second request sale of rental property

[rohnnk]

turbo tax is calculating the 4797 incorrect. sale price is 320,000, basis is 240,000, selling expenses are 16,981 and depreciation is 16,000. TTX calculates capital as 96,000, I think it should be 39,019. what say you?

Thanks

[M-MTax]

How'd you get $39,019?

Your basis is reduced by the $16,000 depreciation deductions so it's $320,000 less $224,000 ($240,000 - $16,000) which equals $96,000. The $16,000 is subject to recapture. Then make sure you entered the selling expenses of $16,981.

[rohnnk]

my mistake the actual basis is 280,000 less 40,000 for the land makes 240,000 the adjusted basis for depreciation.

[Mike9241]

you have two assets land and the building. both were sold.

thus, the sales price and the selling costs must be allocated between the land and building

in Turbotax this can be done by showing total cost of $280K and then entering the land value on the same worksheet as $40K. Turbotax will use a depreciable basis for the building as $240k. you then would enter the allocated amounts for each item on the worksheet

one way is based on their original cost, but the proper way is based on their relative fair market value

so combined

sales price         320,000 

cost building     240,000

land                       40,000 

expenses            16,891

depreciation      (16,000)

net                      280,891

gain                      39.019