Report business or rental portions of a home sale on Form 4797
note
For some property sales, you don't have to allocate the basis of the property and the amount realized between the business and home portion. This is the case when:
- The business or rental part is in the home. Examples include in-home offices or rented rooms.
- The business or rental part is separate from the home, but wasn't used for business or rental during the year it sold.
If you meet 1 of these conditions, you don't report the business and rental portion on Form 4797. Report the entire gain on Schedule D. Enter all of the sale information in the
Home
screen in the Personal Sale
folder. You don't have to enter anything in the Sale
screen.If you don't meet any of these conditions, the sale reports on Form 4797.
- Be sure the business or rental portion qualifies for the section 121 exclusion.
- Divide the maximum exclusion between the business and personal portions of the sale.
- Go to theHomescreen in thePersonal Salefolder. Enter the home portion in theMaximum Exclusion Amount Forcefield. Enter only the sale of the home portion.noteUltraTax CS treats assets coded asOffice in homein theAssettab as being within the home. 100 percent of the sale information transfers to theHomescreen in thePersonal Salefolder.
- On theSalescreen in thePersonal Salefolder, complete the business or rental amounts for the following:
- Selling price
- Selling expenses
- Basis
- Enter3in theTreatmentfield to report the sale on Form 4797 Part III.
- Don't enterXin theSection 1250 propertyfield unless all of the depreciation was after May 6, 1997.
- Don't take any exclusions into account.
- Go to theSalescreen and add a new unit. UseSection 121 exclusionfor the description.
- Enter1in theTreatmentfield to report on Part 1 of the 4797.
- Enter the date of sale in theDate soldfield.
- Enter the amount of exclusion that applies to the business or rental portion in theCost or other basisfield.
- If there is gain reported because of depreciation for periods after May 6, 1997, adjust line 3 of the Unrecaptured Section 1250 Worksheet by this amount. You can replace the amount on the form to make the adjustment.
