Common questions for Fiduciary Schedule D in Lacerte

Select the links below to see solutions to frequently asked questions concerning Schedule D in a Fiduciary return.

• Entering a sale or disposition of assets
• Entering a capital loss carryover in Lacerte Tax
• Entering Section 1231 Loss Carryovers
• Entering a sale of home for Form 1041
• Entering a 1099-B in Lacerte

How do I attribute the sale of an asset to corpus rather than to income in a Fiduciary return?

To attribute the gain on a sale of an asset to corpus and not income:

1. Enter a 2 in "Form 4797 ordinary gains (loss) charged to: 1=income, 2=corpus [O]" in Screen 5, Accounting Income.
2. Enter a 1 in "TAI distribution limitation: 1=yes, 2=no [O]" in Screen 9, Schedule K-1 Distribution Options.
3. Enter the amount that should appear in Schedule K-1 box 5, or -1 if the amount should be zero, in the field "Other portfolio and nonbusiness income (5)", found in the Income section of Screen 43, Schedule K-1 Overrides/Miscellaneous.  If more than one beneficiary has been entered for the client file, this entry must be made per beneficiary.
4. The entry in step 3 will prompt the Lacerte program to make an AMT adjustment in box 12.  Override by entering a -1 in the field "Adjustment for minimum tax purposes (A)", located in Alternative Minimum Tax Items (12) section of Screen 43, Schedule K-1 Overrides/Miscellaneous.   If more than one beneficiary has been entered for the client file, this entry must be made per beneficiary.

The entries above will keep the gain on the sale of asset at the Fiduciary level and allow it to be taxed on the Form 1041 rather than having the gain pass through to the beneficiaries to be taxed at the Individual level.

In most cases cryptocurrency or virtual currency is reported on the tax return in the same manner as property such as stock or other capital gains or losses. See Frequently Asked Questions on Virtual Currency and Digital Assets Transactions for the IRS guidelines. If you are reporting Digital Assets transactions in the 1040 return, be sure to mark the Yes box on the At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? question.