How did you arrive at the sold for price of the house, roof and A/C?
Basically, I pulled the numbers to use for the split out of thin air, keeping one significantly important thing in mind.
- If you sold the property at a gain, then you MUST show a gain on "ALL" assets - even if the gain on some of those assets is $1.
- If you sold the property at a loss, then you MUST show a loss on 'ALL" assets - even if that loss on some of the assets is only $1.
The program itself seems to have issues if you show a gain on some assets, and a loss on others. More often than not, it will screw things up and you'll never know it until you get that audit letter from the IRS 24-36 months after you file the tax return reporting the sale.
So when figuring what number to enter on an asset, keep in mind that you need to subtract the depreciation already taken on that asset and then enter your sales price from that "adjusted" cost basis.
Example:
Asset cost basis is $3,000
I've taken $300 of depreciation on the asset.
I sold the property as a whole, at a loss.
I report my sales price on this asset as $2,900.
That would be wrong, because the depreciation recapture puts my adjusted cost basis on this specific asset at $2,700. So if I report a sales price for this asset of $2,900 I'm reporting a gain on this asset. Chances are, with losses on other assets, the program is gonna screw this up big time.
I've not really looked that close into it, but I think it all has to do with gain/loss on the sale of the land, since the land is not depreciable.
So if your sales price for the land is at a gain, then "everything else" in the assets section must use a sales price that shows a gain too - even if that gain is only $1. Vice-versa if the sales price of the land shows a loss.
