1031 Exchange Form Issue

[BB2000]

I am having an issue filling out the 1031 form (8824). I sold farm land and purchased another farm. When I fill out the form, everything is calculated correctly but when I get to line 25, it only gives me the choice to put a basis for section 1250, 1245, or intangible property. It is my understanding that bare land is none of those choices, it should be section 1231 property. It is forcing me to put a value into one of those choices for me to continue. Is there a work around for this? 

[Mike9241]

a definite bug in Turvotax sine 25a, b and c should be left blank in your situation. i don't see a workaround.

[BB2000]

So what can I do? I tried calling the help desk but they could not find a work around. Is there a way to report a bug to turbotax? The lady from the help desk said she wasn't able to, which is crazy to me.

[DaveF1006]

Yes.  Here is how to report.

1. Go to Federal
2. Wages and Income
3. Business Items
4. Sale of Business Property
5. The first Screen says "Any other Property Sales"
6. Check only Any Additional Like-kind Sales
7. Answer yes if you have like-kind exchanges
8. Next it asks for information about the property given up
9. Next screen asks for more information, including the basis.
10. The adjusted basis should be the amount you paid for the land plus any improvements such as a graveled road
11. Next you will enter information about the land that you acquired.
12. There will be other questions about different property given up. You may ignore these questions.
13. In the end, you should receive a message that there is no taxable gain.

if you are preparing form 8824, stop. If you report it the manner I described above, you won't be saddled by all these other issues you are experiencing.

@BB2000 

[BB2000]

I did these exact steps. But after doing that I still get a red error message on the 8824 form page on line 25A. It requires me to correct it or else I can't submit my taxes. It wants to know how much basis to allocate to line 25a (section 1250 property), 25b (section 1245 property), or 25c (intangible). None of these apply to my situation as bare land is section 1231.

On the actual tax form it says

Note: Complete lines 25a, 25b, and 25c if you received like kind section 1250, or 1245, or intangible  property. I didn't receive any of those. 1250 is for depreciable assets which bare land is not depreciable. 1245 is for personal property.

I don't understand why it is requiring me to allocate basis to these options. 

[DaveF1006]

The problem is that Turbo Tax does not account for like-kind exchanges for land. Land is certainly eligible for a like-kind exchange according to the IRS in this fact sheet. 

Since this is late in the tax year, make an entry in one of these sections since it asks for the basis of property received to satisfy the program. This will not impact your return or any future returns if you decide to sell the property. Remember, you have a two-year holding period on the new piece of Farmland before you decide to do another exchange or else this event becomes taxable.

As a precaution, save the entire transcript of this thread on the outside chance this transaction is questioned. It shouldn't be but it is better to be safe than sorry. Turbo Tax stands by its positions and advice given.

@BB2000  

[KCMiller3]

Any update to this?  This is still an issue for 2025. How can I avoid having to enter information into 25a, 25b, or 25c for raw land?  Thanks!

[DianeW777]

Part of the reason is because land is usually part of a property with other assets. Again, you can enter low insignificant amounts such as $1 to move forward and continue your return.

As indicated above by @DaveF1006, this will not impact your return or any future returns if you decide to sell the property.

@KCMiller3 

[KCMiller3]

@DianeW777 

Thanks for the reply.  Unfortunately, the Turbotax system requires those boxes (25a, 25b, 25c) to equal the total property basis that was previously.  You cannot enter $1 and you cannot put 0 or leave it blank.  These lines are clearly not a requirement on the tax form, so I'm not sure why TurboTax is making them a requirement.  This should be an easy fix, if TurboTax would simply look at it.

If I can simply put anything and it not matter, why did the IRS add those lines to this form?

Thanks again!

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. 
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.  

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax CD/Download for Windows
2. Select 'Send Tax File to Agent'
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution. 

@KCMiller3 

[rcvilla]

I'm having the same issue

[rcvilla]

I'm having the same issue. Here is a picture of my token # and my state is AZ

[DianeW777]

Thank you. After review of your tax return, the following guidance is provided. Both properties must be held for use in a trade or business or for investment (see the fact sheet below). This was not checked in your tax file so I want to confirm it is true.

• 'The like-kind property I exchanged was used in a trade, business or rental' 
• IRS Fact Sheet for Section 1031 Exchange

The 8824 is simply showing the exchange of the asset and that you have no taxable gain on the 1031 exchange in 2024. I agree it shouldn't need to be entered on line 25(a) because it is not Section 1250 property, in fact it is Section 1231 property. Since this is deferred and not taxed in the current year, there is no harm in putting it on Line 25(a) so that you can complete your tax return. 

When you do sell it without using a 1031 like kind exchange you will report it as Section 1231 which does have a more favorable tax treatment. If, in fact, this is land, then there is no depreciation and it will be reported as Section 1231 at that time without reference to Section 1250 property. If the previous statement is true in your situation, and you have no building or depreciation to recapture at a future sale then you can complete the return with the instructions provided. Keep a note with your tax file so you are clear in the future year of sale.

@rcvilla 

[oconcepcion]

Sunday, 30 March 2025  I am having the same exact problem with Form 8824 Line 25A having to be filled in with the same exact amount on line 25 before I can successfully electronically submit my Federal and State Income Taxes. I shared my screen with the  Turbo Tax Support Person.  Tried "nothing", $0.00, $1.00 and other random amounts and it "stayed red" until I put the entire amount from Line 25 in 25A.   My replacement property is farm ground with no buildings - Section 1231 property.   On the second line of Line 2 I wrote "farm ground with no buildings  Turbotax will not allow me to electronically file with line 25A being $0.00 Will only accept the amount in line 25 as a correct entry."  At least I have a record of the original 8824 that it isn't Section 1250 property.   What is frustrating is that this programming glitch which requires the full amount of line 25 to be listed on 25A was brought to TurboTax's attention for the 2023 tax year and it wasn't corrected for tax year 2024.  Are farmers such a small demographic that you don't take the programming time to correct the error.  I could print out the 8824 with $0.00 in Line 25a along with all the other tax forms and submit by mail, but that would be a real headache to the IRS employee who would have to process my Federal Income Taxes by hand.  My case is still open, and the person who assisted me today was thorough and professional.  After reading all the other posts, it doesn't sound like there is a "secret programming code" to enter into Line 25 to get past the Final Check for Accuracy to allow $0.00 or even leaving 8824 Line 25A blank to continue to the electronic processing stage.  For this to be an issue for now 2 tax years is cause for a negative review.

[DianeW777]

Thank you for bringing your experience to the TurboTax team. For 2024, you may need to make the manual adjustments to mail your tax return to the IRS.  For now you can use the following information for us to review first hand.

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax Desktop for Windows
2. Select 'Send Tax File to Agent'* > Follow the prompts to reach the token number.
   • Enter your email used for TurboTax > Enter your code > Send
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.
   • *If using a MAC, go to the menu at the top of the screen, select Help, then, 'Send Tax File to Agent')

We will be able to see exactly what you are seeing and we can determine what exactly is going on in your return to provide you with a resolution.

@oconcepcion