Proseries partial 1031 exchange

kgalland · ‎02-20-2023

A client sold property for 5.5 million and did a 1031 with 1,105,664 of the proceeds. I completed the 8824 and reported the FMV of the property received and allocated a portion of the basis to the exchange property. The deferred gain calculates correctly but I can't figure out how to enter the remaining basis for the non-exchanged portion to calculate the realized amount of gain. If I enter the entire basis on Line 18 then the deferred gain is reduced. How do you enter a partial exchange on Form 8824?

Skylane · ‎02-21-2023

I didn’t know you could have a partial 1031 exchange but would handle as 2 separate transactions. I would Report the taxable gain on 4797

If at first you don’t succeed…..find a workaround

rbynaker · ‎02-21-2023

I think we're missing something. Are you saying the client gave up a $5.5M property in exchange for a $1.1M property and $4.4M boot?

Skylane · ‎02-21-2023

Rick, certainly sounds that way… I’ve never seen a partial 1031 exchange. Wonder how intermediary handled it.

If at first you don’t succeed…..find a workaround

dascpa · ‎02-21-2023

Yes, you certainly can have a partial 1031, or multiple replacement properties from one 1031. Unfortunately ProSeries cannot handle this [automatically]. Everything has to be calculated outside of PS and manually forced onto the 8824 and 4797. Excel becomes your best friend.

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rbynaker · ‎02-21-2023

It can happen, but they usually don't make sense tax-wise because the gain is taxable to the extent of boot received. So unless this gain was more than $4.4M it's going to be fully taxable.

I'm sure the QI did the same with this as with other clients . . . deposited the QI fee into their bank account. 🙂

kgalland · ‎02-23-2023

Seems like the answer to everything is calculate yourself and force it to work in proseries. I think I've figured out how to get the depreciation recapture and deferred gain to calculate correctly in Proseries but of course I did my own calculation in excel to make sure the numbers matched.