Abandoned property

Forum|Forum|5 years ago
February 10, 2021
1 reply
16 views

Business property was abandoned. How do I enter that in the disposition boxes so that it does not flow to Form 4797 because this is an ordinary loss. If I enter 0 in the sales price, it triggers the 4797. If I leave the sales price blank, it does nothing.

ProConnect Tax

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Best answer by TaxGuyBill

In the software program I overrode part I for 4797 and put in part II. That seemed to work. Is that how you would’ve handled it? And I really appreciate your responses

Yeah, if I couldn't find a way to 'force' it to Part 2, then I would have used overrides as you mentioned.

Be aware that using overrides MIGHT make it harder to e-file. In ProSeries, we need to uncheck the "error checking" during the e-file process to do that. I am unsure what PTO does.

T

TaxGuyBill

Level 15

Why do you think 4797 does not apply?

If it was held less than a year, it may be treated as an ordinary loss, but it still goes on 4797 (Part 2 of 4797).

N

numbersoneAuthor

Level 2

Pub 544 states to treat it as an ordinary loss, and it was held for more than 1 year

Loss from abandonment of business or investment property is deductible as a loss. A loss from an abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. This rule also applies to leasehold improvements the lessor made for the lessee that were abandoned.

T

TaxGuyBill

Level 15

But that Ordinary Loss still goes on 4797 (Part 2). The Instructions for 4797 even say so.

As for how to make the software do put it in Part 2 rather than Part 1, I'm a ProSeries user so I can't help you with with how to make PTO do it. Hopefully there is a direct mechanism to do it; otherwise if you find a way to force it as short term it would go in Part 2.

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