1099-A Rental Property

[willhamacct]

Client received a 1099A for rental property. The outstanding principal balance was $110,653.66 and the FVM was $114,0000. However, the cost basis was 164,233 with 62,133 depreciation, leaving adjusted cost basis 102,100. Just to confirm my thinking. Does this create a capital gain of $8,554 on schedule D and report sale on form 4797?


Thanks,
Melonie Williams
Willham Accounting, LLC

[Lion]

In my currently sleep-deprived state, I say Yes.

[Roland Slugg]

You are exactly right. Report the transaction the same as you would a sale, starting on F-4797, Part III. The "selling price" was $110,654. The $8,554 gain will flow to Schedule D. The entire gain, btw, will all be Unrecaptured §1250 Gain.

Since the property's FMV was higher than the debt, the FMV does not come into play. When the FMV is lower than the debt, the difference is taken into account in some situations.