1099s Bug on Form 4797 Line 1 for Rental Property Sale

[RU2]

Was just about to submit my return due tomorrow and noticed a bug on Form 4797. I sold my first property in 2018. It was a rental throughout. In Turbotax you report this on the rentals section under the property part. However, when I came to check form 4797, this was all filled in apparently correctly except that Line 1 (1099s reporting) was left blank - probably the most important box! I realize this is because Turbotax does not ask if the rental property sale was reported to you on form 1099s when going through the sales breakdown in the rental section.

Line 1 of 4797 states "Enter the gross proceeds from sales or exchanges reported to you for 2018 on Form(s) 1099-B or 1099-S (orsubstitute statement) that you are including on line 2, 10, or 20. See instructions . . . . . . . "

Two questions:

1. I am correct in saying Line 1 of 4797 should have the value stated in the 1099s of the property sold, correct?

2. As the rest of the form has been correctly been filled in by Turbotax, it sounds like I am right in saying Turbotax have missed a key question from the sale of rental property section - do you agree? i.e. it should have asked, "Was any of this sale reported to you on a 1099s"? It doesn't impact the tax due but if that box is left blank, it will probably cause issues as it won't match what the IRS has reported to it.

[Rainman12]

Question asked correctly, you apparently answered incorrectly. TurboTax asks for gross proceeds; Source is irrelevant.

[RU2]

Hi, on the rental property sale section, TurboTax doesn’t ask for total gross proceeds to correctly fill in line 1 of 4797. It only asks the gross proceeds in “sale of business property” section which you don’t use if you’ve already reported the sale of the rental property in the rental property section. In the rental property section, the gross proceeds is split across all the improvements made to the property so nowhere does it tally the total gross proceeds and then reports that on line 1 of 4797. This seems incorrect.

[RU2]

Spoke to TurboTax and they agreed it’s an error. 

If you are reporting property sold in the rental property section, TurboTax does not fill in box (line) 1 of form 4797 automatically so you need to manually find the form and fill that box in so it matches the 1099s.

[Queue_Underflow]

Bug is still there in TurboTax 2019 apparently. I just realized my e-filed Form 4797 incorrectly has a blank line 1. It never asks you about a Form 1099-S for the sale of a rental property.

[blerg]

Same here, this is a bug in TurboTax 2019, and as far as I can tell, would be something you would get a letter (or worse) from the IRS about if you did get a 1099-S and the field was left blank. The 1099-S says "If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this item is required to be reported and the IRS determines that it has not been reported". Sounds important to me.

While I was able to enter the value for line 1 directly on the form via the Forms tab, I'm unsure if such changes are persistent; if it gets reset later for some reason I'll update this comment.

[Queue_Underflow]

I can't imagine a negligence penalty unless the sale was completely unreported, which shouldn't be the case for anybody. Line 1 being blank doesn't affect my return otherwise, so hopefully the IRS lets it go.

[ksparbs]

We are going in circles.  The form is supposed to have line 1a filled in if you received a 1099 s or 1099 b  - so, for those who did not fill in line 1a did you receive a notice from the IRS?  And for berg who manually put it in via the desktop turbo tax version, did you have to override the program and mail it in or could you still file electronically after manually entering the gross proceeds on the 1099 in line 1a of the form 4797?  We were told that if this is considered an override, we will have to mail the return in and not be able to file online so it would be good to know if this is an override or not.  thanks in advance

[QueueUnderflow]

I received Form 1099-S and filed my 2019 taxes with Form 4797 line 1 blank (before I noticed the omission). I haven't heard anything from the IRS yet. I would think even if it was flagged, a quick manual review would show that the sum of all the 'gross sales price' entries add up to what should have been on line 1, so there was no underreporting. Don't have the software anymore but generally you can do quite a lot in 'Forms' mode, so I would think you could fill in line 1 manually that way.

[Taxpoor9to5]

Could you provide an update to this? Did you ever hear from the IRS? The problem persists in the 2022 Premier Desktop version. I entered the sales amount from my 1099-S manually, as Turbotax is not updating their software!!!

[RU2]

Not sure why they still haven’t fixed it but it’s good you spotted it had to be manually entered.

[Queue__Underflow]

Never heard from the IRS about it. I believe they have until April of this year though.

[Taxpoor9to5]

I find it more than frustrating; perhaps "scary" is the right word, that I would have to look through the generated forms resulting from the interview process, trying to pick out any errors. If I wanted to go through the forms, I would bypass the Turbotax software altogether.

[RU2]

Yes, other than this forum, I reported it as a bug to one of their “tax experts” on the phone who investigated it and came back and agreed it was an error and still.. years later… it’s not fixed 

[damp1065]

same issue, could hardly believe this has gone unaddressed since 2019