clearing critical diagnostic ref. #2050609 regarding 1031 exchange property

[Ms CPA]

clearing critical diagnostic ref. #2050609 regarding 1031 exchange property that qualifies for the exchange

[George4Tacks]

What type of property are you doing the exchange on? What is the wording in the diagnostic. You are asking other users and we do not have a magic list of the codes.

[dfa]

I think it can be ignored and override when ready to e-file. In my case it's 1979 real property that Lacerte flags as ineligible due to TCJA. I could only get it to clear if I used code 87 and a 1987 or later date of service, but then the 8824 has an incorrect date.

[pat]

How do you override when it comes time to e-file? I have improvements included on my LKE and this critical diagnostic has occurred.  My attempt at e-file validation through the print menu is successful but that has been proven incorrect on other returns for different reasons and I don't consider the validation 100% reliable.

Do I need to do anything to clear the Informational Diags about the election statement. I am using the simplified method.

TIA

[dfa]

Pat - Try putting a 1 in the Blank=1245, 1=1250, 2=1254 box under Miscellaneous in the main asset that is being sold. If there is gain, checkout your 8824 to see if the gain is coming through on Line 21 Ordinary or Line 22 and if Line 22, is the calculations correct.

[pat]

I don't see a 1231, etc box under the main asset on the Depreciation Screen. On which screen? I see that on the Dispositions screen  for Form 4797. I am working off of the Depreciation screen for the main asset.

[dfa]

It's on the Depreciation screen under Sale of Asset (4797/6252) under Miscellaneous after the Form 6252 input. Between "Elected farm or fishing" and Form 1099-S transaction. If batch mode, then it might be Code 87.

[pat]

Found it, I am a little blurry-eyed.

One more thing- I have information diagnostics for each of the other assets included with the exchange that "An election statement is available to support the election to not apply like-kind exchange regulations 1.168(i)-6T" All of these assets were entered into the LKE Wizard and the main asset also has an information diag for the new asset created. 

Do I have to do separate elections for each of the other assets entered into the LKE Wizard? I see where I can enter info for the statement but confused as to what values I enter for that statement since everything is under one the main asset and a new asset has been created with the correct new basis... 

I did use the simplified method.

TIA

[pat]

Hi, I just noticed today that when placed the 1 in the 1250 box as you suggested, it removed the recapture amount from the bulk sale worksheet associated with the 1031 exchange. I want that to stay (don't I?). 

Does this mean that I will have an e-file issue because of the other assets?

TIA.

[dfa]

If you have gain, then it is likely unrecaptured 1250 and should show on page two of your Sch D. If you're using Land as your main disposition asset, that could be the problem. Use Building as the asset and then link land and leaseholds back to it. I usually abandon any fixtures with depreciation codes 57 and 53 that usually fully depreciated anyway. All the informational diagnostics regarding the  1031 election can be ignored. You only need to make the election on one asset.

[pat]

Thank you for all the answers  you have provided. Doing this is in Lacerte is tricky plus the law change to real property only. I completed the election for all the assets since the diagnostic popped up for each one. I wish I had thought of doing the exchange under the land but now that the wizard has been processed there is no turning back - I have entered all the subsequent info and I'm not doing it again... if I can't e-file I will just mail the return.

Thanks again for all of your help.