For other videos on IRS Form 4797:
Form 4797 for Partnership: [ Ссылка ]
Am I a Real Estate Professional: [ Ссылка ]
Section 1250 Depreciation Recapture: [ Ссылка ]
Section 1250 Ordinary Income Treatment: [ Ссылка ]
Section 1250 & 1231 Gains and Losses: [ Ссылка ]
Sale of Business Vehicles: [ Ссылка ]
Section 475 MTM Election & Form 4797: [ Ссылка ]

The sale of real estate (Section 1250 property) that is used in a trade or business and held for more than one year, can qualify for certain preferential tax treatment under Section 1231. Gains are treated as long-term capital gains, while losses are treated as ordinary losses.

However, if you sell the property at a loss and claim ordinary loss treatment in a given tax year, you must track and carryforward the amount of ordinary losses as nonrecaptured Section 1231 losses. If in subsequent tax years you generate Section 1231 gains, you must recapture as ordinary income the amount of nonrecaptured Section 1231 losses.

This loss carryforward rule in Section 1231(c)(1) prevents taxpayers from purposefully manipulating the timing of sales to benefit from ordinary loss in one year and long term capital gains in a subsequent tax year.

For more examples of Rental Real Estate sales and Section 1231 rules, see the following video: [ Ссылка ]

For a video on unrecaptured Section 1250 gains, see here: [ Ссылка ]

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