Sale of depreciable real estate

[itsonjohn]

Purchased house for $104000, in Nov 1993, added $16000 improvements. Sold in Sept 2022 for $408000 (net) Had a deferred gain from previous 1031 of $66000 and TurboTax showed 2021 accumulated depreciation of $82000. (2022 depreciation of only Subtracting the deferred gain, and accumulated depreciation gives a negative Adjusted Basis of $28000, resulting in Cap Gains of $408000+($28000)= $436000, correct?

Must I use the negative Adjusted Basis or do I treat the negative basis as a zero? 

Is there a worksheet that I can use to figure this out?

Thanks for your help,

[VincentL2]

Purchased house for $104000 + $16000 improvements = $105,600 basis.

Sold in Sept 2022 for $408000 (net) - $105,600 = $302,400 capital gain.

$302,400 capital gain - depreciation recapture (taxed as ordinary income) $82000 = $220,400 tax at capital gain rate.

The new 1031 property receives the basis from the previous property not a new basis from deferred gain. The 1031 suspends any gain to the sale of the new property.

[itsonjohn]

Vincent, I am confused by the basis calculation you've used. 104k+16K= $105600?

Bottom line is that I need to subtract the basis of the original property from the net sales price of the 2022 (replacement property) to get the total Gain; then subtract the accumulated depreciation (taxed at regular income rate) to arrive at the taxable capital gain which is taxed at the Cap Gain Rate.  Example: Sold current house net $408K - original house basis $100K=$308K-depreciation $81k= Taxable Cap Gain $227k. $227k x 15%tax = $34.5k leaving Dep. Recapt. of $81k taxed at (say) 22%=$17.8k. Total tax thus 34.5+17.8=$52.3. Apologies for the extra work but just want to be sure I understand your otherwise great advice. Thank you very much