Form 4684 Circular Error Message

[AGG61]

I completed form 4684 for a Ponzi Type Scheme loss and also completed page 3.  When running the ssmart error check as part of the return finalization, I receive a message that Form 4864 Property "Description should not have an entry.  You have indicated this is Rev Proc 2009-20 Ponzi Type loss so you must complete page 3. Section C of form 4684".  I have completed that form.  So when I take out the description of the property and re-run smart check, I get a new error message that Property description must be entered.  If I correct this I go back to the same error message I previously had.  What do I do to get out of this circular loop? 

[DaveF1006]

It depends. When you elect the Rev. Proc. 2009‑20 safe harbor, the IRS instructions require:

1. No property description on Section B
2. All details instead go on Section C (page 3)
3. But many tax programs still have a built‑in rule that says:

• “A property description is required for Form 4684.”
• So the software ends up enforcing both rules at once — even though they contradict each other.

Here are a couple of  workarounds that typically resolve the issue, depending on the software:

1. Enter a placeholder description only in Section C

Some programs want Section B left blank, but they still want something in Section C’s “Investment Name” field. Try entering something simple like:

• Ponzi Scheme Loss – Rev Proc 2009‑20
• Then leave Section B completely blank.
• Run Smart Check again.

2. If the software forces a Section B description, use a minimal placeholder

Some programs require something in Section B even though the IRS doesn’t. Try entering:

• See Section C 
• Then complete Section C normally.
• This often satisfies both validation rules.