Entering IRC Section 988 Gain or Loss Transaction in Lacerte

Where is the input for IRC Section 988 Gain/Loss?

Solution:

IRC Section 988 Gain or Loss can be entered in Screen 17, Dispositions.

The foreign currency gain or loss on a 988 transaction is treated as ordinary income or loss unless an election is made to treat it as a capital gain or loss.

In order to treat this activity as Ordinary income:

1. Make sure to enter either short term dates, or 1 in the field 1 = short term, 2 = long term [O]
2. Scroll down to the Form 4797 section and enter a -1 in the Depreciation allowed (-1=none, triggers 4797) field
3. This will allow the total to show on Form 4797, Part II (Ordinary income/loss), which will then flow to line 14 on the Form 1040

If the transaction should be treated as a capital gain or loss:

1. Enter the Date Acquired, Date Sold, Sales Price, and Cost or Basis
2. The gain or loss will flow to Schedule D, Part I or Part II (depending on short term, or long term dates), which  will then flow to line 13 of the 1040.