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Reporting a sale of partnership interest in ProConnect Tax

by ProConnect Tax Online Updated 5 months ago

A sale of a partnership interest requires two transactions: 

  • An ordinary income gain/loss reported on Form 4797, Part II, line 10
  • A capital gain reported on the Schedule D

You need to enter the sale as two separate transactions in the Schedule D/4797/etc input screen.

Part 1: Follow these steps to enter the ordinary income portion:

  1. Go to Input Return  Income Dispositions (Sch D, etc.) and select Schedule D/4797/etc.
  2. Fill out the Quick Entry grid with the applicable information.
    • Enter the amount of income to be reported as ordinary income in Sales price.
    • Leave the Cost or basis field blank.
  3. Select Details at the right end of the grid to expand the input screen.
  4. Under the Dispositions (Schedule D, 4797, etc) section, locate the State, if different (-1=none) subsection.
  5. Enter 1 in 1=short-term, 2=long-term [Override].
  6. Select the three dots at the top of the screen and choose Sale of Asset 4797, 6252.
  7. Locate the Form 4797 section.
  8. Enter -1 in Depreciation allowed (-1=none, triggers 4797).
    • This information will flow to Form 4797, Part II, line 10.

Part 2: Follow these steps to enter the capital gain portion:

  1. Go to Input Return  Income Dispositions (Sch D, etc.) and select Schedule D/4797/etc.
  2. In the Quick Entry grid, enter the Date acquired and Date sold.
    • Make sure to enter this as a separate transaction from the ordinary income portion.
  3. Enter the amount of gain to be reported as capital gain in Sales price.
    • This will report the gain on Schedule D as either short-term or long-term capital gain based on the dates entered.
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