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carryforward loss to current year sale of rental property

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Level 2

Client has prior carryforward loss of $43,397. Client lives in Georgia, rental property sold in Arizona. Prior loss is from other sale in Arizona. 

Calculation is this:

Sold: $235,000

Basis - $106,800

 Carryforward  -$43,397

Depreciation recapture  $47,093

Expense of Sale  $ 24,610

This results in $107,286 Gain

Problem: I listed disposition in Depreciation , Arizona is calculating correctly but if I put in carryforward loss into the Federal screen, it deducts it again from the $107,286 gain. So the loss  is there somewhere but it doesn't show up on Form 4797 and Arizona need to see Federal Capital Gain/Loss Worksheet. 

I can not figure this out 

Also, QBI is taking loss and giving $8k in QBI deduction ???  There was no income for 2019, property sold 1/17/2019.

Can anyone help???

Thank you 

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Level 2

Yes ,it does all of that. I guess I am just overthinking it at this point. Everything is where you say it should be and my calculations are right, so I'm just going to finaly be through with this one. 

Thanks for your help!

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Level 12

@lmhenry4 wrote:

So the loss  is there somewhere but it doesn't show up on Form 4797


 

The carryover Passive Loss does not affect the gain/loss calculation.  It is ordinary income/loss and shows up as a deduction on Schedule E.

Is that what you are missing?

 

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Level 2

I'm showing a small passive loss on the Sch E, but what I'm not showing is the Capital Loss Carryover on line 14 of the Sch.D. If I input it to show there it reduces the gain which already includes the loss, I just can't get it to show on Sch. D. 

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Level 12

@lmhenry4 wrote:

I'm showing a small passive loss on the Sch E, but what I'm not showing is the Capital Loss Carryover on line 14 of the Sch.D. If I input it to show there it reduces the gain which already includes the loss, I just can't get it to show on Sch. D. 



Now I'm even more confused.

This is a carryover CAPITAL Loss?  What was previously sold?

A carryover Capital Loss would not affect the gain/loss on 4797, so the gain should NOT "already include the loss".  That only shows up on Schedule D.

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Level 2

capital loss from land sold in Arizona two years ago, they have had no other gains since so have just been able to claim the $3000 for the last two years. 2019 is the first gain and so can't entire loss be applied against total gain?

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Level 12

First, the carryover capital loss should not show up on Form 4797 at all.  That should ONLY be reflected on Schedule D.  If you entered it somewhere on 4797, get rid of that.

As for applying the carryover capital loss to the gain, yes, it should do that.  The sale on Form 4797 should be reported in Part 3 of 4797.  That gain flows to Lines 6, 7 and 9 of 4797, then ends up on Line 11 of Schedule D.  Is it doing that?  If not, you need to track down which line is the problem.

Highlighted
Level 2

Yes ,it does all of that. I guess I am just overthinking it at this point. Everything is where you say it should be and my calculations are right, so I'm just going to finaly be through with this one. 

Thanks for your help!

View solution in original post

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