Purchased home. Rented home. Figured depreciation on Tax Assessed value (locality used FMV) of the building, which was lower than purchase price at the time. Building was fully depreciated over years of business use. No capital improvements were made (ONLY repairs were made) during years of business use. Used TT to record Sale of Business Property. Final printed tax return Form 4797 results indicated on: Line 20-Gross Sales Price, Line 21-Cost or other basis plus expense of sale, Line 22-Depreciation (or depletion) allowed or allowable and Line 23-Adjusted basis. Subtract line 22 from line 21, Line 24-Total gain. Subtract line 23 from line 20. And, on 1040, all the gain from 4797 that is subject to capital gains tax and all the depreciation from 4797 that is subject to ordinary income tax is recorded. In this case, TT did it right. I didn't allocate anything, because it doesn't make any difference if it is as simple as my circumstance. You will see the same result if you perform a test on TT Sale of Business Property. As @M-MTax says: "...it doesn't matter whether you allocate to land or not....the whole thing comes out in the wash anyway where your entire depreciation deductions you took or should have taken are recaptured."
