Form 8949

[pmbblblaw]

TurboTax Business 2023: Capital Gains/Loss Worksheet (Schedule D) & Form 8949

I am using the TurboTax Business 2023 program for my Sub-S corp. My corp invests in tax liens. One of the tax liens became worthless in 2023, so I am writing it off as worthless.

I entered that information on the TT Schedule D worksheet, Part II as a long-term capital loss, showing a $4,351 cost (basis) and $-0- proceeds (sale price).

At the top of the Worksheet, line A1, I checked the No box, to indicate that I did not receive a 1099-B for this write-off. On Line F1, Type of Transaction, I inserted “O” for “worthless securities.”

That then generated a checked box entry on the related form 8949, part II, line F—showing no 1099-B. So that is ok.

Also, form 8949, Part II, line 1 columns a-e and h are all ok, showing correct information for holding period, basis and proceeds.

BUT, on that same line, columns f and g are (automatically by TT) incorrectly completed.  To my understanding, those two columns are supposed to apply only if there is an adjustment to gain or loss. I do not have any such adjustment and I did not anywhere indicate that I have any adjustment to my basic $4,351 long term capital loss due to the worthless security (the lien).

In column f, code letter E is inserted by the TT program. That should not be there, because, as noted, there is no adjustment in my situation. Moreover, code E only applies if one has received a 1099-B or 1099-S. As noted above, I did not receive either such form, as I so indicated on line A1 of the Capital Gains/Loss (Sched. D) Worksheet.

Also, Column G is demanding that I insert an amount, to show the amount of the adjustment. (If not, I get an "error" when I do my TT fed tax review.) But, as noted, there is no adjustment, and I did not (to my knowledge) anywhere indicate that there should be an adjustment to my capital loss amount.

Am I doing something wrong, or is this a TT program glitch?

[Mike9241]

short answer. don't use code O

You have an adjustment not explained earlier in this column use code O
Enter the appropriate adjustment amount in column (g). See the instructions for column (g).

if none of the other statements apply 
Leave columns (f) and (g) blank

there is no code letter for worthless security check the 8949 instructions codes

https://www.irs.gov/pub/irs-pdf/i8949.pdf 

[pmbblblaw]

Hi Mike: Thanks for your comment. 

As I said in my original question yesterday, I did not anywhere (in the TT program) say that I had an adjustment. Therefore, columns (f) and (g) should be blank.

So why is the TT software insisting that I insert an adjustment amount in column (g)?

And why is the TT program automatically inserting code E (note: it is not inserting Code O, as you suggest in your comment) in column (f)?

When I try to override the automatic entries in these two columns (to leave both columns blank, as it seems they should be left blank), and I then run the Federal Review in TT, I get a warning note:

Check This Entry
Form 8949 (Copy 1): Gn or Ls Adjustment (LT) should not be overridden and changed for Electronic Filing. Using an override can prevent the cross-checking that's important to an accurate tax return. To cancel the override, click on the overridden field and choose 'Cancel Override' from the Edit menu.

So, of course, I am concerned about overriding. It seems as if this is a TT program problem; no?

Thanks.  

[pmbblblaw]

Never received an answer to my question above. Seems like a TurboTax program error?

Anyone have a suggestion?