Unrecaptured Section 1250 Gain

[palbert1]

Form 1065, Schedule K, Line 9c Question:

TurboTax Business entered a number there for Unrecaptured Section 1250 Gain.

According the Schedule K Instructions, Form 4797 amounts for Section 1231 and 1250 will flow to Line 9c and Line 10. 

Form 4797, Line 26 (if Section 1250 property) If straight line depreciation was used, enter 0.

We used straight line depreciation and don't understand why TurboTax Business entered a large value there on Schedule K, Line 9c when we think it should have been 0.

Please explain.

[Rick19744]

Did you sell some of your real property?

[palbert1]

Yes, we sold a residential rental home that was the sole asset of an Florida LLC with husband and wife as only members.

[Rick19744]

Line 9(c) is not double taxing any of the gain reported elsewhere.

What is happening here, is that Section 1250 gain is taxed at 25%.  So the software will use the figure on line 9(c) when determining your overall tax.  This computation is done on the worksheet for Schedule D.