Hi Carl,
Thank for your detailed example as it was very helpful. In reviewing it, I did have the following questions:
1) How did you compute the Sale Prices for each of the assets?
In reading your explanation, it appears that you selected Sales numbers that met the criteria where for each asset where the selling price on each asset is "at least" $1 more than the cost basis and the sales price of all assets adds up to total sales price as you explained?
So, other Sales Prices number could have been used in your example as long as the 2 criteria you explained are met?
2) For the Sale Expenses, it appears that you used the 70/30 cost basis allocation for the structure and land to calculate the respective Sales Expenses. Because the HVAC and Windows were improvements, they would have no respective sales expenses correct?
3) Should the Gain number for the Structure be $43,000?
Sales Prices - Cost - Sales Expense + $120000 - $70000 - $7000 = $43000
Possibly a test to ensure I understand your example? 😉
4) It appears that I should have defined additional asset entries for the HVAC and Windows under the Sale of Property/Depreciation section? Specifying the relevant information (e.g. Cost, Date or purchase, Date Sold, Sales Price etc) for each asset even though there will be no depreciation on them since I held them for less than 1 year.
Thanks for the education!
