House was appraised at $267,000 then. We rented the house for 14 years, and sold it in 2021 for $320,000. Info on 2021 TT is the total depreciation recapture is $59,748. Settlement costs were $18,500., improvements totaled $39,508. Our Fed Form 4797 Part II Line 18 shows -14,286.
something isn't right and we can not see your return
FMV @ DOD 267,000
improvements 39,508 assuming after inheritance
total cost 306,508
depreciation 59,748 assuming after inheritance
adjusted tax basis 246,760
selling price 320,000
selling expenses 18,500
net selling price 301,500
gain 301,500 -246,760 = 54,740
I don't know how TurboTax came up with a loss based on the number you provided. so you may have federal issues besides state issues.
since depreciation exceeds the gain the entire gain for federal purposes would be subject to IRC sec 1250 recapture
i can probably tell you what you may have done incorrectly. in Tutbotax when you dispose of rental property you are supposed to allocate the sale price among the various components - land, building and improvements. Selling costs are allocated based on the sales price allocated to the components. Most likely you allocated $0 to the improvements so the undepreciated cost shows up as a loss on the 4797.
