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lucanadeau
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

I used a qualified intermediary and identified and bought the new property in the allotted time frame. In TT, I went to business income, sale of business property, and checked the box for a like-kind exchange. In schedule E, for my rental properties, at first I indicated that the exchange property had been sold, but after reading the fine print, which says not to check that box if it's a like-kind exchange, I unchecked it. It didn't change the outcome, however, and both ways I'm being charged for capital gains on something that should be deferred.

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Accepted Solutions
hbbcpa
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

The like-kind exchange may have been entered correctly, but the sale may also have been entered which would result in a taxable gain showing on Schedule D.

Check your input under the section Business Income, Less Common Business Situations, Sale of Business Property.  The box on the bottom for additional like-kind exchanges should be checked.  If the box on top, sales of business property is checked, you may also have entered it as a sale.  If you continue further, it should take you to a screen that shows Sale of Business Property (Copy 1).  If information was entered there, you probably have to delete it (Copy 1) because that's producing Form 4797 and Schedule D.  As you continue further in this section, you should see the like-kind gain previously entered, which should be the only input in this section.

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32 Replies
hbbcpa
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

It's hard to say without seeing numbers.  Were all the proceeds from sale used to acquire the new property?
lucanadeau
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

Yes, all the proceeds from the sale were used in the exchange. On form 8824 line 23, my recognized gain is zero. Line 24 shows my deferred gain as $53,000. However, for some reason, TT has filled out form 4797 for this same property, showing a capital gain of $63,000. Is it correct that form 4797 should not have been filled out for this property, since it had already been reported as a deferred gain on 8824?
hbbcpa
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

See answer.  I tried entering a deferred gain and encountered the same issue because I was entering it as a sale in addition to a like-kind exchange.  You are correct in that it should show up only as a deferred gain and not as a taxable gain.  Let me know how it works out.
csjostedt925
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

How did it work out because I have just had the same issue come up on my tax return and can't seem to fix.
4saul
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

See the additional answer section below, I think it now addresses both TT: Home and Business and TT:Business, short answer is you mostly have to backout the transaction and likely delete forms and make sure the 4797 is not in the form list, then start over using the tips and tricks in the answers below
hbbcpa
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

The like-kind exchange may have been entered correctly, but the sale may also have been entered which would result in a taxable gain showing on Schedule D.

Check your input under the section Business Income, Less Common Business Situations, Sale of Business Property.  The box on the bottom for additional like-kind exchanges should be checked.  If the box on top, sales of business property is checked, you may also have entered it as a sale.  If you continue further, it should take you to a screen that shows Sale of Business Property (Copy 1).  If information was entered there, you probably have to delete it (Copy 1) because that's producing Form 4797 and Schedule D.  As you continue further in this section, you should see the like-kind gain previously entered, which should be the only input in this section.

lucanadeau
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

Thank you - this was the issue. This appears to be a glitch in TT, because I tried unchecking the upper box, yet it kept those forms filled out - I had to keep the box checked, then go in and delete that property before it removed form 4797 and the input on Sch D. Also, TT should explicitly say not to check the upper box if one is entering that property as a like-kind exchange.
hbbcpa
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

Yes, I noticed the same issue.  Glad to help you out.  Best
jmisiag
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

Has the glitch been addressed? I am getting a capital gain figure on my 1031 exchange and the numbers are unreal.
hbbcpa
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

I thought you resolved the problem; wasn't Form 4797 removed?  There may be a glitch, but if you go back in and delete the property the way you described above, it should remove Form 4797.
lucanadeau
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

Yes, jmisiag, just go in and delete the property if you checked the sale of business property box. The glitch remains, but you can work around it by doing that, as hbbcpa suggested.
4saul
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

I seem to be having a similar problem with TT BUsiness 2016, I did a 1031 exchange 12/16 -> 1/17, but when I enter it in the "Rental Real Estate Income and Expense" step-by-step page, I am still getting a K-1 line 10 gain and a Form 4797 is getting generated and I can't seem to delete it. I tried going through with the "About your business" / Rental real estate property summary / Confirm property information page with rental property sold or otherwise disposed checked and un-checked, it did not matter.

Hope someone can see this and help out.
malcook
Level 2

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

Make sure you read the additional answer below from @stuart.bunstock  -  after following it my Schedule D and Form 4797 were gone, as desired.
stuart-bunstock
New Member

I'm doing a 1031 exchange. TT populated form 8824 and told me I had a deferred gain that was not taxable this year, so why is it shown as a taxable gain on sch D line 11?

I struggled with this for hours; and the solution was just to delete all info in the SALES INFO boxes!  For your exchange property, under Business Income Expenses, choose "update" on the "Assets/depreciations";  ."yes, go to my asset summary"; continue thru the screens to get to "..any items not covered.."; choose, yes, then the property, "edit"; continue thru ; choose "no" .. I did NOT stop using item for business purposes; continue thru to "Sales Information" and make sure all the four boxes are empty.  (The fact that you do not check you sold it is NOT enough; these boxes have to be empty).

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