Sale of Rental Property

[Koss]

I'm having a brain lock here...

Is the sale of a rental property treated as a capital gain on Schedule D, or an ordinary gain on Form 4797?

Does the treatment change if it is an installment sale?

BMK

[BOB W]

I'm having a brain lock here...

Is the sale of a rental property treated as a capital gain on Schedule D, or an ordinary gain on Form 4797?

Does the treatment change if it is an installment sale?

BMK

Brief overview response>>> If a profit, gain first goes to depreciation recapture(ordinary income 4797 page 2). the excess goes to CG.

Installment sale>> ALL depreciation recapture is reported in year of sale. CG goes on Installment sale form.

[solomon]

If there is a gain, the depreciation after May 6, 1997 is considered unrecaptured 1250 gain taxed as capital gain up to 25%. Any gain beyond that is taxed at regular capital gain rates.
From part three of 4797 it flows to part one and then to Sch D. The depreciation subsequent to the above date is not at ordinary rates. The unrecaptured 1250 gain flows to the 1250 worksheet and then to the capital gain worksheet.

[Davc]

Part 2 4797 and read the form. I would completely ignore the above post. May 1997 has nothing to do with rentals and gain not attributable to depreciation is not taxed as ordinary income.

[Questionguy101]

Which program do you use? I use Drake and it makes it very easy for us. All we need to do is to specify that it is a 1250 property. And then we enter the amount of depreciation allowed through the years, sale price, cost basis and the sale expense. Drake would then do all the calculations based on the tax rule..like the 25% ceiling capital gain rate depreciation recapture...etc.

[Black Bart]

Gosh, Davc

Part 2 4797 and read the form. I would completely ignore the above post. May 1997 has nothing to do with rentals and gain not attributable to depreciation is not taxed as ordinary income.

Why soften the blow? No use holding back about poster Sol's answer. Why don't you just give it to him straight that you think it's baloney?

[Corduroy Frog]

Dumbing Down

I use Drake and it makes it very easy for us. All we need to do ....Drake would then do all the calculations based on

Unlike others who have spiced up the thread, please do NOT ignore Questionguy's post. With no slight of anything negative to Questionguy, I believe his post is clear proof that we are being "dumbed down" by software, and worse still, by the electronics mindset at large.

Just like we're hearing about kids not learning cursive handwriting, preparers have attached themselves to keypunching rather than procuring an analytical knowledge of tax behavior. If this happens, we can claim to be no better for our clients than TurboTax.

I have had other preparers call me a total idiot, but I prepare every return on a set of home-made worksheets (many of them from TTB). Then I repeat the process by putting the information into Drake. Occasionally, I back off of certain complexities such as AMT in the interest of billing the customer for less time.

Why the duplicate effort, and the old-fashion grinding out of numbers? YOU CANNOT DO A RETURN BY HAND without an intimate knowledge of every line on the tax return. You cannot compute their refund or due without getting in the trenches and knowing how the items of certain income and expense interact with each other to contribute to the final outcome. Yes, and Drake catches me in error sometimes and sometimes Drake is wrong.
Some of my errors are calculation, others teach me that I'm not flowing information correctly, and I know better the next time. When Drake is wrong, most of the time it is not Drake's fault, but simply the screens do not populate the way they intend.

Bart, we've had Davc and Solo answer many posts. Tell 'ya what, you manage one corner and I'll manage another. We'll charge admission...