Cheryl, I have a similar but slightly different case with FORM 4797. Inherited house + improvement basis=$218698 in 2014 . Rented house in 2014. Allocated $133406 to building, $85292 land. Sold house 2018 for 38100, 342900 land. Kicker is I had inappropriate depreciation of 9330 above straight line due to error in first five years of not using assessed value for allocation. Heres where I get lost.
1) In part III for the 1250 building calculation, I get a -66013 loss which carries to Part II according to Form Instructions but I think it should carry to Part I to net out against the 1231 land gain. Is this correct?
2) As part of this mess, the $9330 additional depreciation never gets recaptured because the above loss is handled per the instructions for line 26 of the form. Is this correct?
Any specific advice on filling out the form would be appreciated. Have already spent hours. Thanks
