Anyone familiar with IRS Form 4797? (1 Viewer)

[mon]

Form 4797, Sale of Business Property. Trying to figure this out, but can't get past the first line. We sold our house, which had an apartment in the backyard that we rented out.

Line 1 wants the gross proceeds reported to me on Form 1099-S, 1099-B, or substitute statement, but we didn't receive any of those forms or statements. Who would we have received it from? TIA

 

[The Commish]

Form 4797, Sale of Business Property. Trying to figure this out, but can't get past the first line. We sold our house, which had an apartment in the backyard that we rented out.

Line 1 wants the gross proceeds reported to me on Form 1099-S, 1099-B, or substitute statement, but we didn't receive any of those forms or statements. Who would we have received it from? TIA

I don't think you should be going this route. Were the two buildings zoned differently? If not, this is simply another structure on your residence. You'd report the income as rental income. When you sold the house, was the apartment included?

 

[Treynwreck3]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

 

[mon]

Form 4797, Sale of Business Property. Trying to figure this out, but can't get past the first line. We sold our house, which had an apartment in the backyard that we rented out.

Line 1 wants the gross proceeds reported to me on Form 1099-S, 1099-B, or substitute statement, but we didn't receive any of those forms or statements. Who would we have received it from? TIA

I don't think you should be going this route. Were the two buildings zoned differently? If not, this is simply another structure on your residence. You'd report the income as rental income. When you sold the house, was the apartment included?

Yes, but it wasn't used as a rental. We actually did a lot of work to it and turned it into a B&B.

 

[The Commish]

Form 4797, Sale of Business Property. Trying to figure this out, but can't get past the first line. We sold our house, which had an apartment in the backyard that we rented out.

Line 1 wants the gross proceeds reported to me on Form 1099-S, 1099-B, or substitute statement, but we didn't receive any of those forms or statements. Who would we have received it from? TIA

I don't think you should be going this route. Were the two buildings zoned differently? If not, this is simply another structure on your residence. You'd report the income as rental income. When you sold the house, was the apartment included?

Yes, but it wasn't used as a rental. We actually did a lot of work to it and turned it into a B&B.

Doesn't matter....that form you listed is for a business commercially zoned etc. Sounds like this can all go under rental income. ETA: For your B&B, did you have a separate company set up for it?

 

[mon]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

 

[jon_mx]

Form 4797, Sale of Business Property. Trying to figure this out, but can't get past the first line. We sold our house, which had an apartment in the backyard that we rented out.

Line 1 wants the gross proceeds reported to me on Form 1099-S, 1099-B, or substitute statement, but we didn't receive any of those forms or statements. Who would we have received it from? TIA

I don't think you should be going this route. Were the two buildings zoned differently? If not, this is simply another structure on your residence. You'd report the income as rental income. When you sold the house, was the apartment included?

Yes, but it wasn't used as a rental. We actually did a lot of work to it and turned it into a B&B.

You probably claimed depreciation on the building too. I think you need to file that form. You will need divide up what portion of the sale price was for the residence and what portion was for the business. The profit you made on the house should be tax exempt since you probably have lived there for several years. But there may be some tax on the apartment. You will have to figure out your basis of the value when you initially purchased it, add in your improvements, and subtract off any depreciation you took. It might have been possible to do a like-kind exchange, but you have to plan for that when you make the sale. It is probably too late now. BTW, I am no tax accountant, but I have done quite a bit in real estate.

ETA: Nevermind....it sounds like you never rented it. You may be able to escape reporting it as business income.

 

[The Commish]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

 

[mon]

Form 4797, Sale of Business Property. Trying to figure this out, but can't get past the first line. We sold our house, which had an apartment in the backyard that we rented out.

Line 1 wants the gross proceeds reported to me on Form 1099-S, 1099-B, or substitute statement, but we didn't receive any of those forms or statements. Who would we have received it from? TIA

I don't think you should be going this route. Were the two buildings zoned differently? If not, this is simply another structure on your residence. You'd report the income as rental income. When you sold the house, was the apartment included?

Yes, but it wasn't used as a rental. We actually did a lot of work to it and turned it into a B&B.

You probably claimed depreciation on the building too. I think you need to file that form. You will need divide up what portion of the sale price was for the residence and what portion was for the business. The profit you made on the house should be tax exempt since you probably have lived there for several years. But there may be some tax on the apartment. You will have to figure out your basis of the value when you initially purchased it, add in your improvements, and subtract off any depreciation you took. It might have been possible to do a like-kind exchange, but you have to plan for that when you make the sale. It is probably too late now. BTW, I am no tax accountant, but I have done quite a bit in real estate.

ETA: Nevermind....it sounds like you never rented it. You may be able to escape reporting it as business income.

This is what my CPA sister-in-law thinks, that I need to divide up the portions. But what do I put on Line 1?

 

[mon]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

 

[jon_mx]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

You are dividing it up and treating it like two transactions. The Gross sales price would be whatever portion of the sale you attribute to the apartment.

 

[Treynwreck3]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Sounds like another case of a lawyer muddying the water. I suggest you seek pro advice. Kinda difficult at this late date, but you can always file an extension.

 

[mon]

I suggest you seek pro advice.

That's why I'm here in the FFA.

 

[The Commish]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Then you can make up whatever reasonable number you want. Your lawyer did you no favors by doing this, but I think you're well within your right to treat it as rental property. I'd ask someone local to you, but I know folks who have been in similar situations who did as I described. This isn't much different than having a room in your house or apartment in the basement etc. If it were me, I'd go the rental income approach and hope for the best. The reason you haven't gotten the 1099 is because no one else has seen it as a separate real estate transaction from the sale of your home.

 

[mon]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Then you can make up whatever reasonable number you want. Your lawyer did you no favors by doing this, but I think you're well within your right to treat it as rental property. I'd ask someone local to you, but I know folks who have been in similar situations who did as I described. This isn't much different than having a room in your house or apartment in the basement etc. If it were me, I'd go the rental income approach and hope for the best. The reason you haven't gotten the 1099 is because no one else has seen it as a separate real estate transaction from the sale of your home.

Thanks for the advice, Commish -- I'll do this. Perhaps the real estate transaction documents could be considered the "substitute statement".

 

[The Commish]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Then you can make up whatever reasonable number you want. Your lawyer did you no favors by doing this, but I think you're well within your right to treat it as rental property. I'd ask someone local to you, but I know folks who have been in similar situations who did as I described. This isn't much different than having a room in your house or apartment in the basement etc. If it were me, I'd go the rental income approach and hope for the best. The reason you haven't gotten the 1099 is because no one else has seen it as a separate real estate transaction from the sale of your home.

Thanks for the advice, Commish -- I'll do this. Perhaps the real estate transaction documents could be considered the "substitute statement".

Do the real estate transaction docs break out the costs/profits of each structure? If not, then it's just you "guesstimating".

 

[mon]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Then you can make up whatever reasonable number you want. Your lawyer did you no favors by doing this, but I think you're well within your right to treat it as rental property. I'd ask someone local to you, but I know folks who have been in similar situations who did as I described. This isn't much different than having a room in your house or apartment in the basement etc. If it were me, I'd go the rental income approach and hope for the best. The reason you haven't gotten the 1099 is because no one else has seen it as a separate real estate transaction from the sale of your home.

Thanks for the advice, Commish -- I'll do this. Perhaps the real estate transaction documents could be considered the "substitute statement".

Do the real estate transaction docs break out the costs/profits of each structure? If not, then it's just you "guesstimating".

No they don't, but it reflects a cost basis from which to guesstimate, I'm thinking.

 

[The Commish]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Then you can make up whatever reasonable number you want. Your lawyer did you no favors by doing this, but I think you're well within your right to treat it as rental property. I'd ask someone local to you, but I know folks who have been in similar situations who did as I described. This isn't much different than having a room in your house or apartment in the basement etc. If it were me, I'd go the rental income approach and hope for the best. The reason you haven't gotten the 1099 is because no one else has seen it as a separate real estate transaction from the sale of your home.

Thanks for the advice, Commish -- I'll do this. Perhaps the real estate transaction documents could be considered the "substitute statement".

Do the real estate transaction docs break out the costs/profits of each structure? If not, then it's just you "guesstimating".

No they don't, but it reflects a cost basis from which to guesstimate, I'm thinking.

It will provide the cost basis for the entire property sure, but how you divide up the value is on you. That's why I wouldn't even bother. You bought it as one piece of property with two structures for X dollars. You sold it as one piece of property with two structures for Y dollars. Keep it simple It's not really a stretch at all to take this approach.

 

[mon]

I agree with Commish. I think you can forego the 4797 and just report the income as Misc. Income. I would treat the sale of the house as just that, you sold your house. Keep it simple.

When I sold the house, the closing lawyer had me sign an IRS form stating I had sold a residence that was also used as a business (rental). Don't remember the form number. Would this have any bearing?

That's sale of a rental property then. So it's two transactions....your primary residence and a rental property.

But it was sold in one transaction.

Then you can make up whatever reasonable number you want. Your lawyer did you no favors by doing this, but I think you're well within your right to treat it as rental property. I'd ask someone local to you, but I know folks who have been in similar situations who did as I described. This isn't much different than having a room in your house or apartment in the basement etc. If it were me, I'd go the rental income approach and hope for the best. The reason you haven't gotten the 1099 is because no one else has seen it as a separate real estate transaction from the sale of your home.

Thanks for the advice, Commish -- I'll do this. Perhaps the real estate transaction documents could be considered the "substitute statement".

Do the real estate transaction docs break out the costs/profits of each structure? If not, then it's just you "guesstimating".

No they don't, but it reflects a cost basis from which to guesstimate, I'm thinking.

It will provide the cost basis for the entire property sure, but how you divide up the value is on you. That's why I wouldn't even bother. You bought it as one piece of property with two structures for X dollars. You sold it as one piece of property with two structures for Y dollars. Keep it simple It's not really a stretch at all to take this approach.

I think we're saying the same thing. Gonna just put a reasonable amount on Line 1 of what I think the apartment structure is worth. That's really all I know to do.