Form 4797 not reflecting land in Part 1 from sale of rental property

[babs234]

I have entered the house and land in the Asset Entry worksheet. The Premium TT asks to include the house and land on line 4 and then break out the land on line 8 and I have done so.  On Disposition line 21 and 22 I list the Asset Sales price and expense of sale; then on line 24 and 25 I list the Land Sales price and land expense of sale. Line 34 shows the correct Land Gain/Loss.

Form 4797, however, shows the land and house combined in Part III.  Land should be showing in Part I.  How do I fix this ?

[ThomasM125]

You need to edit your rental entries. On the screen that says Your (name of business) Business, choose the Assets being Depreciated option under Business Assets. One there go to the Asset Summary. From there,  edit the rental house asset. On the screen that says Tell us more about this asset, indicate that you sold it. Later on the Sales Information screen, you will break out the sale amount between the building and the land. Once you do that, the gain on the land will show in Part I of Form 4797.

[babs234]

I have all the information entered into the Asset wks and under DISPOSITION the Asset Sales Price (Sales price of building excluding the land) and the Land sales price.  It still does not put the Land gain in Part 1 of the 4797.

Please re-read my original question where is said what lines were filled in.  I believe I had done exactly what you wrote.

Thanks

[babs234]

I forgot to mention that this is an Installment sale.  Would that affect why land is not showing under Part 1 on Form 4797?  The correct gain for land is showing on Form 6252 under "The Unrecaptured Section 1250 Gain Smart Worksheet" line G

[AmyC]

Yes, the software is reporting your land as a depreciable asset - section 1250. Since the section 1250 flows through the 4797 part III to sch D, we need to get the land moved. Land is sec1231 and needs to be on 4797 part I. You want the more favorable tax rate. Since you broke out the land in the house sale and the program missed it, you need to break up your asset into 2 entries.

1. Edit your asset and take out the land value, sale, all things related to the land. This leaves the house, depreciation, and sale.
2. Add a new asset - land, select land, non-depreciable, enter your original cost. Sell the land.