Is an amended return required for the sale of an investment property even if it had no gain or loss?

by Stephen F. Mankowski, CPA | Feb 23, 2018

I sold an investment property in 2017. I received a 1099S form. I did not make any gains on the property from the purchase price and improvements. I already filed my return and thought I had reported it, but when I printed my return I noticed it was not reported. Do I need to do an amendment, or since I made no gains can I just not worry about it?

My initial thought was that you weren’t certain exactly where to look for the sale on the tax return. Since it is the sale of a business asset, it would not only appear on Schedule D, but also on Form 4797.

I don’t think it is possible that the sale would not appear on the return, even if it was no gain or a loss. Further, you mentioned that there were improvements to the property. Therefore, unless these items were very old, they would have been subject to the Modified Accelerated Cost Recovery System (MACRS) or a separate type of accelerated depreciation, which is subject to recapture. The real property would most likely have been depreciated using the straight-line method, which is not subject to recapture.

You will most likely need to amend your return if you did not incorporate the proper recapture of the depreciation and if the return doesn’t reflect Form 4797 with the resulting gain/loss flowing onto Schedule D.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Stephen F. Mankowski, CPA, is president and CEO of Mankowski Associates CPA LLC in Chalfont, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.