I am unsure of how to report the sale of a duplex; one unit owner occupied and one unit rented. The rental unit is separate from the owner's unit, and has always been used as a rental. I know that the adjusted basis, selling price, expense of sale, etc. must be allocated, with the rental unit sale reported on form 4797. I believe that the owner occupied unit is reported on form 8949 (not positive about that) but if I do it that way, the sales price entered on form 4797 will not match the 1099-S. How do I properly reconcile this? Also, is the gain from depreciation taken before May 6, 1997 excluded? I am using Drake software. I have never reported this type of sale before; any help would be greatly appreciated.
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Does the seller qualify for the Sec 121 exclusion?In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de Tocqueville -
The seller does not qualify for an exclusion on the rental unit; she does qualify for the Sec 121 on the unit she resided in.Originally posted by DaveO View PostComment
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Regarding the 1099-S, I think you have to hope IRS will notice the non 1099-B transaction on Form 8949 and add it to the 4797 gross sale and realize all is reported. All depreciation on the sale of the rental is taxed. The exclusion you refer to, only applies to home offices.Comment
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When reporting the sale of the rental part of the building on form 4797, would you identify it as a 1099-S transaction? My thinking is that if I do, the gross sale price will then carry to line 1 which will be an obvious mismatch with the 1099-S. Do you think that it would be less of a red flag if not shown as a 1099-S sale, or will they think that there is a 1099-S transaction that is not being reported?Originally posted by Kram BergGold View Post
In this case the basis and gross sale price will be divided equally; 50% to each. The sale of the rental unit will produce a gain due to depreciation taken, but the sale of the owner's unit will actually be a loss. The check box on form 8949 will indicate that the transaction was not reported on 1099-B, so perhaps if I attach a statement explaining that the sum of the 1099-S transaction is reported on two separate forms, that will take care of it.
Thanks for the clarification on the pre-1997 depreciation....I thought that it probably applied only to a home office type situation, but wasn't positive and didn't want to short change my client.Comment
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In this case (I have had such a situation) the rental half went on 4797. The personal half went on the 8949 showing 121 exclusion. This is easily accomplished in my software. Therefore the two gross proceeds items will match the total on the 1099-S. Should not be a problem. And there should not be any need to attach a statement.Comment
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What software do you use? I am using Drake and if there is a way to accomplish the above, I am not aware of it. Maybe I will email support and ask.Originally posted by Burke View PostComment
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