Hello all,

I am trying to figure out how to fill out form 4797 for the tax year 2013. The duplex was purchased in 2007 for $240,000 and sold in 2013 for $251,900. It was used as a rental property the entire time and was never owner occupied. Here are the facts............

- Purchased in 2007 for $240,000 (Land: 50,000 Building: 190,000)

- Sold in 2013 for $251,900

- Fees associated with sale of the property: $13,500

- Depreciation over the 6+ years: ~$34,000

- No improvements were made to the property during this time


For line 20 (of form 4797) I put 251,000. I assume this is correct.

My questions is what do I put for line 21. Do I put the original cost of the building and land plus the fee's associated with the sale? Or is it just the building value (at time of purchase, plus associated fees).

Where I am confused is that I am not sure whether to count this as 1 sale (building and the land combined) or 2 separate sales (building and land), and how this relates to "Part I" of form 4797.

Any help would be greatly appreciated! Thanks!

#1;You must then recapture the unrecaptured depre so called sec 1250 recap in part 3 form 4797; the unrecap depre ‘d be taxed at 25% aslongas your marginal tax rate is 25% or higher; if not it’d be taxed as your tax bracket. ALSO UNLESS you have gain on sale of the rental home, you do not need to recapture the unrecap deprec on your rental.,

#2;So your adj basis(original cost/basis) is $219.5k;$240K-$34K+$13.5K


#3;correct;$251.9k needs to be reported here; the amount reported here is your gross sales price including money, the FMV of other property received, and any existing mortgage or other debt the buyer assumes or takes the property subject to. as you sold the property for $251.9K and the adjusted basis was $219.5K, the capital gain is $32.4K as the LTCG of $32.4K is smaller than your accum deprec of $34K, you must pay tax 25% on $32.4K aslongas your marginal tax rate ‘d be 25% or higher .

#4;correct, $253.5k;you need to report the oc of the DEPRECIABLE part,I mean b/d , land, the costs. Then in line 22 , you must report $34K, the whole accum depre and you must report , in line 23, adj basis,$253.5K-$34K=$219.5K in line 24, you must report$ 32.4K;$251.9k-$219.5k

#5;as mentioned above.
#6; I guess TOTALLY CRITICAL QUESTION !!!!!! one sale; sec 1250 ordinary gain rule applies on to the depreciable b/d NOT on land.you must report the recap sec 1250 depre on form 4797 line 13 Part and 1040 line 14

Note that line 26 relates to ordinary income recapture and does not apply to your sale. Instead the 1250 recapture is used when applying the tax rates using SchD/8949 I guess.