[murphyboyz]

We sold both our home and farm together in 2016.  We cant deduct the home loss.  But we can deduct the $62900 farm loss.  Since we wont file a schedule F going forward, how and where do we enter this loss?  We file 1040, married joint.

[Coleen3 · Accepted solution]

Sale of a business asset (farm) goes on Form 4797 and is not subject to the $3000 per year loss limit a capital asset would be on Schedule D.

Enter the information of the sales in their proper section. They are two different transactions for tax purposes. Go into Schedule F as you normally would and indicate the sale. You will be asked information to determine the gain or loss and the program will include it on the 4797. You do nothing manually.

[Cattlerancher]

I would like to make an additional suggestion. The sale of farm business assets go on form 4797 yes, but not the farm itself. If you live in this home as your primary home, you would separate your home portion of the sale from the farm land portion. That amount would be enter under Sale of Home in TurboTax. The Farm land portion is entered as an investment sale under Mutual Funds, Stocks, Bonds, Other. This is Other and will be reported on schedule D subject to the $3000 per year loss limit. Farm land cannot be depreciated and is classified as an investment, not a business asset. You report how you disposed of your depreciating assets by editing each asset in your farm business. The assets you sold will be reported on form 4797. There are three parts to form 4797. Depending on what business assets you sold, some may be subject to the $3000 per year loss limit too. If you had farm income and expenses in 2016, you would enter them in the Farm Income and Expense section as you have in the past.