A client sold property for 5.5 million and did a 1031 with 1,105,664 of the proceeds. I completed the 8824 and reported the FMV of the property received and allocated a portion of the basis to the exchange property. The deferred gain calculates correctly but I can't figure out how to enter the remaining basis for the non-exchanged portion to calculate the realized amount of gain. If I enter the entire basis on Line 18 then the deferred gain is reduced. How do you enter a partial exchange on Form 8824?
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Yes, you certainly can have a partial 1031, or multiple replacement properties from one 1031. Unfortunately ProSeries cannot handle this [automatically]. Everything has to be calculated outside of PS and manually forced onto the 8824 and 4797. Excel becomes your best friend.
I didn’t know you could have a partial 1031 exchange but would handle as 2 separate transactions. I would Report the taxable gain on 4797
Rick, certainly sounds that way… I’ve never seen a partial 1031 exchange. Wonder how intermediary handled it.
Yes, you certainly can have a partial 1031, or multiple replacement properties from one 1031. Unfortunately ProSeries cannot handle this [automatically]. Everything has to be calculated outside of PS and manually forced onto the 8824 and 4797. Excel becomes your best friend.
It can happen, but they usually don't make sense tax-wise because the gain is taxable to the extent of boot received. So unless this gain was more than $4.4M it's going to be fully taxable.
I'm sure the QI did the same with this as with other clients . . . deposited the QI fee into their bank account. 🙂
Seems like the answer to everything is calculate yourself and force it to work in proseries. I think I've figured out how to get the depreciation recapture and deferred gain to calculate correctly in Proseries but of course I did my own calculation in excel to make sure the numbers matched.
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