TT handled the sale of the property just fine, and yes, that was done thru the interview. The problem is not with the depreciated property, it is with the amortized refinance fees, which is a separate line item on the Form 4562 Depreciation and Amortization Report. Not all of the refinance fees have been depleted and I should be able to write-off the balance remaining.
TT states: "Schedule E Worksheet (property address) -- Asset Entry Worksheet (2012 Refinancing Fees): Asset sales price should be blank. Based on your entry for amortization code section, this intangible is not considered Sec 1245 property. Dispositions of intangibles that are not Sec 1245 property cannot be entered on the Asset Entry Worksheet. Se tax Help for specific instructions."
The error message is referring to Line 21 of that worksheet. Line 18 specifies the IRC section, which had an entry of "197". The "On Demand Tax Guidance" for Line 18 states: "Enter the amortization code section under which you amortize these costs. For code section 197 the program uses a 15 year life. For all other code sections you must enter the recovery period." As I said, the section code 197 was originally in that field, but that is incorrect since the amortization of refinance fees should be done over the life of the loan, in this case 30 years.
In the "On Demand Tax Guidance" for Line 18 the "amortization code section" part of the sentence is highlighted as a link. Clicking that link opens a list of some of the available "Amortization Code Sections" available for use. the first entry in the list is "446 for most loan fees". Changing line 18 to "446" does not clear the error. I also cannot find any information on the Amortization Code Section 446.
I will have to report the sale of this amortization with a blank Line 21 and manually apply the un-amortized remainder to the basis of the property sale.
