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Why isn't Form 4797 generating for an asset with prior section 179 expense?

by Intuit• Updated 2 years ago

Below are solutions to frequently asked questions about why Form 4797 isn't generating in Lacerte for a disposition with a prior section 179 expense.

Why doesn’t the sale of asset flow to Form 4797, Part III?

According to the IRS Instructions for Form 1120-S and Instructions for Form 1065, S-corporations and partnerships shouldn’t use Form 4797 to report the sale or disposition of property if a section 179 deduction was previously passed through to any of its owners for that property.

Where does the disposition get reported?

Lacerte will report the sale on the shareholder’s or partner’s Schedule K-1 and generate a supplemental statement with all of the information about the asset needed to prepare the owner’s return. Owners who claimed the section 179 deduction on their tax return, such as individuals, will report their portion of the sale on Form 4797.

Partnership: The information required will flow to the Schedule K-1 (Form 1065) as Supplemental Information for Box 20, Code L.

box-20-code-l-disposition-of-assets-prior-section-179.png

S-Corporate: The information required will flow to the Schedule K-1 (Form 1120S) as Supplemental Information for Box 17 with Code K.

box-17-code-k-disposition-of-assets-prior-section-179.png

How do I change the disposition amounts allocated to each owner?

Changing the disposition amounts using the Depreciation screen

Go to the Depreciation screen for your tax type.
- Screen 14 (Partnership)
- Screen 26 (S-Corporate)
Scroll down to the Additional Disposition Information section.
Locate the Disposition of Section 179 Property subsection.
Enter the overrides in the applicable fields of this subsection.

Changing the disposition amounts using the Dispositions screen

Go to the Dispositions screen for your tax type.
- Screen 19 (Partnership)
- Screen 23 (S-Corporate)
Scroll down to the Disposition of Section 179 Property section.
Enter the overrides in the applicable fields of this section.

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