Hi,
I am doing 1031 so gains are deferred. But I need to calculate the deferred gain, and thus the depreciation recapture.
I have been in high income category and my rental real estate depreciation has been considered unallowed loss.
Can I deduct the unallowed loss (the sum of all the unallowed depreciations over the many tax years) to calculate the depreciation recapture? I think it is the right thing to do because I am trying to recapture depreciation that was regarded as unallowed loss and had no impact to my personal income. Thus, these two (unallowed loss and depreciation recapture) go hand in hand.
But some said unallowed loss should not be a factor in calculating depreciation recapture. Then, how can I enter the unallowed loss info? Will it end up entering in Schedule 1, 8a (Net operating loss)?
Even so, my deferred gain will be incorrect without considering unallowed loss. That really puzzles me!
