I sold a rental property that I have owned for several years. I want the gain treated as a capital gain, not as ordinary income. TurboTax is reporting the entire gain amount on form 4797 as ordinary income.
Shouldn't I be able to have any gain amount above depreciation recapture reported as capital gains, and taxed as such?
You can't treat it as capital unless you didn't intend to make a profit on it. Since you held it out for rent, it's assumed that you wanted to make a profit on it.
Think about it: you've made money off that property the time you've owned it, so you should pay ordinary income tax rather than have the more advantageous tax treatment of capital gains.
This, from the IRS:
Rental property is income-producing property and, if you are in the trade or business of renting real property, report the loss on the sale of rental property on
Form 4797, Sales of Business Property
. Normally, you transfer the loss as an ordinary loss to line 14 of Schedule 1 and attach it to
Form 1040, U.S. Individual Income Tax Return
. If your rental activity does not rise to the level of a trade or business, but instead is held for investment or for use in a not-for-profit activity, the loss is a capital loss.