How to resolve Diagnostic 10700 in Lacerte

If you're recieving the following diagnostic:

S-Corporation # {PrefixNum} : AMT prior year basis loss carryovers have not been entered. The program will assume the AMT basis carryovers are zero and compute a corresponding AMT difference.

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This diagnostic appears when Alternative Minimum Tax (AMT) prior-year basis loss carryovers have not been entered for a shareholder in an S-Corporation return. Without this entry, Lacerte assumes the AMT basis carryover is zero, which may overstate AMT income and trigger discrepancies between regular tax and AMT.

Follow these steps to resolve:

1. Open the S-Corporation Return where Diagnostic 10700 triggered.
2. Navigate to Screen 9, Shareholders Basis.
3. Select the affected Shareholder on the top left panel.
4. Scroll down to Basis Carryovers.
5. In the Ordinary Loss field, enter the amount of prior year AMT basis loss carryover. If there is no carryover, enter 0.
6. Press F9 to recalculate. The diagnostic will now be cleared.