Is proseries calculating long term capital gain correctly?

Forum|Forum|4 years ago
April 28, 2022
6 replies
45 views

I have a couple who sold a rental property. They have a capital gain of 157,000 they also have a rental loss of {157,000}. Their other taxable income minus standard deduction is 143,000. The schedule D worksheet is deducting the 80,800 exclusion from the 143,000 and taxing the difference at 15%. Nothing is being taxed as ordinary income. I am so confused. Hopefully one of you great minds can give me some guidance.

ProSeries Professional

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Best answer by tctxldy

So your saying the rental loss is going against the ordinary income not against the capital gain. The gain stands alone for the calculation. I hadn't rolled it around that way. I assumed the Rental Loss would go against the Capital Gain not the ordinary income. Interesting... this is why I asked the Great Minds. Thank you so much for the clarification. I will sleep tonight.

sjrcpa

Level 15

Their ordinary income is negative. (157,000) loss plus $143,000 = (14,000).

The more I know the more I don’t know.

T

tctxldyAuthorAnswer

Level 4

So your saying the rental loss is going against the ordinary income not against the capital gain. The gain stands alone for the calculation. I hadn't rolled it around that way. I assumed the Rental Loss would go against the Capital Gain not the ordinary income. Interesting... this is why I asked the Great Minds. Thank you so much for the clarification. I will sleep tonight.

sjrcpa

Level 15

You're welcome.

Also look at the Schedule D tax computation worksheet.

The more I know the more I don’t know.

PATAX

Level 12

My experience is Pro Series does good job on capital gain tax calculation.

rbynaker

Level 13

I think these awesome folks answered your rate question so I'll wander off on a tangent.

Is the gain the exact same amount as the rental loss? That seems suspicious but maybe we're just rounding. Oddly enough I just finished one today with a $19K released PAL and a $19K gain on sale but the numbers weren't exactly the same so it was purely coincidental. Was it a complete disposition and did you check box "H" on the Sch E Wks? Also wasn't there depreciation on the rental so you'd have some 1250 gain taxed at ordinary rates? Maybe that's already factored in. I'm just asking as a "reviewer".

Rick

T

tctxldyAuthor

Level 4

The clients have multiple rental properties and had enough carryover losses to offset the capital gain and still carry forward some loss. Yes there was depreciation and the 1250 gain was in the equation. Yes I did check the box for complete disposition . I appreciate your follow up very much. You brought up some valid points which could easily be missed.

Thank you

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