Form 4797 Line 1a/b/c missing

towtruck
towtruck Member Posts: 5 Newcomer
in Filing my taxes

I am using Form 4797 for the sale of a primary residence turned rental property that qualifies for Section 121 Exclusion, but that also needs to account for unrecaptured section 1250 gain. The form looks correct, except that it does not fill in Line 1: "Enter the gross proceeds from the sales or exchanges reported to you for 2024 on Form(s) 1099-B or 1099-S."

My concern is that because the form (correctly) breaks down the sale of rental property into land (part 1) and property (part iii), nowhere is the amount that is actually reported on my Form 1099-S reported on the tax return. I believe it should be reported in Line 1a.

My property was my personal home that I turned into a rental property due to military moving (I qualify for exclusion based on 2 out of 5 years primary residence with 10 year 'stop the clock' rule for military). I'm still a bit confused as to whether to report on Form 8949 or Form 4797, but after experimenting, it seems both are options and result in the same tax/result. It seems that if it is considered an investment, Form 8949 is the more correct option, whereas if considered a business, Form 4797 is the more correct option.

Answers

  • CoryF
    CoryF FreeTaxUSA Agent Posts: 198

    Hello Towtruck

    Making sure your tax information get reported and filed correctly is important to us. Our FreeTaxUSA program was enhanced to deal with this situation by reporting the sale of the Rental in the Rental Income (Schedule E) and also reporting the Sale of Main Home. You combine the effects of reporting the depreciation taken with the Section 121 exclusion for selling a personal home using these reporting pages.

    If you have further questions, please contact our Customer Support team through the Support Center dropdown in the upper right-hand corner of your account screen. This way personal information can remain secure.

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