Question: My father sold a building in 2021 at a 400k gain on an installment sale. Essentially half the proceeds were received in 2021 and half in 2022. So 200k of gain was recognized in 2021. There was 94k of previous depreciation. He also had a short term capital loss carryforward of 171K. Turbotax had 94k of the 200k gain as 1250 gain (previous years depreciation) but then offset this with the 171k of short term capital loss carryover. Result was there was no gain taxed at 1250 rates and line 19 of schedule D was zero. All of the gain was taxed at regular capital gains rates. This appears correct to me.
Skip forward to 2022. For 2022 is it correct that the entire 1250 gain was recognized in the prior year (and offset with the short term capital loss carryforward) and therefore there is no 1250 gain to carryover to 2022.? I am trying to do a 2022 projection using the 2021 tax return and just want to make sure there is no more 1250 gain to carryforward since it was all recognized in 2021 and offset by the short term capital loss carryover. Turbotax still has 94K of previous depreciation and is now taxing this at I believe 25 percent. I think for the 2022 projection I have to force the 1250 depreciation to be zero (since it was all recognized the year before and offset with the short term capital loss). Am I correct in doing this?
