I replaced my undepreciated HVAC system on rental property that was being depreciated over 27.5 years. I entered the information as to date sold and zero dollars on sale - the Asset Worksheet calculated a loss and the loss did not carryover to Form 4797 - the Form is showing zero dollars for the loss.
I cannot reproduce the result you are seeing (i.e., the loss appears on Form 4797).
Where in the program are you entering the "sale"?
it's not clear why the old HVAC is undepreciated if it is listed as a separate asset or was it included in the original purchase price of the property?
Since it's an asset associated with a rental property - which flows through to a Schedule E, the information was entered on the Asset Entry Worksheet, which reflected a loss on Line 31 of $1,766. The following information flowed from the Asset Worksheet to Form 4797 Part 1 - Line 2 - (a) Description of property; (b) Date Acquired; (c) Date Sold (technically system was replaced); (d) Gross Sale Price (zero came through); (e) Depreciation allowed or allowed since acquisition ($1,164); (f) Cost or other basis ($2,930) and (g) Gain or (Loss)
Subtract (f) from the sum of (d) and (e) ($0 is what TurboTax entered) - the loss of $1,766 did not flowthrough.
It was a separate Asset - as it was not the original HVAC system purchased with the house, but replaced the system 10 years ago in 2010 and then this system had to be replaced in 2021 - since tax law required it to be depreciated over the life of the rental property - it had an undepreciated value remaning at the time of replacement and based upon my understanding this is a loss that should have come through on Form 4797 after entering the 'Sale' (replacement) information on the Asset Worksheet.
Why did you not simply indicate it was sold in the Rentals section?
I presume it was already entered as an asset in that section, was it not?
I did enter the asset as sold in the Asset Entry Worksheet and it calculated a loss of $1,766 - this loss did not flow through to Form 4797 - as noted in my more detailed response above. If I override the amount calculated on Form 4797 and enter the correct amount of the loss, TurboTax indicated I will not be able to file electronically.
I meant the Rental Properties and Royalties section of the program.