Common questions about Form 1040 elections in Lacerte

Below, you'll find answers to frequently asked questions about Form 1040 elections in Lacerte:

Table of contents:

How do you make the Election to Group Similar Passive Activities in the Individual Module?

The IRS Revenue Procedure 2010-13 allows you to group together similar Passive Activities and report them as a single entity as described in Section 1.469-4.

To make the election to report multiple K-1's as a single activity:

1. Go to Screen 46, Elections.
2. Scroll to Other Elections.
3. Enter the Election title and Election text.
4. Go to Screen 47, Notes.
5. Under the Print As panel, select Statement.
6. Enter the names, addresses, and Employer Identification Number (EIN) of the activities you want to group together.
7. Go to Screen 20, Passthrough K-1.
8. Enter the totals of the entities that are grouped together as a single K-1 activity.

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How do you make the election to treat all interests in a rental real estate as a single activity?

To make the election to treat all interests in rental real estate acivities as a single activity under IRS Section 469(c)(7)(A) and Regulation Section 1.469–9:

1. Go to Screen 46, Elections.
2. Select the Misc. Elections button.
3. Select the box labeled Treat All Interests in a Rental Real Estate as a Single Activity [469 (C)(7)(A)].

The item will now appear in the Elections statement in the Forms tab of the return.

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How do you generate Election 83(b) for an individual return?

Lacerte doesn't have a specific input for an 83(b) election. But, you can manually create an election.

To manually generate an election for 83(b):

1. Go to Screen 46, Elections.
2. Scroll to the Other Election section.
3. Enter an Election title.
4. In the field Election text, copy and paste all the information listed in the IRS sample below.
   • The 83(b) Election will appear in Forms under the Elections option.

Copy and paste the entire text below taken from IRS Rev. Proc. 2012-29, Section 6:

Section 83(b) Election

The undersigned taxpayer hereby elects, pursuant to § 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares.

1. The name, taxpayer identification number, address of the undersigned, and the taxable year for which this election is being made are:
   • TAXPAYER’S NAME:
   • TAXPAYER’S SOCIAL SECURITY NUMBER:
   • ADDRESS:
   • TAXABLE YEAR: Calendar Year 20
2. The property which is the subject of this election is shares of common stock of.
3. The property was transferred to the undersigned on [DATE].
4. The property is subject to the following restrictions: [Describe applicable restrictions here.]
5. The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax Regulations) is: $ per share x shares = $.
6. For the property transferred, the undersigned paid $ per share x shares = $.
7. The amount to include in gross income is $. [The result of the amount reported in Item 5 minus the amount reported in Item 6.]
8. The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.

Dated:

Taxpayer

Key points about filing the election:

• Send the election to the IRS office where the return is filed within 30 days after you received the stock. (Check the instructions for Form 1040 for the address.)
  • It's highly recommended that you send this election as certified mail with a stamped receipt.
• Provide a copy of the election to the employer (the company that granted the stock).
• If the employer transfers the stock to someone other than the taxpayer, provide a copy to that person as well.
• Attach a copy of the election with the income tax return for that year.

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Election to Treat Taxpayer Nonresident as U.S. Resident [6013 (g)]

To generate the Election to Treat taxpayer nonresident as U.S. Resident [6013 (g)]:

1. Go to Screen 46, Elections.
2. Click on the Misc. Elections button.
3. Check the box Treat taxpayer nonresident alien as U.S. Resident [1603 (g)] or the box Treat spouse nonresident alien as U.S. Resident [1603 (g)].

This will generate a general election to treat the taxpayer / spouse as U.S. residents for the tax year ending in the current year and subsequent years.

Checking the box for both taxpayer and spouse will generate a critical e-file diagnostic warning that only one election can be used for either taxpayer or spouse. If both the taxpayer and spouse make this election in the same year, the return must be filed on paper.

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Related topics:

• How to resolve Lacerte diagnostic ref. 2000184
• Making elections under regulation 1.263(a)-1(f), 1.263(a)-3(n), or 1.263(a)-3(h) (Form 3115)
• Special depreciation input and elections in Lacerte
• Entering a 1033 election for an involuntary conversion in Lacerte