sale of rental property by partnership

[Alpinewood]

I have a partnership 50% owned by me and 50% owned by my son.  The partnership purchased a home for a rental in August 2023.  The partnership sold the home for a loss in April 2024.  We did not have any rental income in either 2023 or 2024.  The partnership filed a form 1065 supported by forms 8825 and 4562 for 2023 which showed a loss in 2023 and distributed K-1s to the 2 partners. 

I have completed a pro-forma form 4797 for 2024 and will complete form 8825 for the expenses associated with the home. 

2 questions:

1) How does the form 4797 loss make it to Form 1065?  

2) Should I omit depreciation for form 8825 in 2024 since I would add it back to for 4797 if took depreciation as 2024 expense?

[tagteam]

1) Transferred to Line 2 of Part III of your K-1s.

2) Do not forego depreciation for 2024 if the property was available for rent.

[Mike9241]

as @tagteam mentioned if the property was not available for rent in 2024 - no depreciation is allowed. the same goes for 2023 so if you took depreciation, you would need to amend.  

[Alpinewood]

Thanks for the prompt replies.  To clarify, we offered the property for rent in 2023 and did not offer the property for rent in 2024 – we listed for sale and then sold the property.  So I believe the return is correct for 2023 and will be for 2024.

Don’t I need to report the loss from Form 4797 somewhere on Form 1065 Schedule D or Form 8949 and then enter it somewhere on Form 1065 before I allocate 50% to each partner’s K-1?  Or do I simply allocate the loss between the  each partner's K-1 and not report it anywhere else?

Thanks for your guidance.

[tagteam]

The loss will be reported on Form 4797 and then passed through on your K-1s.

The program will take care of that for you.