Form 4797 is Sale of Business Property
-- including real property
-- There are four "Parts" -- only two are relevant here
Part 1 is entry of key data (primarily for Long Term holdings) -- TT collects this properly
Part 1 then goes on to determine Gain and you can go from this part direct to Schedule D
TT does not show these lines
Part III -- is for disposition of properties where there is "accelerated" (per IRS) depreciation
-- such depreciation is converted to regular income
--- the SOLE exception is if the depreciation was taken straight line
over an extended period (20+ years)
-- TT does NOT ask how you took your depreciation
-- TT just goes to Part III and assumes your depreciation is taxable
The result is that they complete Part III automatically and end up with
-- Capital Gains -- correctly
-- AND "unrecaptured section 1250 gain" (Worksheet for Sched D line 19)
that is NOT correct -- if you took the depreciation straight-line
and for a property you held for 31 years -- that can be a big number
That then flows to the Sched D tax worksheet to determine taxes due on 1040 line 16
Instead of the Qualified Dividends & Cap gains worksheet feeding that line
The result is a increase of ~10% in taxes due
How do I fix this?
-- I do not see any way to adjust the handling of the data input into Form 4794
If I can't fix it, how is TT going to fix it.
Thank you
Bob
