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sale of rental property owned in with a partner

Highlighted
last updated ‎January 23, 2020 6:40 PM

My client has owned rental property with a partner for years.  The property is in her name so the 1099S comes in her name.  I have always entered all income and expenses on schedule E as 100% and then select under Other information: 50% ownership, which halves the profits or losses.  

when I go to dispose of the property and enter the gross sales price (at 100%), the software gives me half of the basis, which results in a huge gain.  If I uncheck the 50% ownership then I get the full basis and the gain comes out right.  But then of course the schedule E shows the whole profit/loss instead of 50%.  

I would like to keep the schedule E as is: report 100% of income and expenses and let the software halve the profit/loss, but on Form 4797 I would like to show the whole sales price and have the software show the whole basis.  

Is there something I am not checking, or some override that I have to use to achieve that?

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Highlighted
Level 15
last updated ‎January 23, 2020 6:40 PM

Do Schedule E as you normally would. Indicate a total disposition. Show each asset sold as of the date of sale, but DO NOT show a sales price. This should take care of properly reporting the passive loss and clear any PAL carryover. 

Using the depreciation Schedule create the 4797 through the Schedule D input, reporting 50% of the sale price. Show the other 50% of sale as an code N or O on the 8949.  Alternatively show 100% sales price on 4797 and adjust basis to make the gain the appropriate 50%. Either way I would attach statement explain the situation and indicate the name and SSN of the other "partner".

I imagine some other user might have even better suggestions to report this nonconforming partnership sale


ex-AllStar

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1 Reply 1
Highlighted
Level 15
last updated ‎January 23, 2020 6:40 PM

Do Schedule E as you normally would. Indicate a total disposition. Show each asset sold as of the date of sale, but DO NOT show a sales price. This should take care of properly reporting the passive loss and clear any PAL carryover. 

Using the depreciation Schedule create the 4797 through the Schedule D input, reporting 50% of the sale price. Show the other 50% of sale as an code N or O on the 8949.  Alternatively show 100% sales price on 4797 and adjust basis to make the gain the appropriate 50%. Either way I would attach statement explain the situation and indicate the name and SSN of the other "partner".

I imagine some other user might have even better suggestions to report this nonconforming partnership sale


ex-AllStar

View solution in original post