Sale of rental property

It depends. Reporting the sale of land separately from a rental property can be beneficial in certain situations, especially when it results in a loss. 

1. Tax Treatment: Land is not depreciable, unlike buildings and other improvements. If you report the sale of land separately, the loss on the land can be treated as a capital loss. This may make up for the capital gains from other sources.
2. Depreciation Recapture: If you sell the building and land together, the IRS requires you to account for depreciation recapture on the building. Separating the land from the building can help you avoid depreciation recapture on the land portion, as it is not subject to this rule.
3. Fair Market Value Allocation: When selling a rental property, you need to allocate the sales price between the land and the building based on their respective fair market values. If the land has decreased in value, reporting it separately allows you to recognize the loss.
4. Form 4797: The IRS instructions for Form 4797 state that building and land must be reported separately when there is a gain on the sale. However, if reporting separately results in a loss, it might be advantageous for tax purposes.