form 7203 line 3a cannot have a gain in Part I and a loss in Part III

[TotalTaxNoob]

I believe there is an error in how the form 7203 is checking itself. Line 3a states "Ordinary business income (enter losses in Part III)". Unless I'm missing something (entirely possible since we are talking accounting here) this literally means you CAN have a gain on line 3a AND a loss in Part III. That's the whole purpose of Part III. Yet if you do have a gain (I did) and do have a loss (I had a small deduction which gets entered into Part III) then you get an error and are not allowed to e-file your taxes. Hopefully someone will either fix this or maybe point out how you can in fact have a gain and report a loss in Part III correctly?

To anyone with the same issue that just wants to file their taxes (and NO I am NOT an accountant and you should for sure NOT take my advice on anything especially taxes)... I deleted everything in Part III (not put a 0 literally delete every blank so nothing is there). I then went to line 6 and just added my deduction to that line so my stock basis (line 15) would still read correctly. THEN (and this is an important step) DO NOT forget to hit the RECALCULATE button at the bottom. Let it put 0's where it wants them and fix any math errors. Now you can double check the numbers and hopefully your line 15 should read the same as it does on your K-1 form. Doing this got me the correct Stock Basis amount and finally I was able to e-file without the error that cost me an hour of my life.

[JamesG1]

If ordinary income from the entity is positive (K-1 1120-S line 1), the income is reported on line 3a in Part I.

If ordinary income from the entity is negative (K-1 1120-S line 1), the loss is reported on line 35 in Part III.

What deduction were you reporting with the gain on K-1 1120-S line 1?

@TotalTaxNoob 

[TotalTaxNoob]

Line 12 Other Deductions on my K-1 was listed as type A with a small amount listed there. As I understood the 7203, this would go down in Part III and it think it was line 41. The form in turbo tax had a much nicer bit of instructions next to each line unlike the actual 7203 which I'm using at the moment as a reference so I can reply.

[chmglobal]

Having the same issue.  After spending 4 hours one the phone with two "experts" who had me attempting to resolve the concern by trial and error, the error message remains.  The most recent conversation had the "expert" state that Macs are not compatible with Turbotax.  Really?????   It is apparently a systemic concern and the ongoing processing issue without any proactive remedial action by Turbotax is indicative of the value they place on their clients.

[chmglobal]

Hope this helps TT clients with the noted issue of having a K1 that reports an Ordinary Business Loss in Box 1 AND a Capital Gain in 7, 8a, 8b and or 8c.   

Enter the loss on Line 11 ONLY.  This entry will be accepted, adjust the stock basis when calculations are refreshed.  

Do not enter any information below in Section 3 as TT recommends, eventually resulting in the ERROR message and the inability to process.  Further, TT experts were perplexed with the issue, internal escalation provided no useful support for Form 7203.  Resulting, an inordinate amount of time was spent going through "hunt and peck" trial and error recommendations that provided no resolution.

[hopefullyhelpful]

I was running into this same issue and I think I found the problem. When filling out the basis worksheet, I had an ordinary business gain that was listed in part I but then a cash contribution from box 12 A in my K1. This went into part III. I kept getting the "cannot have a gain in Part I and a loss in Part III" error when I would do my federal review 

I went back into the basis worksheet and the ordinary business income line in part III has a "0." in the loss section, I deleted the "0." in that field and then left it blank. This allowed the form to validate. 

I think the issue is that the validation is saying you cannot have anything in that field for Part III if you have the field filled out in Part I even if its zero loss