How you allocate your sales price only matters to a certain degree. Things don't have to be allocated proportionally per-se either. But there are a few ground rules.
- If you have more than one asset listed in the Sale of Property/Depreciation section of the program. then you need to allocate your sales price of the structure (not the land) across all SEC 1250 depreciable assets.
- If you sold the property at a gain, then you need to show a gain on all assets - even if that gain is $1 on some assets and thousands of dollars on other assets. This is the only way the program can correctly account for the required depreciation recapture.
- If you sold the property at a loss, then you need to show a loss on all assets - even if that loss is $1 on some assets and thousands of dollars on other assets. This is the only way the program can correct account for the depreciation recapture. If an asset was sold for less than it's adjusted basis (original cost minus depreciation) this will ensure the program does not "do the math" to have you paying taxes on recaptured depreciation.
When you show a gain on some assets and a loss on other assets, it screws up the 4797 and SCH D and the program will not catch any error then, since as far as the program is concerned, the math "works out". (Even though the wrong math may be used.)
