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Posted by LoTax on June 13, 2009, 9:02 am
Please log in for more thread options On Jun 11, 10:36�pm, "removeps-gro...@yahoo.com" <removeps-
gro...@yahoo.com> wrote:
>
> > 1. �Does each disposition item require an entry or is there a way to
combine
> > it all on 4797 into one entry? � Assume all long term. (then, what if one
> > item is short term?)
>
> Yes, a separate entry for each disposition. �It seems you have 4
> (property, furnance, carpet 1, carpet 2). �Maybe the two carpets can
> be combined into one.
>
> > 2. �If I have to make separate entries, how do I allocate the sales price
to
> > the individual items?
>
> In proportion seems logical. �For example, net purchase is
> 125000+3598+962+935=130495. �House is 125000/
> net=95.789110693896317866584926625541% �So net sale price of house is
> this percentage of 150,000=143684. �On the other hand, a furnace and
> carpet does not appreciate in value. �But I don't think it makes a
> difference if all gain is long term. �In the end the gain is
> 150000-130495+7647=27152 no matter how you allocate.
>
> --
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If you don't allocate the selling price among the assets based on
their FMV, you sorta forfeit the opportunity to avoid the unrecaptured
section 1250 gain, which can be taxed at a higher rate than LTCG but
isn't always. For an extreme example, let's say the entire gain can
be ascribed to the land, i.e., none of the depreciable assets has any
taxable gain from the sale, based on those assets' fair market value
in the sale. In this case, if you report the sale as separate assets,
you'll find that none of the gain attributable to the depreciation
allowed or allowable of $7,647 is taxable as unrecaptured section 1250
gain, since the land didn't have any depreciation taken. All the gain
will be Section 1231 gain.
Maybe this saves taxes, maybe not. Depends on too many other things
to even start to list them here. And maybe it's not the case that all
the gain is in the land; this is factual and I can't tell from here,
and you might not be able to tell from there. If you lump all the
assets into one, however, IRS won't complain because you've tried for
the highest tax. NO, that's not right. The personal property, if
sold at a gain, would give you Section 1245 recapture, which is fully
taxable as ordinary income, since it's personal property, and not real
estate. Make sure to sell the carpet at a loss...
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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