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Level 1

Question

Form 4684 Circular Error Message

Forum|Forum|4 months ago
March 29, 2026
1 reply
90 views

I completed form 4684 for a Ponzi Type Scheme loss and also completed page 3. When running the ssmart error check as part of the return finalization, I receive a message that Form 4864 Property "Description should not have an entry. You have indicated this is Rev Proc 2009-20 Ponzi Type loss so you must complete page 3. Section C of form 4684". I have completed that form. So when I take out the description of the property and re-run smart check, I get a new error message that Property description must be entered. If I correct this I go back to the same error message I previously had. What do I do to get out of this circular loop?

Level 15

It depends. When you elect the Rev. Proc. 2009‑20 safe harbor, the IRS instructions require:

No property description on Section B
All details instead go on Section C (page 3)
But many tax programs still have a built‑in rule that says:

“A property description is required for Form 4684.”
So the software ends up enforcing both rules at once — even though they contradict each other.

Here are a couple of workarounds that typically resolve the issue, depending on the software:

1. Enter a placeholder description only in Section C

Some programs want Section B left blank, but they still want something in Section C’s “Investment Name” field. Try entering something simple like:

Ponzi Scheme Loss – Rev Proc 2009‑20
Then leave Section B completely blank.
Run Smart Check again.

2. If the software forces a Section B description, use a minimal placeholder

Some programs require something in Section B even though the IRS doesn’t. Try entering:

See Section C
Then complete Section C normally.
This often satisfies both validation rules.

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