TaxGuyBill
Level 15

I'm too tired today to analyze everything you said, but I'll toss out a few thoughts and questions:

 


@david3 wrote:

The election to elect out of regs under Sec 1.168(i)-6(i) was not taken.

When the accumulated depreciation from the relinquished asset was entered on the replacement property Asset Entry Wks, an error message stated that no prior depreciation should be entered for the asset.


 

If the election out was not taken, you should be depreciating it on two separate Asset Entry Worksheets, right?  One for the depreciation of the 'old' building and one for the additional cost for the 'new' building.   The 'old' building should still have the original "placed in service" date with the prior depreciation.

If that is the case, you can just allocate the sales price between the two Asset Entry Worksheets.

Otherwise, for any situation that entering the sale on the sale on the Asset Entry Worksheets is problematic, you can just enter the sale DATE on the worksheet and leave the sales price BLANK.  That will stop the depreciation.  Then use the "Enterable 4797" to manually enter the sales information.

 

 


@david3 wrote:

Boot of $35K was reduced by selling costs of $30K resulting in a taxable gain of $5K.

Shouldn't the 1250 recapture be $32K plus $66K for a total recapture amount of $98K?


 

I didn't look at all of your numbers, but did you factor in the $5000 that was already taxed?  You don't want to tax that again.  I think the $5000 of taxable boot should have been taxed as Unrecaptured Section 1250 Gain, so that will reduce that amount of gain subject to Unrecaptured Section 1250 Gain.

 

0 Cheers