Taxes

Forum|Forum|4 years ago
September 29, 2021
13 replies
72 views

In 1040 program, how do i enter section 1202 gain reported on K-1 from a partnership?

ProSeries Professional

This topic has been closed for replies.

PATAX

Level 12

I think that would be on the K-1 worksheet , maybe on the other income line, not sure as I am not in my office now, just off the top of my head.. Just my opinion

R

Rhoder19Author

Level 3

Gain should be 100% excludable. Definitely don't want to show it as other income.

PATAX

Level 12

You are right... I think that is just the line that it goes on but the code that is used will exclude it from income...

T

Terry53029

Intuit Community Champion

It will be reported on line 11 code I (other income/loss). here are the irs instructions, and link:

https://www.irs.gov/instructions/i1065sk1

"

Gain from the sale or exchange of qualified small business (QSB) stock (as defined in the Instructions for Schedule D (Form 1065)) that is eligible for a section 1202 exclusion. The partnership should also give you (a) the name of the corporation that issued the QSB stock, (b) your share of the partnership's adjusted basis and sales price of the QSB stock, and (c) the dates the QSB stock was bought and sold. Corporate partners are not eligible for the section 1202 exclusion. The following additional limitations apply at the partner level.
1. You must have held an interest in the partnership when the partnership acquired the QSB stock and at all times thereafter until the partnership disposed of the QSB stock.
2. Your share of the eligible section 1202 gain cannot exceed the amount that would have been allocated to you based on your interest in the partnership at the time the QSB stock was acquired.
See the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949 for details on how to report the gain and the amount of the allowable exclusion.

R

Rhoder19Author

Level 3

Maybe I need to clarify my situation. The total capital gain has been reported in box 9a, which is the first problem, because if I just enter this in the software it will all get reported and taxed as long term capital gain. The information pertaining to the section 1202 gain (which is included in the amount in box 9a) is reported on the K-1 as a footnote on an additional page, not on any particular box on the front page of the K-1. Nothing is being reported on the K-1 in box 11. I know where everything is supposed to be reported, but where in ProSeries do I enter things to get them to flow to the right place?

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Terry53029

Intuit Community Champion

Sounds like the partnership did not do the K1 per IRS instructions. ProSeries does not flow every line of the K1 to the 1040 form it belongs, but there will be an "*" letting you know which ones you have to do manually. If the 1202 gain was included in 9a (incorrectly) then you have to put only LT capital gain in box 9a, and I would fill out the supporting statement showing the 1202 taken out. Then you need to fill out schedule D, and 8949 for the 1202.

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