Entering IRC Section 751 Gains and Losses in the Individual module in Lacerte

To enter IRC Section 751 Gains and Losses:

1. Go to Screen 17.1, Dispositions.
2. Enter two transactions, one for the ordinary income and one for the capital gains income.
   • NOTE: the ordinary income transaction must be SHORT TERM to show on line 14 of the 1040. Use 1 = short-term [O] if needed.
3. If the partnership was held for more than one year, on the ordinary income transaction, enter a 1 in the field, 1 = short-term, 2  =long-term [O], this will move the transaction into Part 2 of the Form 4797.
   • NOTE:  A depreciation allowed entry is required to activate the 4797 on screen 17 code 30.  Enter -1 for zero depreciation.
4. If these transactions are related to a K-1, go to the section Corresponding Activity Information - Passive (8582) / At-Risk (6198) / Investment Tax (8960).
   • NOTE: Prior to 2013 this section is titled Related Activity Information - Passive (8582) / At-Risk (6198).
5. In the field Form number of related activity (Ctrl+T), choose Schedule E (partnership).
6. In the field Activity name or number, choose the partnership K-1 that it belongs to.