Form 4797 Help!

[ETax847]

I have a client who solid his rental property in 2018 for a LT Gain.  In the fixed assets tab, I'm completing the disposition fields but I am hung up on the part "Force 4797 Section".

Option 1 Form 4797, Part 1, Long-Term

Option 2, Form 4797, Part 3, Long-Term

Any one have any idea on what the difference is between the two?

 

[Terry D EA]

The first page of the instructions for form 4797 identifies what type of transaction goes in which section of the form. In your case, it would be 1250 property sold at a long term gain in

Part III.

https://www.irs.gov/pub/irs-pdf/i4797.pdf

 

[ETax847]

Thanks Terry! I appreciate your help as always.

[SaraEA]

The land portion goes on Part I.

[Catherine]

Part I gets ordinary income treatment, Part III is capital gains income treatment.  So first thing to determine, in general, is the tax treatment of the income or loss involved.

[EricF]

Part I is Sec. 1231 gain or loss, with gain treated as capital and loss treated as ordinary.  Part II is ordinary gain or loss.  Part III is property sold at a gain where depreciation has been claimed, with potentially different treatment for past depreciation claimed.

[Catherine]

5 hours ago, EricF said:

Part I is Sec. 1231 gain or loss, with gain treated as capital and loss treated as ordinary.  Part II is ordinary gain or loss.  Part III is property sold at a gain where depreciation has been claimed, with potentially different treatment for past depreciation claimed.

I stand (sit, actually) corrected.  Thanks, @EricF!