Depreciation Recapture

[helow]

I have completed this tax return and before I call the customer and tell her she need to pay I would like to know I am right.

TP rented out this prorperty since 10/2003. She lived there for 3 month prior to her renting it out. She sold it on 4/28/09. I prepared form 4797.

Sales Price..............................................455,000

Cost/Sales expense..................................362,631

Depr recaptur + 4 months of depr...............56,212

Adjusted Basis..........................................306,419

Gain.........................................................148,581

This gain is shown on line 13 of form 1040.

This amount did not show up in Sch. D! Why not

Do you see any wrong with my calculation. Is there any way to legally avoid the recapture?

Thanks much

Helow

[RoyDaleOne]

Use the asset entry and disposal feature.

[grandmabee]

I have completed this tax return and before I call the customer and tell her she need to pay I would like to know I am right.

TP rented out this prorperty since 10/2003. She lived there for 3 month prior to her renting it out. She sold it on 4/28/09. I prepared form 4797.

Sales Price..............................................455,000

Cost/Sales expense..................................362,631

Depr recaptur + 4 months of depr...............56,212

Adjusted Basis..........................................306,419

Gain.........................................................148,581

This gain is shown on line 13 of form 1040.

This amount did not show up in Sch. D! Why not

Do you see any wrong with my calculation. Is there any way to legally avoid the recapture?

Thanks much

Helow

do you mean 04/28/08?

[ICOUNT]

I have completed this tax return and before I call the customer and tell her she need to pay I would like to know I am right.

TP rented out this prorperty since 10/2003. She lived there for 3 month prior to her renting it out. She sold it on 4/28/09. I prepared form 4797.

Sales Price..............................................455,000

Cost/Sales expense..................................362,631

Depr recaptur + 4 months of depr...............56,212

Adjusted Basis..........................................306,419

Gain.........................................................148,581

This gain is shown on line 13 of form 1040.

This amount did not show up in Sch. D! Why not

Do you see any wrong with my calculation. Is there any way to legally avoid the recapture?

Thanks much

Helow

The gain should be shown on Form 4797 first. I assume by recapture that capital gains can be taxed at the 25% rate. On the sale of rental property there actually are two sales---the sale of the building and the sale of the land. The sale of the land would have no recapture and qualify for the lower capital gains. Thus is all the gain was attributed to the land there would be no recapture.

[Julie]

Well, first, as icount said, you need to separate out the land. If you've already done that, and this is just the building: The part of the gain attributable to depreciation is going to be taxed at a higher rate than the part of the gain attributable to the appreciation of the property. Make sure your 4797 is filled out correctly for sec 1250 property.

I'm a bit confused by your entry about Deprec Recapture and 4 mos deprec? What was recaptured?

You might get more reliable results by using the sale page of Asset Entry in ATX, like RoyDaleOne suggested.