If I go to Form 4797 and ‘override’ the loss on line 18b to be zero (0.), that removes the loss (and adjustment to income) on 1040, which is compliant. Maybe in 4797, I could add a note in the Description of Property, “Related Sale, Loss Not Allowed?” Could it be this easy? The instructions for line 18b in 4797 do advise to “Redetermine...”
If I do this, all numbers reported are consistent and accurate. The cost basis will remain the same (no need to 'drastically' change that), 2020 depreciation will also be consistent with depreciation history.
