Investors & landlords

This is a very confusing area given the structure of the TT software.  Basically, you want to think about the sale in 2 parts:

1. The gain subject to recapture as Ordinary Income
2. The capital gain/loss

You handle the Ordinary Income, and none of the Cap Gain/Loss, in the K-1 portion of the interview.  You handle the Cap Gain/Loss, and none of the Ord Income, in the 1099-B portion of the interview.

In the K-1 portion, enter the Ord Income, and then 0 for sales and the inverse of the Ord Income (so if Ord Income is 100, enter -100 for Basis).  If you have AMT adjustments, make them and do the same in the AMT column.  If done correctly, the next screen in the interview will show 0 cap gain/loss.

Then, in the 1099-B portion, you'd enter the correct selling price, but adjust the cost.  The correct cost basis is what you originally paid, plus the cum adjustment, plus the Ord Income.  So if you paid $500, and the Cum adjustment is -150, and the Ord Income is 100, your basis is 500-150+100=450.

Note that your K-1 will show the split between long term and short term, so you'd use that % to split the basis adjustments and Ord Income.