I sold 2 rental properties last year one with a gain one as a loss- both were owned long term. Both were entered on form 4797 part 1. The gain went to form
1040 as taxable income. I would like to take the entire loss during the same year. Can I do this? how / where does the loss flow down the form 4797 and where does it go on the 1040?
I don't you filled out form 4797 correctly. The property that was sold at a gain is entered first into part 3 of the 4797; the loss property is entered into part 1. The gain and loss is the consolidated at the bottom of part 1. If you have a net gain it ends up on schedule D, a net loss will go directly to the 1040. Any unrecaptured depreciation, as computed in part 3, goes to schedule D.
The gain/loss on the home will be reported in part III, and the gain/loss on the non-depreciable land on part I.
BEGIN QUOTE form 4797 instructions
Depreciable Property and Other Property Disposed of in the Same Transaction
If you disposed of both depreciable property and other property (for example, a building and land) in the same transaction and realized a gain, you must allocate the amount realized between the two types of property based on their respective fair market values (FMVs) to figure the part of the gain to be recaptured as ordinary income because of depreciation. The disposition of each type of property is reported separately in the appropriate part of Form 4797 (for example, for property held more than 1 year, report the sale of a building in Part III and land in Part I).
END QUOTE
The net gain/loss may end up on line 13 and line 14 and/or Schedule A. I don't know if line 13 and line 14 could both be non-blank, or if exactly one of them will be non-blank.
It would be good to use a professional. I hope you're not doing it yourself.
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