1120S - Asset entry - how is the gain calculated?

[roshansharma]

Need help understanding where the gains of $7901 and 6201 come from on the Asset Entry Wkst

[tagteam]

Can you post a screenshot of your Form 4797? 

With respect to the land, it appears as if your land basis is the same as your land sales price for which you had $1,700 in sales expenses and all of those expenses resulted in a loss on the sale of the land.

[HopeS]

You will need to review the Detail of the gain which will be reflected on Form 4797. The prior years' depreciation will be factored into the computation of the gain on the sale of the asset since Tax rules let the IRS recapture some of the depreciation deductions you have taken since you owned the asset. The recapture rules differ for real estate and equipment.

If you sell depreciable equipment at a gain, you must recapture either the depreciation and expensing deductions claimed on the asset, or the total gain, whichever is less. This recapture amount is then taxed as ordinary income, not as Section 1231 gain.

Also, see IRS instructions for Form 4797 below as well.

Instructions for Form 4797

@roshansharma