when you say which state software I'm not sure what you mean... I am using Turbo Tax Premium online for Federal and State. It transfers info automatically over to the state return. The Federal return is fine, it has correctly calculated capital gains on both land and house after sale and brought into appropriate lines on the 1040. However on my Kentucky State return it has incorrectly completed Schedule M because it put the entire cost basis of the land and the house on Schedule A (Federal/State Adjustment Summary) giving me a huge credit. The house cost basis was listed as an adjustment on (E) Gain adjustment as a negative number and the land cost basis was listed at the bottom as Passive/At-Risk/Other Adjustments. That Schedule A has these numbers in it:
(C) Federal Loss/Gain - my gain on the house portion of the sale
(D 1 and 2) - some accumulated depreciation numbers I'm not really sure where they came from but not overly concerned with them (federal number I know came from fed return, not sure where stat number came from)
(E) Gain Adjusment - the entire cost basis of house portion as a negative number
(G) Total Adjustments = D1 - D2 + E (a huge negative number)
Passive/At-Risk/Other Adjustments - a negative number of the entire cost basis of the land portion
Total Sale of Asset Adjustment = G + above passive adjustment (even huger negative number)
That large number was then divided across my wife and myself and placed on line 9 of "Kentucky Other Subtractions Worksheet - Attach to Schedule M" and added to line 3 Passive activity loss adjustment. That total was put on Schedule M line 14 which in the end carries forward to my 740 and takes all my income away and gives me a big refund.
Any insight would be great, at this point I fear I'm not going to be able to use TT to file state and will have to print it all out and take it to a tax preparer which I'm hoping to avoid.
Chris
