The reply (answer) in a 2020 posting on the Subject stated that "If you sold a rental property at a gain, you must show a gain on all assets, even if that gain is $1. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1." My question is ... I don't understand why, since all the asset Gains and Losses add together on Form 4797, Page 1.
I sold the property for a Gain. If I disposition each of the assets with a sales value of $0 or $1, I get a loss for each that have a remaining basis to depreciate. This was actually the recommended answer to previous questions submitted to TT.
The only way to obtain no Gain or Loss ($0) is to enter the exact difference between the Cost (Depreciable) Basis and the Total Depreciation at the time of sale. This is what I did on my 2021 return yet to be filed under an extension.
Example: Asset Cost (Depreciable) Basis $4,000 minus Prior Depreciation $2000 minus Current Depreciation $100 equals $1900. Enter $1900 as this Assets Sale Price and you get $0 Gain/Loss.
If it needs to be a gain of $1, then I would need to enter this difference plus $1, i.e. $1901.
Does anyone know the correct (or IRS acceptable) approach?
Happy to make it a Gain of $1 if it keeps me in the good graces of the IRS.
Thanks!
