topic asset disposition in Business & farm

asset disposition

lpelzel — Sat, 08 Feb 2020 17:59:04 GMT

Seems like TT Business must have a glitch. When I enter the disposition of an asset sold for a gain it correctly shows the depreciation recapture as an ordinary gain but also enters the difference between the purchase price and the selling price as a sec 1231 loss. How can one have a loss on something sold for a gain? To confirm my thinking I entered the same transaction in TT Home and Business and it did not show a 1231 loss. How do I work around this?

Re: asset disposition

ThomasM125 — Tue, 11 Feb 2020 21:21:09 GMT

The sale of a business asset would normally show up on form 4797, page 2, part III. Can you look at that form and see what the net gain or loss is?

Re: asset disposition

lpelzel — Wed, 12 Feb 2020 23:28:45 GMT

The issue is on my 1065 business return. Sch K-1 line 20 has a statement called QBI Pass-through Entity Reporting that shows the difference between the asset purchase price and sale price as a Sec 1231 loss even though the asset was sold for a gain (asset had been depreciated to a book value of zero). The gain is also shown on K-1 line 20. The effect when this flows to my personal return is that the gain correctly becomes ordinary income on form 4797 while the supposed loss reduces my QBI (but not taxable income).

Re: asset disposition

DavidS127 — Mon, 24 Feb 2020 14:49:30 GMT

Qualified Business Income (QBI) does not include “investment items” such as capital gains or losses. So, what the TurboTax software is calculating on the Schedule K-1, Line 20 QBI Pass-through Entity Reporting Statement is the QBI reported to partners, which by definition excludes the portion of partnership income that represents the capital gain.

Use “Forms” mode (icon at upper right, blue panel) to look at the “199A Act Wks” and “199A Stmt A Sum” worksheets for the calculations on the QBI Pass-through Entity Reporting Statement. You can also use Forms mode look at the Form 4797 for the calculation of the taxable amount of your asset disposition, as suggested by Community user ThomasM125.

Re: asset disposition

lpelzel — Tue, 25 Feb 2020 15:04:26 GMT

Ya'll are not speaking to the question I am asking. I'll try to be more clear. I don't need help on how to report the gain. I want to know why TT is calculating a sec 1231 loss on an asset I have sold for a profit.

Re: asset disposition

AmyC — Mon, 02 Mar 2020 23:24:51 GMT

You could have had non-recaptured losses or excess accumulated depreciation. It is possible to have a loss on part of the gain.