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In TT H&B 2020 desktop version, when reporting the sale of partially depreciated improvements on a 100% business use asset, I am not clear how to fill out the sales price and sales expense fields. I understand that I need to do this in order to allocate the sales price of the house between the house itself and these improvements, reducing the reported sales price of the house asset by what is allocated to the improvements. What I don't understand is how to do that in such a way that TT will handle the fact that only part of these assets have been depreciated so far.
Do I simply add up the depreciation taken in prior years and the current year and use that for the sales price, ignoring the sales expenses.. or is there a different way this is done?
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Since the sales price covered everything, the house and the improvements, you can just enter the on the HUD for the house and zero for the improvements. You can also split it up, but that is more work. The program should take the depreciation into account for you, if you are entering the sale in the Rental Section (which you should be doing if you rented in 2020).
If you are entering the sale in Sale of Business Property, you will have to add the 2020 depreciation to the accumulated and enter it as a whole.
So that it's actually done correctly by the program, you need to allocate the structure sales price across all SEC 1250 depreciable assets. Just keep in mind that if you sold at a gain, then you must show a gain on all assets - even if that gain is only $1 on some assets, and thousands of dollars on other assets.
Likewise, if you sold at a loss then you must show a loss on all assets.
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