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?
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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.
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.
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.
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.
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