No. It would not be considered personal residence. He was "allowed" the depreciation at the time it was rental property. I assume you are referring to the suspension of the loss due to his AGI. Some of that loss might have been depreciation, or it could have consisted of other expenses as well. It was suspended, not disallowed, and he is now able to deduct all of it due to disposition. Note that he is not able to deduct the loss based on the original purchase price of the property when it was a residence.
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Last edited by Burke; 04-26-2012, 11:58 AM. -
You are not disregarding it. That is what is triggering the sale / disposition, the 4797, the release of the suspended losses, etc. You just don't have to enter it in your software via a worksheet if you don't wish to. My software doesn't even have this form/worksheet. You plug the numbers just as if there had been an outright sale to another party on the appropriate forms. Software is wonderful and I would not want to do tax returns without it, but sometimes an "enhancement" attempts to take away any judgement on our part. There really is no substitute for the human brain. Your unease with the way the numbers were coming out was justified and warranted exploring.Originally posted by AZ-Tax View PostLast edited by Burke; 04-26-2012, 12:00 PM.Comment
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Agreed. And if you are using Proseries, the worksheets are not made for this type of issue (personal to rental & foreclosure) and will generate all sorts of wrong answers if you rely on the software. Take this from someone that made a bit of money walking two Proseries users through a few clients with about 4 foreclosures/short sales between the two of them. I knew what the answers were and could NOT get the **** program to generate them.
Those worksheets took what should have been a half hour bit of computation into several hours of consultation revenue.Comment
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