Using Home & Business. Form 1033 (a)(2)(A) Election to Defer Gain on Involuntary Conversion seems to calc Realized Gain incorrectly. Cost of Replacement Property ignored,

Forum|Forum|6 years ago
March 30, 2020
5 replies
55 views

Rental house fire:
Insurance payment 60K
Adjusted based on destroyed property 40K.
Replacement property purchased 50K

I enter values using Casualty Theft Summary under Deductions and Credits, and then the Deferred Gain Election screens.
------------------------------------------------------------ TurboTax says realized gain is 60K. Shouldn't realized gain be 10K, with deferred gain of 10K to be reflected in lower basis for the replacement property?

TurboTax Online

user420028Author

Level 2

After submitting this to the community, I studied the situation further and decided that a formal support call was appropriate. The issue wasn't cleared up with the first call, so I'll post the result after my followup discussion tomorrow.

user420028Author

Level 2

After 3 sessions with the support team, TurboTax says this calculation is too complicated for them and I should go to a CPA. It's really not that complicated... make the formula on 1033 match the written text on 1033. ...recognize gain only to the extent that the amount realized upon such a conversion exceeds the COST of the REPLACEMENT Property"

thoroughly disgusted... after 20 years on Turbotax

CSeisert

Level 2

And if the gain is calculated incorrectly, then the basis for the next property is wrong before beginning depreciation.

I'm trying to use the same form for a condemnation of rental in 2016, and replacement purchased in 2019, and the form will not accept 2016 as the year of conversion. I can force it by putting in a 2019 date, but that's not accurate. the form also says my gain is higher than I calculate. Just a little worried to use TT filing this time. Did you wind up using it, or did you go to a CPA?