It depends. If you are saying you qualify for one of the elections for Line 11 (see below), you may need to make manual adjustments to remove the error by switching to Forms in TurboTax Desktop. Go to Form 8824 and check to see if the statement shows up and if you are able to remove the error. If not, you may find that mailing the return may be necessary.
Lines 11a through 11c.
The line 11 exceptions are in Form 8824 on lines 11a through 11c. These are the exceptions.
- Line 11a. The disposition was after the death of either party.
- Line 11b. The disposition was an involuntary conversion, and the threat of conversion occurred after the exchange.
- Line 11c. You can establish to the satisfaction of the IRS that neither the disposition nor the exchange had tax avoidance as one of its principal purposes.
Line 11c.
If you believe that you can establish to the satisfaction of the IRS that tax avoidance wasn’t a principal purpose of both the exchange and the disposition, attach an explanation. Generally, tax avoidance won't be seen as a principal purpose in the case of:
- A disposition of property in a nonrecognition transaction,
- An exchange in which the related parties derive no tax advantage from the shifting of basis between the exchanged properties, or
- An exchange of undivided interests in different properties that results in each related party holding either the entire interest in a single property or a larger undivided interest in any of the properties.
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