Sale of Business Rental Property with land and depreciable assets

[ccgarcia]

I am using TT Business - I sold my rental property that is an RV lot (land) with a depreciable small building. The value is largely in the land which you do not depreciate. In TT Business I checked that the rental property was sold in 2023.  This is recorded on the Schedule E form correctly.  TT is asking for disposal of the small building, but not the land.  How do I enter the sale? 

FYI:  I had the identical type of transaction in 2016 and all went well. 

[Mike9241]

if you entered them on separate asset worksheets, on each asset worksheet you must enter an allocation of the sales price and the selling expenses. if it's on one asset worksheet, then the allocations are done there 

[ccgarcia]

In the program on Schedule E  I have "124 Address, City State" rental property and I have entered the rental expenses. This is considered land for tax purposes as it is an RV lot.  Among the asset I have "small building" which is on the land, but of little value compared to the land and I  have been depreciating for 10 years.  I checked that I sold "124 Address, City State" and I have disposed of "Small Building".  I have not been asked to enter the land portion of the sale and the expenses which is the majority of the value.  Where do I capture the land portion of the sale?

[ccgarcia]

I think my reply became a new post.  

[AmyC]

When you first entered the property for depreciation, you should have entered both a land and building value. If not, the program does not know there is land associated with the building.  Condos and such don't have land associated with them. No problem. You just need to report the sale now.

In your case, if the land value is not part of the rental, you can enter it separately. See Where do I enter the sale of a second home, an inherited home, or land on my 2023 taxes?

[ccgarcia]

I entered the property over a decade ago and TT Business did not allow me to enter land as it was not depreciable.   What I don't understand is that in 2016 I entered the same transaction seamlessly.  When I told TT Business that I sold my rental that year, it prompted me for the sales price and division of money toward the land and assets.  I am not getting those questions this time in the step-by-step format.  I can't find in TT Business where to enter the sale of the rental property.   

I have since manually opened a 4797 to enter the information manually.  This is not satisfactory.

FYI:  TT Business and TT Home and Business are set up very differently and the answers for one forum do not carryover.

[AmyC]

I am so sorry. In the business version, you won't be able to enter the sale of land in the rental section without the building. It seems like you would have entered the land as an asset with a depreciable building. However, if your paperwork is showing a correct sale of the depreciable asset you will still need to enter the land separately. Enter it under investments, as an other.

[ccgarcia]

After reviewing your question again, I went back to my entry of the property.  The Rental Property category is "5" land with a depreciable asset "small shed".  I checked that I sold the rental property - the land - this year.  It takes me to the disposal of the asset, but doesn't ask about the land.  This isn't other, it is a listed property.  TT Business should prompt the correct questions.  Why isn't it?

If I have to enter this manually, is form 4797 the correct form?

[AmyC]

What should have happened:

Purchase: For your depreciable asset, it must initially have been listed as real estate or there is no land value associated with the asset.  When you first entered the asset, you may not have selected real estate to enter the land value.   

Sale: Once you have an asset, the screen asks about the disposal of the assets. Then you enter the disposal information. I just made up numbers throughout the screen shots.

What may have happened and how to correct:

I think the shed may not have been entered as nonresidential real estate. This leaves two ways to go with the land and I believe your prefer this area so you need to:

1. save a copy of your return as it is now, 
2. take note of your prior depreciation, all information necessary to re-create the shed on your pdf copy
3. delete the asset
4. enter it again as real estate, be sure depreciation matches
5. sell it