@mwh1 You have suspended losses that get reported on Sched E, and the amount is probably very large. Those losses lower your cost basis, which can be abused by good tax accountants: the Sched E losses reduce your taxes at Ordinary tax rates, while the offsetting Cap Gain is taxed at Cap Gain rates. So the IRS requires that the losses be reexamined at sale and where they're not real (e.g., depreciation of an asset well below its market value) be reclassified away from Cap Gain to Form 4797 income.
In the end, you're still taxed on about $11k. Its just that its at a combination of tax rates, and the $11K is showing up on Sched D, E, and Form 4797.
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**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!
