We had a client sell some real estate at a gain, then they invested a portion of the gain into a Qualified Opportunity Zone Fund. The gain is reported on page 2 of the 4797, then flows to page 1 of the 4797, then goes to Sch D. I cannot figure out how to report the deferred gain on the forms. The only place I see is on Form 8949 with code Z. But the 4797 does not go to Form 8949. But the instructions to 4797 say to use 8949 to report the deferred gain. But then the instructions for 8949 say that 4797 gains go directly to Sch D. For now, we've added another line item on page 1 of the 4797 showing a loss for the amount of the deferred gain that was invested, as an offset to the real estate gain. I would imagine there would be a more formal way of reporting this, especially since the deferred gain needs to be tracked for many years in order to determine the reduction in future years. Any help would be appreciated. Thanks.
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It looks like the article is no longer available but I was able to recover the steps.
You'll need to enter a rollover to a QO Fund as two separate dispositions in Lacerte. Per the Form 8949 instructions, you should report the original transaction as if the tax on the eligible gain is not going to be deferred. Then you should enter a separate transaction to report the amount of eligible gains on which tax will be deferred by investing in a QO Fund.
Do not make any adjustments to this transaction. Leave the Qualified Opportunity Fund subsection completely blank. Enter this transaction as if it's a general disposition.
The program will report the deferred gain as a negative amount on its own row of Form 8949 along with the QO Fund's information.
To enter the Deferred Gain it actually requires two transactions to be entered. This article gives you details for Lacerte on how to enter those to get it to work out correctly:
https://accountants-community.intuit.com/articles/1801290-rollover-to-qualified-opportunity-fund
That'll work. Thanks! As a side note, the people I talked to at Lacerte customer support had never even heard of the Qualified Opportunity Zones. This information needs to be spread to the phone support people. Thanks for your help.
I'm glad to help! I'll make sure our phone teams are aware of this.
Good afternoon,
I am trying to find the solution to this question as well, but when I click on the link, it doesn't take me to any solution. Did the solution move somewhere else?
Thank you!
It looks like the article is no longer available but I was able to recover the steps.
You'll need to enter a rollover to a QO Fund as two separate dispositions in Lacerte. Per the Form 8949 instructions, you should report the original transaction as if the tax on the eligible gain is not going to be deferred. Then you should enter a separate transaction to report the amount of eligible gains on which tax will be deferred by investing in a QO Fund.
Do not make any adjustments to this transaction. Leave the Qualified Opportunity Fund subsection completely blank. Enter this transaction as if it's a general disposition.
The program will report the deferred gain as a negative amount on its own row of Form 8949 along with the QO Fund's information.
None of the links with the answers work.
Thank you Charlene. This worked great for the federal return but generated a Critical Diagnostic Warning error 17304 "WI requires a Date Sold in Dispositions on Schedule WD to electronically file this return". Any ideas how to overcome this? Thanks.
If the gains to be deferred are passed through from a K-1 such as would normally appear on schedule D lines 5 and 12, would you instead enter these gains on Form 8949?
Good luck. If you get an answer I would love to know.
It should be EIN and not TIN of the QoZ fund
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