I have a situation which has been discussed before - but am now having to deal with the nuts and bolts of how to report. Most of us are aware of the "twilight zone" when selling a residence converted to rental home: For computing a loss, the basis is the FMV at time of rental, but for computing a gain, basis is historical cost. Thus any sales value between the two becomes a zero gain/loss.
For reporting unadjusted basis (no depr), I'm assuming this number on the 4797 simply wratchtes upward to the extent necessary to bring about the zero G/L.
What about the Depreciation Recapture (sorry, Roland)? Is the zero G/L before or after the recapture? If it is reported on Part III of 4797, the zero G/L will be a net transaction between a LT capital loss and a section 1250 recapture gain. Doesn't sound very smart to report it that way...
Remember, the reporting of the unadjusted basis is a phony contrived number to begin with...
Comments?
For reporting unadjusted basis (no depr), I'm assuming this number on the 4797 simply wratchtes upward to the extent necessary to bring about the zero G/L.
What about the Depreciation Recapture (sorry, Roland)? Is the zero G/L before or after the recapture? If it is reported on Part III of 4797, the zero G/L will be a net transaction between a LT capital loss and a section 1250 recapture gain. Doesn't sound very smart to report it that way...
Remember, the reporting of the unadjusted basis is a phony contrived number to begin with...
Comments?
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