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How to resolve Lacerte diagnostic ref. 11118 -Amount of loss is entered as a Federal Basis Carryover

by Lacerte Tax 2023 Updated 6 months ago

When preparing an Individual return where New Jersey is one of the states, you may encounter the following diagnostic:

  • An amount of loss is entered as a Federal Basis Carryover for a Partnership. An entry of -1 should be entered in the corresponding 'state if different' Basis Carryover code in order to prevent the NJ return from reporting any prior year loss amount. NJ tax law prohibits any carryover of losses, including Basis carryover amounts. (ref. #11118)

To resolve this diagnostic:

  1. Go to Screen 20.1, Passthrough K-1 Partnership Information.
  2. Scroll down to the Basis Carryovers section.
  3. Enter a -1 in the State, if different column and source to NJ  if the column has a federal Basis carryover amount for:
    • Ordinary loss,
    • Rental real estate loss,
    • Capital loss, etc...
  4. Repeat for any other Partnership K-1's with federal Basis carryover amounts.
Lacerte Tax

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