Knowledge Base

13324: Group Sale Calculations

Fed Returns Generally

How does the software calculate the Gross sales price and Cost or other basis displayed in Part III of Form 4797 for a group sale?

The sales price and sale expenses are allocated to each asset according to the proportion the asset's cost bears to the total cost of all the assets in the sale. Starting in Drake17, the group sale information, including allocated amounts, expenses, and income, are shown on the Group Sale Summary report in view mode. 

Simple Example: Group sale price $400,000, and sale expenses of $10,000.

Asset Cost Percentage of total cost Allocated price Allocated sale expense Line 21 (cost plus sale expense)
Rental house cost $200,000 80% $320k
(80% of $400k)
(80% of $10k)
Furniture cost $40,000 16% $64k
(16% of $400k)
(16% of $10k)
Storage building $10,000 4% $16k
(4% of $400k)
(4% of $10k)
All asset total $250,000 100% $400k $10k $260k

 Note: For Drake 17, the allocated sale expense ratio will be the same as the cost ratio unless the Fair market value of THIS asset is used without Expense of sale for THIS asset being used.

Part III of Form 4797, Sale of Business Property, looks like this:

Less than 100% business use. If an asset has less than 100% business use, that results in a subsequent calculation affecting only that asset. For example, if the storage building is a 75% business use asset, a separate calculation for the storage building produces this result:

Line 20 allocated price Line 21 (cost plus sale expense)
$12k (75% of $16k) $7,800 (75% of $10,400)

Note that line 22 includes current and prior depreciation.

For more information regarding the sale of assets, see Pub 544, Sales and Other Dispositions of Assets, and the Instructions for Form 4797.

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