Reporting gains and losses from casualty or theft on Form 4684 in Lacerte

In Lacerte, there are two ways you can generate Form 4684 to report gains or losses from a casualty or theft.

Reporting gains and losses for non-depreciable property

Solution 1:

1. Go to the Dispositions screen.
   • Screen 19 (for a partnership return)
   • Screen 15 (for a corporate return)
   • Screen 23 (for an S corporate return)
   • Screen 22 (for a fiduciary return)
2. Enter all applicable information for the property in the Dispositions grid, or in the input fields under section Dispositions (Schedule D, 4794, etc.).
3. In Date Sold, enter the date of the casualty or theft.
   • Select Add if you'd like to report additional gains or losses.
4. Scroll to Section D.
5. Under the subsection State, if different (-1=none), enter the Cost or other basis for the item.
6. Scroll to Casualties and Thefts (4684) and enter the Description (fire, robbery, etc.).
7. In the field labeled 1=business, 2=income producting (triggers 4685):
   1. Enter 1 or 2 (for partnerships and S corporations).
   2. Enter a 1, 2, or 3 in 1=personal, 2=business, 3=income producing (triggers 4684) (for fiduciary)
8. Enter the Fair market value before casualty or theft, then the Fair market value after casualty or theft.
9. Enter any Insurance or other reimbursement.
10. Enter a number in Multiple casualties if applicable.

Solution 2:

1. Go to the Depreciation (4562) screen:
   • Screen 14 (for a partnership return)
   • Screen 21 (for a corporate return)
   • Screen 16 (for an S corporate return)
   • Screen 27 (for a fiduciary return)
2. Select the Asset.
3. Scroll to the Casualty or Theft (4684) section and enter the Description (fire, robbery, etc.).
4. In the Blank=trade or business, 1=income producing field, enter a 1 or leave it blank.
5. Enter the Fair market value before casualty or theft, then the Fair market value after casualty or theft.
6. Enter any Insurance or other reimbursement.
7. Enter a number in Multiple casualties if applicable.

Additional info

• In passthrough entities, if the asset had prior Section 179 expense, the program won't generate Form 4684 the loss will be reported on the Schedule K-1 Supplemental Information.
• If the asset is sold after receiving an insurance reimbursement, a basis reduction may be required to properly reflect the gain. That adjustment will appear on line 26 of the Form 4684 and on line 23 of the Form 4797 (p.2).
• If the reimbursement received is greater than the adjusted basis of the asset, a gain will be reported on Form 4797, page 2, which will then flow to page 1, line 13.

How to defer the gain on a casualty or theft

There's no way to automatically defer the gain. However, you can enter an override for the total gain to not report on the return.

Lacertewon't track the deferment, so you may want to create a statement on the Notes screen to advise the IRS and to track the deferment.

To defer the gain if the asset is already being depreciated:

1. Go to the Depreciation screen for your tax type:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S-Corporate)
   • Screen 27 (Fiduciary)
   • Screen 39 (Exempt Organization)
2. Scroll down to the Disposition Overrides section.
3. Enter a -1 in the Total gain (loss) [O] field.

Item is being reported on the Dispositions screen:

1. Go to the Dispositions screen for your tax type:
   • Screen 17 (Individual)
   • Screen 19 (Partnership)
   • Screen 15 (Corporate)
   • Screen 23 (S-Corporate)
   • Screen 22 (Fiduciary)
   • Screen 24 (Exempt Organization)
2. Scroll down to the Overrides section.
3. Enter a -1 in Total gain (loss) [O] field.

Related topics

• Generating Form 4684 Casualty / Theft losses for an Individual Return