Form 4797, dispositions, and office in home

[Catherine]

Client sold of principal residence with office in home. So we need to report depreciation for gain but there is NO gain on the overall sale of the home -- not just Section 121, but the house sold for an overall (small) loss -- so the ONLY reportable "gain" is the depreciation taken for the past several years.

I need to adjust the basis for improvements needed as condition of sale (this puts the property from gain on sale to loss on sale).

I can enter basis adjustment on fixed asset --> dispositions -->disposition info screen and the total properly recalculates for federal AMT and State, but does NOT recalculate for "normal" federal, NOR can that total be over-ridden and adjusted manually, NOR can it be fixed on the 4797 -- which is showing an imaginary, nasty, "gain" as taxable.

Can anyone help here?