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TaxGuyBill

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  1. The sale is supposed to be on Form 4797, just like any other rental. The amount of Unrecaptured Section 1250 Gain is shown on page 2 of Schedule D, and is actually calculated on one of the capital gain worksheets. The exclusion should also be entered on Form 4797. https://www.irs.gov/instructions/i4797#idm139902460554688
  2. As was mentioned above, it is distributed (essentially 'sold') to the taxpayer/shareholder at Fair Market Value. That is required. The individual person is a separate taxpayer/entity. They will restart depreciation using their 'purchase' cost. After 20 years, and factoring in 20 years of depreciation, do you really think there won't be much of a gain? That would be ideal, but I suspect the gain due to the depreciation could be large.
  3. LOL. That really doesn't make sense, does it? :-) I think I originally typed "the instructions don't say this". When I changed it, I MEANT to say "I don't think the instructions say this", but I forget to delete the "don't".
  4. I realize that I'm 3 weeks late, but I have a slight clarification for when the dependent's MAGI needs to be added: It's when the dependent's "taxable income" (Line 43 of the 1040) is more than $0. There are other circumstances when a dependent is required to file a tax return (such as self employment), but they don't have any "taxable income". In these cases, the dependent's MAGI is NOT added. I don't think the instructions don't really say this, but the gobbledygook in the Tax Code does.
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