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Where do I report in Form 4797 abandonment of leasehold improvements by lessee (taxpayer) when business closed .

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Leasehold improvements has cost of $19,000 and accumulated depreciation of $11,000. Also where do I put the accumulated depreciation in Form 4797? Balance should be ordinary loss, right? Thanks for your reply.

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George4TacksAnswer

Level 15

Income > Dispositions > Schedule D... > Enter purch date, sale date, sale price, original cost

In small faint print across the top white section, select Sale of Asset 4797,...

Enter the depreciation and code section of prop and no 1099B

This will all end up on 4797

Answers are easy. Questions are hard!

BobKamman

Level 15

Form 4797 Instructions: Deduct the loss from a qualifying abandonment of business or investment property on line 10.

George4TacksAnswer

Level 15

Income > Dispositions > Schedule D... > Enter purch date, sale date, sale price, original cost

In small faint print across the top white section, select Sale of Asset 4797,...

Enter the depreciation and code section of prop and no 1099B

This will all end up on 4797

Answers are easy. Questions are hard!

A

atalomaAuthor

Level 3

Thanks a lot! Very detailed.

A

atalomaAuthor

Level 3

When business closed various equipment were either abandoned in the store or not working and were fully depreciated. Do I need to report in Form 4797 with $30,000 costs, $30,000 accumulated depreciation and zero gain/loss? Can I just group the assets in one amount instead of listing 5 assets?

When business closed should I show ending inventory as zero and inventory kept by owner should reduce purchases. How about if there were no more purchases because the business decided to close, can I have a negative purchases shown in the tax return?

Thanks.

A

atalomaAuthor

Level 3

Thanks for your reply! The info was reported on Form 4797, line 2, Part I, and the loss is carried over to Line 11. I think that's right. The loss did not show on Line 10.

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