You can allocate the gain by taking the $5400 allocated to land divided by the purchase price of $22,617 that equals 23.87%. Multiply the amount of the gain by 23.87% and allocate that amount of the gain to the land.
The improvements made to the property add to the basis the the rental property you do not report the gain separately to the Improvement Assets. You would add the improvements to the building portion of the rental property so you only have gain on the land and gain on the building.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
