Tax calculation on Recaptured Depreciation and LT Capital Gain on rental sale

[10276]

I just sold my condo in March 2022 with capital gain and trying to estimate by hand first the taxes portion before using TurboTax to file my 2022 income tax.

Sch. D line 15 shows $120,000 Net Long Term Capital Gain, total $63,000 for line 18&19

Form 4797 Part III line 22 shows $63,000 Depreciation, line 24 and line 32 shows $120,000 Total Gain (TG)

Form 1040-SR shows $190,200 Taxable Income (TI) 

Form Sch. D Tax Worksheet, I have to use only TI number on line 1, TG number on line 7, total number line 18&19 (Sch. D) on line 11 to obtain the tax number on line 42 to be included on Form 1040-SR

Questions:

1. Is the tax number on line 47 of Sch. D Tax Worksheet is the total tax for the Ordinary Income and Capital Gain portions only ... but not the tax for the Recaptured Depreciation?

2. The 25% tax for the Recapture Depreciation will be calculated and added on separately by TurboTax?

3. I also have $4,000 unallowed loss from 2021 and the overall gain number  shown on Form 8582 that was never asked to be used any where in calculating my tax estimation. Will TurboTax automatically adjust this loss and overall gain numbers to calculate the correct tax amount?

This would be the first time that I will use TurboTax to file my 2022 income tax to report a rental sale with capital gain. Could you please tell me if I am estimate my tax correctly or wait until I file my income tax to find out?

Thanks for your responses and advises.

[Critter-3 · Accepted solution]

Questions:

1. Is the tax number on line 47 of Sch. D Tax Worksheet is the total tax for the Ordinary Income and Capital Gain portions only ... but not the tax for the Recaptured Depreciation?  Look again ... the depreciation recapture is reflected in that calculation especially if you are using the TT program to do some what if's.  The recapture is taxed as ordinary income not to exceed 25% so you may see no difference at all.

2. The 25% tax for the Recapture Depreciation will be calculated and added on separately by TurboTax?  Again review the worksheet again carefully.

3. I also have $4,000 unallowed loss from 2021 and the overall gain number  shown on Form 8582 that was never asked to be used any where in calculating my tax estimation. Will TurboTax automatically adjust this loss and overall gain numbers to calculate the correct tax amount?  Prior year unallowed losses are released in the year of sale to line 18 of the Sch E ... look there for that amount. 

[10276]

Thanks so much for your reply.

You are correct on the recapture depreciation ... I looked again in the Sch. D Tax Worksheet, the depreciation was included in the Ordinary Income portion and is taxed at 22% rate, while the capital gain is taxed at 15% rate.