I found the problem. It is a bug but should not affect a correct return.
If in the asset worksheet for rental real estate the cost of land (line 7) is $0 and then, when the property is sold, some portion of the sales price is allocated to the land, that gain will be classified as short-term, regardless of the time the property is held. Putting a correct, non-zero, land cost will make the gain appear correctly as long-term.
In my case, the property came as an inheritance through a trust. When the trust dissolved, the trustee only provided a cost basis for the building and other assets (heater, refrigerator, etc) - no land cost was specified. So I left it out. When I apportioned the sales price per the most recent county assessment, I triggered the bug. I put in a proper basis for the land and the problem disappeared.
Thanks,
Jeff
