Form 1065 LTCG qyestion

[Snaggletooth]

A partnership sold a building (rental property).

Imagine the following elements on Form 4797:
Sales Price $120,000
Original Cost $90,000
Depreciation $30,000

No one disputes the gain should be $60,000. However, I'm thinking the recapture should be %30,000 in ordinary income, and $30,000 should appear as LTCG on Sch D of Form 1065.

Drake is showing all of the income as ordinary income. Am I correct or is Drake correct and I'm losing my mind???

[Uncle Sam]

First of all - where's the segregation of land vs building? Otherwise you're not properly reporting the sale.
On Form 4797 the land gets reported on P. 1, the building and accumulated depreciation goes on P. 2.

Yes - you're losing your mind. Anyone who has been around a long time - like you claim you have been - should know this by now.

Stop trying to test us on how much we know!!!!!!!!!!!!!

[BOB W]

Ordinary income from depreciation recapture.

[kathyc2]

Obviously something is screwed up if anything from this transaction is showing on a 1065 Sch D. 4797 which flows to K1's.

[Snaggletooth]

First of all - where's the segregation of land vs building?

The owners bought the building and paid rent on the land. Not very smart but those are the facts.

Stop trying to test us on how much we know!!!!!!!!!!!!!

I think this message board has the facility to block certain members from viewing their posts. Unless you delight in reading posts so you can insult them, why don't you try that?

[Snaggletooth]

Obviously something is screwed up if anything from this transaction is showing on a 1065 Sch D. 4797 which flows to K1's.

Looks as if this is correct. I took the time to look at the instructions, since the form itself declares "most" sales can qualify for capital gains. Apparently the instructions say that Real Estate transactions are forced entirely into Part IIi. Unfortunate that the customer lost LTCG but at least the gain will qualify for QBi. Capital gains would not qualify.

Thank you MIss Kathy.

[Uncle Sam]

When you quote me - at least quote all that I wrote and don't add your own sarcasm.
You are the one who looks for attention by being a nuisance. Go back to ATX board.

[kathyc2]

Unfortunate that the customer lost LTCG but at least the gain will qualify for QBi. Capital gains would not qualify.

That is not what I said. The partners will get CG rates from appreciation portion on the 1040 Sch D if the K1 is completed correctly.

Seriously you should see your Dr. You might need medications adjusted.

[Lion]

Please, do NOT go back to ATX board !!!

[Rapid Robert]

"First of all - where's the segregation of land vs building? Otherwise you're not properly reporting the sale.
On Form 4797 the land gets reported on P. 1, the building and accumulated depreciation goes on P. 2."

This is correct.

"Apparently the instructions say that Real Estate transactions are forced entirely into Part IIi."

This is not correct for Form 4797.

In the OP, there is no depreciation recapture.

There is $30K of Sec 1231 gain, and $30K of Sec 1250 gain. Both of these will end up as LTCG on the partners' returns, although taxed at different maximum rates (and assuming no prior year carryforwards of nonrecaptured Sec 1231 loss).

[Snaggletooth]

Thank you RR. I understand that the recapture is subject to ordinary income or 25%, whichever is lower.