topic TurboTax does not support deferring gain by investing in... in Get your taxes done using TurboTax

How do I elect qualified opportunity zone deferrals in Turbo Tax Deluxe 2018?

woodward-apart — Fri, 07 Jun 2019 23:40:37 GMT

If I were filing by paper, this would be analogous to putting code Z in column F on Form 8949. (https://www.irs.gov/pub/irs-pdf/i8949.pdf)

What's throwing me off is how to do this in TurboTax correctly. I don't see any option (including under advanced ones) to elect a specific transaction as deferred.

The obvious alternative (just attach a statement with code Z in place OR do an override on the 8949 form to force a code Z and then override the summation) also has issues; my state (CA) doesn't honor QOF deferral, so the gain must still be a part of the state return. But I don't see any way in Turbotax to make state adjustments to the 8949, meaning I can't produce a complete return that is both correct for state and federal.

What's the proper way to handle this?

TurboTax does not support deferring gain by investing in...

rjs — Thu, 19 Sep 2019 22:41:55 GMT

TurboTax does not support deferring gain by investing in a qualified opportunity fund, and does not support code Z on Form 8949. There is no way to enter it.

An override will cancel the TurboTax accuracy guarantee, and will prevent e-filing. Overrides sometimes cause the calculations in TurboTax to break in unexpected ways.

Well, that's unfortunate, but doesn't quite answer what I...

woodward-apart — Fri, 07 Jun 2019 23:40:41 GMT

Well, that's unfortunate, but doesn't quite answer what I should be doing. What's the proper way to file here?

The bottom line is that you can't file the proper way wit...

rjs — Fri, 07 Jun 2019 23:40:42 GMT

The bottom line is that you can't file the proper way with TurboTax. The proper way to file is one of the following.
- Use other software that will fully support postponing gain by investing in a qualified opportunity fund, including handling it correctly on the state return.
- Use a tax professional who has such software.
- Prepare your tax return by hand on paper forms.

Well, that's unfortunate. I'm not sure what other softwar...

woodward-apart — Fri, 07 Jun 2019 23:40:44 GMT

Well, that's unfortunate. I'm not sure what other software even handles this; sounds like I'll just use Turbotax with overrides, carefully making sure numbers don't break, and paper file.

Has TurboTax gone on record saying that this wont be supp...

vpescado — Fri, 07 Jun 2019 23:40:45 GMT

Has TurboTax gone on record saying that this wont be supported? I recall earlier questions where it was a "not yet" situation.

I haven't been able to get an official statement. Earlier...

rjs — Fri, 07 Jun 2019 23:40:46 GMT

I haven't been able to get an official statement. Earlier in the season there was a check box for it on the Capital Gain (Loss) Transaction Worksheet, but no way to enter it in the interview. That check box was later removed from the worksheet. I take the removal of the check box as a pretty strong indication that they are not moving in the direction of supporting it.

If you select box I on the capital gain worksheet it will...

mmjim — Fri, 07 Jun 2019 23:40:49 GMT

If you select box I on the capital gain worksheet it will put the letter Q on form 8949. There will be no federal tax on the amount. I also live in California and it does handle it correctly by taxing the amount. Then you can print the return and manually change the Q to a Z and then file the taxes manually. What do you think of this idea? Also I am frustrated the TT has not responded to this issue and I do not understand why they would not provide the system to handle this.

There's a fundamental issue TT must address. A taxpayer...

BobF48 — Fri, 07 Jun 2019 23:40:51 GMT

There's a fundamental issue TT must address. A taxpayer must make a valid election to claim a Qualified Opportunity (QO) Deferral. The IRS has prescribed the method of validly electing the QO Deferral through entries on Form 8949. If the taxpayer does not follow the prescribed procedures, s/he is open to disallowance of his QO Deferral. TT must provide an effective work-around to permit its customers to make valid QO elections. The work-around doesn't need to be elegant or pretty, it just needs to work. If TT doesn't provide a fix and chooses to abandon a segment of its customer base, I'm walking away and never coming back. I encourage others in the same situation to do the same.
--A retired CPA and 30-year loyal TT customer.

@mmjim That's wrong as the reporting is much different....

woodward-apart — Fri, 07 Jun 2019 23:40:54 GMT

@mmjim That's wrong as the reporting is much different. For 'Q' type deferrals you put a number in column G cancelling out proceeds less basis (basically -gain). For Z type deferrals, you don't put anything in column G; you have to open a new 8949, check box F or C, and add a new row with the EIN of the QO fund and column G being negated. See the end of <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i8949.pdf">https://www.irs.gov/pub/irs-pdf/i8949.pdf</a>

Personally, I'm just gong to generate a spreadsheet version of the 8949 entries I deferred and paper file. (Specifically, in TT, add a row in the 8949 with "see attachment" as a description, and all other columns sums of my spreadsheet) Then for CA, in the "other CA adjustments" state "non-deferred QO investment" and throw the sum of the gains on there. This has the advantage of not requiring any overrides, even if it does require paper filing.

Still surprising that TT doesn't have this. Did they think the customer base that does this is too small?

It is absolutely ridiculous that TT has not implemented t...

marc-ludeke — Fri, 07 Jun 2019 23:40:55 GMT

It is absolutely ridiculous that TT has not implemented this even though the IRS instructions are from January. Several of us have commented on their blogs and no response whatsoever.

In their advertising, TT states: TurboTax Has You Cover...

BobF48 — Fri, 07 Jun 2019 23:40:57 GMT

In their advertising, TT states:
TurboTax Has You Covered
TurboTax has you covered and will be up to date with the latest tax laws.
Well TT, do you really have us covered?

While I am disappointed that TT does not seem to currentl...

vpescado — Fri, 07 Jun 2019 23:40:58 GMT

While I am disappointed that TT does not seem to currently support opportunity zone deferrals, it doesn't strike me as unreasonable. It's software that requires deep knowledge of the complexities of tax law, with issues that are often not resolved much before the beginning of the year.

However, I do find it unreasonable, irresponsible, and incompetent that a month before the filing deadline TT has not seen fit to provide any guidance as to what its customers can expect as far as such support. Even in the worst case, a simple "Opportunity Zone CG deferrals will not be supported for the 2018 tax year." would at least allow its customers to find other paths forward. And even if it won't be supported, providing a recommendation of best practices for reporting such a deferral would seem to be a minimum effort at customer service.

Instead, we are faced with the prospect of reading the tea leaves of appearing and disappearing boxes on worksheets to guess as to whether it will be supported, and rolling our own experimental solutions that may or may not cause federal and state taxes to be incorrectly calculated and even if it does ultimately may not pass muster with the IRS resulting in additional taxes, penalties and interest.

Can Turbotax *please* demonstrate some leadership and customer service and let us know where we stand?

I am pushing this up because I am experiencing the same f...

dave16b — Fri, 07 Jun 2019 23:41:00 GMT

I am pushing this up because I am experiencing the same frustration. Hello Turdo Tax are you out there?

Can you at least provide some response. Are you working...

dave16b — Wed, 12 Jun 2019 20:30:03 GMT

Can you at least provide some response. Are you working on a solution? If not are you going to refund us for the software cost so we can find an alternate product that can complete are taxes with?

I have turbotax Premier. This reminds me of when I used...

dave16b — Wed, 12 Jun 2019 20:30:04 GMT

I have turbotax Premier. This reminds me of when I used Turbotax deluxe and they dropped some of the functionality. Intuit made it right by offering an upgrade to Premier which I have been using since. Not aware of a higher level thast is applicable. Are you the wrong software for use with a key revision of the recent tax cut?

I do have turbotax Premier as well. Can Turbotax do anoth...

ttuser12345 — Wed, 12 Jun 2019 20:30:06 GMT

I do have turbotax Premier as well. Can Turbotax do another update to support this opportunity zone deferral? If not, are there any other software that supports it? Or how can I override the options in the 8949 form?

Turbotax support just confirmed that they will not suppor...

steved — Wed, 12 Jun 2019 20:30:08 GMT

Turbotax support just confirmed that they will not support QOF deferrals this year. Has anyone figured out the best places to override in order to enter this? I know it at least needs to be entered on 8949 and someplace for AMT, but I'm not sure that's sufficient. I also want to defer unrecaptured sec 1250 gains and it's not clear (even in the IRS docs) how to document that.

TT: will you support deferring gain by investing in QOZ...

lori58sf — Wed, 12 Jun 2019 20:30:09 GMT

TT: will you support deferring gain by investing in QOZ , and support code Z on Form 8949 box F for 2019 tax year filing? Can you make an official statement in NOV 2019 when you release TT software to the marketplace? Thanx

Re: How do I elect qualified opportunity zone deferrals in Turbo Tax Deluxe 2018?

woodward-apart — Thu, 27 Jun 2019 01:34:31 GMT

Closing this out, I was able to elect the deferrals in TurboTax with the aid of overrides (which forces paper filing).

Federal:

Step-by-step: Add a sale. Select "No 1099-B". Choose everything else. Add the OZ election as described in form 8949 instructions. (only question that is relevant will be name (use the EIN), disposal date, and whether you acquired over a year ago. Blank out everything else)
Go to forms; find the 8949 with the OZ election. For the OZ row(s), use overrides to wipe columns d, e, and f. Insert the actual OZ amount in column G. Add code Z to column F.
Validate tax was altered as expected

State:

For CA (which doesn't conform), I went to the State schedule D (D(540) and in the smart worksheet, checked the box (under sales price) in the OZ rows. This led to the OZ deferrals being excluded from the state capital gains worksheet.