Reporting of Section 1231 gain and unrecaptured Section 1250 gain on Sch K-1 of S Corp

Forum|Forum|5 years ago
July 11, 2021
2 replies
49 views

Why does program, when reporting 1231 gain on S Corp K-1, not reduce the gain by the unrecaptured 1250 reported. The total gain is being duplicated. Have I missed checking a box? Thanks.

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TaxGuyBill

Level 15

1250 gain is not part of 1231 gain, so the 1231 gain should not be reduced.

For example, let' say some real estate was purchased for $100,000, they took $5,000 in depreciation and it was sold for $120,000. In that scenario, there is $20,000 of 1231 gain (not $25,000).

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Tenn JeffAuthor

Level 3

Understood but the program is showing the entire gain as 1231 and then adding on top of that the 1250 gain.

PATAX

Level 12

@Tenn Jeff Intuit / ProSeries does a good job on this... Had a similar situation about 3 months ago on a partnership return... Pro series did everything to the T... Check your work papers and/or adjusting journal entries and compare your total gain to the gain on the K1...

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Tenn JeffAuthor

Level 3

Not this go round. The program is entering two numbers on Line 9 of the K-1 for net section 1231 gain - the number in the column on the far right is the entire gain (1231 plus 1250) and the number on the left is the true net section 1231 gain. Of course, it also shows 1250 in item 8. So, if I enter the true net section 1231 gain in the beneficiary's return (the number on the left), will the Service say "Oops, you should have entered the number on the right" - which is not correct because the number on the right is the entire gain despite being captioned "Net Section 1231 gain (loss)." Got to be a box to check or something to tell the program to separate the 1231 gain from the entire gain.

Thank you.

PATAX

Level 12

Double Check the asset entry worksheet boxes for all information including accumulated depreciation, sales information, type of property sold, etc..

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