? on loss on sale of residential rental property - Form 4797

With all due respect -

While this NG exists to help those with tax questions, I believe our moderator would agree that we are NOT here to try to help you complete your tax return for you. Rather, we can help explain the law and the rules to you and help you understand the theory or how something works.

I do appreciate your desire to get a good answer for your situation. I can tell you your entry may need to go on Form 4797, Page 2, Part III - I don't know and can't tell from the info you've given us.

And once you're finished with the regular tax 4797 you'll have to also run the AMT version of this form. And again with all due respect, if you can't figure out where to enter the info on the regular tax 4797 you have little chance of doing the AMT part correctly.

I would suggest you retain a pro, at least for this return. Once the rental is gone you may be able to go back to doing the returns yourself, they may be much simpler then.

Good luck, Gene E. Utterback, EA, RFC, ABA

If it hasn't changed in the last few years, form 4797 does not flow to Sch A, but rather, Sch D. Sch A is where itemized deductions land, Sch D for gains and losses. Pull a copy of IRS pub 544, it should help.

Forgive me, but I see no mention of sch E, where real estate income and expenses should have been tracked. All situations are different of course, but 2001/2 was not the peak in housing prices, and in most cases, the depreciation taken on schedule E would mean that even though they sold for less than they paid, they may very well show a gain as depreciation is recaptured. I happened to sell a rental in 2001, taking a bath in the process, yet showing a $2000 gain on schedule D.

Joe

Even adding in the depreciation, the house was sold at so low a price that they are taking a small loss. The house was for sale the entire year of 2009, finally closing on Nov 20. I am taking depreciation declared on their 2002, 03, 04, 05, 06, 07 and 08 tax returns and using that on 4797 Line 2e. But the cost basis, and expenses of selling the house (Line 2f) exceed the sum of the gross sales price and the allowed depreciation. Since there was no effort to rent the property during 2009 because it was for sale the entire period, I do not believe it is necessary to file Schedule E for this property since I don't think you can take depreciation when the property is not available for rent.

Also, 4797, Part II, Line 18a, in the text, does refer to Schedule A line 28. It was also there in 2008, before that I do not know.

Thanx for your reply.

For residential real estate property held more than one year and sold at a loss, Page 1 of the 4797 instructions say to use Part I of 4797 for the first entry. That is the applicable situation. I was looking for clarification on Line 18 where it refers to "individual returns". I just wanted to be sure that this included those filing jointly as opposed to "Partnerships and S Corporations" mentioned in line 7.

The AMT worksheet and form don't bother me, I have used them for many, many, years and never been challenged. I have been doing taxes since I was a teenager. That was 61 years ago, and I have never had a return contested. And that time frame has seen many much more complicated returns than this.