Form 4797 Part ii Line 10 -- sold de minimis deducted property

[disgruntled3]

Where/how on TT do I enter the sale of business property which was deducted under the de minimis safe harbor?  This needs to be reported on Form 4797, Part ii, Line 10.  I think it's taxed as ordinary income (not capital gain rates).  I entered it as sale of business property, but TT wants me to enter prior depreciation for which there is none.  TT seems to be putting this on Form 4797 Part III, but it belongs on Part II.  Thanks.

[Anonymous_ · Accepted solution]

Your profile indicates you are using the online version of TurboTax Deluxe and I doubt you will be able to get the transaction ported to Part II of Form 4797 with that version.

If you were (or are) using TurboTax Self-Employed or TurboTax Home & Business, you can get to that section of Form 4797 through the Business Income and Expenses section.

You need to click the Start (or Update) button to the right of Special Situations and then check the box as shown in the screenshot below. From that point you will enter an asset description and select Ordinary income asset from the dropdown menu. Of course, you will enter your cost basis as zero.

[disgruntled3]

I'm using Turbo Tax Premier on-line.  I've done several searches and still can't find the where to enter sale of a nondepreciable business asset which was described above.  Thanks for any help.

[Anonymous_]

You need to upgrade, most likely, to the Self-Employed product (or use a desktop version).

[Critter]

If you are filing a Sch C and you sold something you deducted as an expense (did not list as an asset and depreciate it ) then it is simply income to the Sch C and is listed as INCOME.   The business did NOT sell an asset so you do not use the form 4797. 

[disgruntled3]

Maybe, but TT ought to be able to handle it thru Premier, which I've always used because of Sch E rental property which sold in 2019.  TT capability includes the de minimis deduction so it ought to handle the sale of such property without upgrading.  (I have no Sch E for 2019 because no rental income and TT deleted my asset schedule when I clicked the boxes indicating it sold and not rented.)  (TT is handling the sale of the land and the house properly on Form 4797.)

[Critter]

@disgruntled3 

In view of all the posts you made you really should be either using a paid tax professional  OR   upgrade to the LIVE option so you can get one on one assistance.

But since you are using a Sch E and not a Sch C then the answer is still the same ... if you deducted something as an expense instead of depreciating it as an asset then you simply have regular income to report on the Sch E ... do not use the form 4797 ...  just lump it in with rent. 

[disgruntled3]

It does not go on Sch C or E, but that would give it the same tax rate treatment as on a correct Form 4797.  Per the Form 4797 instructions, the sale of business property which was deducted under the de minimis safe harbor goes on Form 4797 Part II Line 10.  I know what the forms should look like if prepared properly, I just wasn't able to figure out how to get TT to do it correctly.  I did eventually find a solution thru the TT Sale of Business Property by clicking held one year or less, entering the actual purchase and sale dates (which are long-term), and TT reports it correctly on Form 4797 Part II Line 10 (ordinary income) and taking it to Form 1040 Schedule 1 Part 1 Line 4 which is correct.

[Srubyak]

TT (Home and Business), allows me to only enter 10 items (5 per page and two pages) for the Asset Sales Worksheet Summary.  My understanding is all items are suppose to be listed individually.  I have about 70 items that were sold that I need to list.  Is there a different way to show the sale of assets that were de minimis?  I will be filing Form 8594 that shows the total as part of the class V assets.

[Critter-3]

Please feel free to group like items with similar class lives on the 4797 but items that were expensed are NOT assets and as such are simply ordinary business income like inventory so you will Not use the 4797.