My client sold a house and the basis is very complicated. It includes a couple of step ups and rental activity.
I agreed to provide a draft to my client's attorney (I'm billing for the time accordingly and it's a good client, with a great attitude, so I don't mind).
The attorney was very helpful in providing a workbook with a timeline of events for me to calculate basis.
But when I submitted my draft tax return to them, he came back with a tax return, that he did on turbo tax, with no 4797 and seemingly no adjustments or inclusion of allowable depreciation.
Before I respond and make a fool of myself, I want to make sure that we need a 4797.
The 121 exclusion applies, but the property was clearly held out for rent for many, many years, though the owner also lived in part of the property for the entire period.
You can't just throw it on a D, correct? 4797 is needed here?