@DianeW777 - I ran a simulation in TT Desktop assuming I sold the rental house last year. I see that "Depreciation (or depletion) allowed or allowable" is added in Line 22 of Form 4797. What I am not clear - where and how this Line 22 is calculated at ordinary income tax rate (i.e. tax bracket rate)? I only see that it is just deducted from the cost basis (Line 21) to come up to Total Gain - Line 24 that goes to Line 32. Then it just goes as LT gain in Line 11 in Schedule D. The Question is: where is the 25% treatment of depreciation recapture here? Apologies if I confuse anything here. It looks as it is a LT loss? But yes, there is Line 19 in Schedule D where Depreciation Recapture is less Net ST losses. Is it where a special treatment of up to 25% tax rate is applied? A bit confused.
