Thank you - that was extremely helpful. A couple of final questions:
- I am going to enter the 2022 capital improvements as "Repairs" in schedule E instead of "Selling Expenses" in form 4797 line 21. Please confirm that this is correct and that you agree? What difference does it make on the Taxes (if any)?
- Is it a tax rule to "use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset. Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset"? My thinking was to just put the selling price of the Land equal to the cost basis so that there is no loss or gain as the Land was not depreciated and also should have no appreciation or gain/loss. Hence, all the gains and losses would be focused on the building. Is this not allowed and do I need to allocate the sales price and selling expenses to the ratio of the cost basis for the land/building that was originally entered when this asset was put in service by Tax law? I tried looking up the Tax law on this piece, but could not find anything concrete.
