How to divide rental sale proceeds between two owners? What forms/entries are needed?

[valwoodward23]

 The Schedule E assets were updated and marked as sold with 50% ownership.  Attempted to use Schedule C but denied since the rental suffered a loss...?

Meanwhile, Form 4797's were generated...

Help!

[ChristinaS · Accepted solution]

Schedule C would not be used to report rental property activity. 4797 reports the sale of business property, which includes the sale of rental property. A sale is not reported on Schedule E itself- only the rental income and expenses (including depreciation) go on Schedule E. Schedule C is for a self-employed business, independent contractor work, etc- just not rentals.

While we are not discussing the specifics of the figures, there's no indication of a problem other than your attempt to use a Schedule C for rental property.

As far as dividing, there are no "special" forms for that, but the cost (basis) and sales price/ sales expenses would generally need to be split manually. Your own level of effort also depends on whether you have the depreciable asset in the program with these allocations already- this could vary from user to user. Have you been reporting 50% of everything in the program all along?

After reviewing the Form 4797s, please re-post if you see specific problems.