I have a client who took distributions in excess of basis, which needs to be recognized as a long-term capital gain on his individual return. Also, I need to add this gain to his basis. I thought that Lacerte could do this automatically. I read in the Pro-Connect section that these steps aren't necessary if the K-1 transfer utility has already bridged the information into Screen 17.
Can someone tell me where to find the K-1 transfer utility? I've been doing it manually for way too long!
Thanks,
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Nope, it's not done automatically. I'm guessing because outside basis issues would need to be considered?
You should get a diagnostic on the individual return that the distributions in excess "may" need to be reported, as well as the need to adjust basis info on the Screen 22.
Are you also preparing the S-corp return?
If so, Screen 36. Pick the shareholder(s) you wish the info to transfer for, put a check mark in the "Export shareholder K-1 data".
Beware that STATE data sometimes transfers, sometimes doesn't. AND you should always double check the numbers.
I think, once you have it set up, the question of "do you want to transfer" pops up automatically when you go to 'Forms' in the S-Corp module (this is so automatic for me that I can't remember..). If not, you can "push" it from Tools, then drop down to about 1/2 way where it says "K-1 Data Export"
Yes, we prepare the S-Corp return and the individual return.
We are marking the export shareholder K-1 data, and it transfers most items, but the distributions in Excess of Basis don't carry over to the Dispositions screen as a long-term capital gain. Also, the basis isn't being adjusted for the gain recognized. Is there something else we need to toggle to make it carry over to the individual return?
Thanks,
Nope, it's not done automatically. I'm guessing because outside basis issues would need to be considered?
You should get a diagnostic on the individual return that the distributions in excess "may" need to be reported, as well as the need to adjust basis info on the Screen 22.
I don't think that is one of the things that exports. Enter it as a disposition. Go down the screen and link it to the S Corp K-1.
Please define "outside basis."
https://googlethatforyou.com/#previewsearchbox
And the link is for........
The link is for you to do your own research/education regarding outside basis.
Google is your friend.
You DO realize this is a peer to peer forum of professional tax preparers? This is not Intuit support.
Hi there. I am running into this issue now but use ProSeries - same problem though.
It seems the way the IRS wants this handled is...
Shareholder distributions exceed basis so basis =$0
Capital Gains are reported on the Individual 1040 but according to what I've been reading: it is NOT reported on the K-1... so HUGE margin for error here...
Anyone completing the Individual return must know about the excess basis to report it as LTGC on the 1040.
Basis is NOT increased because it is only getting UP to $0 by reporting the LTCG.
@lisacslater wrote:
Anyone completing the Individual return must know about the excess basis to report it as LTGC on the 1040.
Yes, it is the responsibility of the individual person (and/or their tax professional) to keep track of their Basis. That has always been the case.
Starting this year (the 2021 tax return), Form 7203 will be required to report the Basis calculations for a shareholder of a S-corporation.
I don't see the 7203 in Lacerte yet even as a draft. I know the IRS hasnt released it yet but what are Lacerte's plans for this?
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