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Using the template we should not have a gain or loss:
orig cost $435K
conversion value $321K (lower of cost/FMV at rental time)
depr taken $35K
= Adj basis for gain $399K
Adj basis for loss $285K
Sale price is 370K
taxpayer did not live in house in last 5 years.
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You need to use a make-believe Basis. Use a Basis of $405,000 (sale price, plus total depreciation) for purposes of the disposition.
You can enter that in the disposition area of the Asset Entry Worksheet where it says "Asset gain (loss) basis, if different".
An alternative is to ONLY enter the sale date (no sale price) on the Asset Entry Worksheet, and enter the same numbers on the "Enterable 4797" (Basis of $405,000, sale price of $370,000, with total depreciation of $35,000).
