I have rented a rental home for 20 years. I have shown the required depreciation and expenses for the property on Sch E and have accumulated a large carryover loss on Form 8582 because of income limitations. I disposed of the property this year and I'm not sure how to report everything. I thought I report the sale on Form 4797 by showing my gross proceeds and adjusted basis - original purchase plus improvements and expense of selling . Then on the next line it sates to put depreciation. I assume even though I didn't deduct it all every year because iII had to carry it forward, I still show it. I read some where that the total carryover loss can now be added to my basis but I'm not sure if thats correct. The software I'm using is carrying the large carryover loss to the front page of Form 1040 and wiping out all my income. Is this correct? Any pointers would be greatly appreciated.