Form 4797

What is the name of your state? PA

I'm so confused. I'm trying to complete Form 4797 and I can't seem to make sense out of a few things. Here's my situation: I sold a commercial building for $50,000. I purchased it for $105,000, 20 years ago. Over the years my depreciation deductions totaled $90,000.

When I complete Part I line 2 I get a gain of $35,000. However, when I complete Part III I end up with a total of $35,000 on line 32, which says to enter it on line 6 in Part I. That makes a total gain of $70,000 (when I add lines 2 through 6 on Part I) which then states to enter this amount on Schedule D. This seems incorrect. How can I be showing a gain of $70,000 on a building I sold for 1/2 of what I paid for it? Even when I add the depreciation back on it it should only add up to $35,000 ($50,000 sales price plus $90,000 depreciation minus my cost of $105,000). What am I doing wrong?

Please help.

Thanks

You're trying to do it by hand. Go to a tax preparer & let their computers do the work.

you should only have calculations in Part III, not in Part I as this is reserved for business property. The front pagte should be blank. You'll then end up with the $35,000 gain.

Thanks for the reply, Caglitz. Please consider this follow-up question: The building in question housed a business in the middle of town for all of those years. Wouldn't that be business property? If not, what is the distinction?

Thanks in advance for your time.

your property was depreciable, section 1250 property, and therefore your calculations belong in part III only. your property, i believe, fits into the "gain from dispositon under section...1250".

Thanks so much for helping.