Home sale worksheet has a gain that is correct but that is not the amount showing on Form 8949. It brings in the gain without the selling expenses deducted. Why?

[SuperAcct]

Turbotax Home and Business Version for 2021

[Critter-3]

The selling expenses are added to the basis not subtracted from the selling price.  

[tagteam]

The selling expenses are subtracted from the sales price to arrive at the amount realized. The basis is then subtracted from the amount realized to arrive at the gain, which is then reported on Form 8949.

[Mike9241]

if the gain on the worksheet is the same as on schedule D and the sales price on schedule D is gross (before sales expenses  - this is necessary because the IRS matches gross proceeds reported with any 1099-S they get) then the cost column includes sales expenses and everything is fine 

[SuperAcct]

Thanks so much for the reply.  I had no problems with the worksheet which is the doc you are showing.  My problem is the gain is correct on the worksheet.  It takes the gross selling price, reduces the amount received by the selling expenses and then applies it against the basis and comes up with the correct gain on the worksheet.  My problem is that Turbo would not transfer the correct gain to the Form 8949.  It was putting the gain on that form in a higher amount and then on Schedule D not taking into account the selling expenses that were already on the worksheet.  I spent over an hour with Turbotax expert support and finally was told that since my gain ended up not being taxable, Turbotax considers the selling expense irrelevant and doesn't take them into calculation.  But if my gain was taxable, I was told, Turbotax would have subtracted the selling expenses and put the correct gain on 8949.  I as an accountant did not like that answer and felt it should be a bug in Turbotax as I want the correct gain showing on my tax return forms whether it is taxable or not.  Ha. 

[SuperAcct]

Thanks so much for the reply.  I had no problems with the worksheet which is the doc you are showing.  My problem is the gain is correct on the worksheet.  It takes the gross selling price, reduces the amount received by the selling expenses and then applies it against the basis and comes up with the correct gain on the worksheet.  My problem is that Turbo would not transfer the correct gain to the Form 8949.  It was putting the gain on that form in a higher amount and then on Schedule D not taking into account the selling expenses that were already on the worksheet.  I spent over an hour with Turbotax expert support and finally was told that since my gain ended up not being taxable, Turbotax considers the selling expense irrelevant and doesn't take them into calculation.  But if my gain was taxable, I was told, Turbotax would have subtracted the selling expenses and put the correct gain on 8949.  I as an accountant did not like that answer and felt it should be a bug in Turbotax as I want the correct gain showing on my tax return forms whether it is taxable or not.  Ha. 

[tagteam]

I agree with you but, on the other hand, if the gain is excluded by Section 121, the selling expenses become irrelevant.

[Mike9241]

Turbotax is following IRS directions

the exclusion is limited to the gain after selling expenses and selling expenses are to be separately reported

. 

  example

sales price $500,000 per closing statement and 1099-S 

selling expenses $50,000

tax basis  $230,000

thus gain $220,000

exclusion $220,000

taxable $ 0

8949 reporting  (this flows to schedule D)

sales price $500,000 as above

cost or other basis $230,000 as above. this is how the IRS wants it since the sales price on the closing statement was not directly reduced by the sales expenses

codes EH for selling expenses and exclusion 

amount of adjustment -  exclusion $220,000 selling expenses $50,000 total $270,000

taxable gain $500,000 - 230,0000 - $270,000 = 0

had selling expenses been $45,000 

sales price reported same as above

cost or other basis same as above

codes same as above

amount of adjustment  - exclusion now $225,000 selling expenses $45,000 total $270,000

taxable gain same as above.

code E is for selling expenses.  per 8949 instructions In column (g), enter as a negative number (in parentheses) any selling expenses 

[SuperAcct]

I appreciate the many replies, but most of the answers seem to miss that I filled out the worksheet correctly.  It shows the correct gain.  Gross selling price-selling expenses listed separately-basis=gain. 

The problem is the that the correct gain just like you described does NOT flow to the Form 8949 in the correct amount.  The Turbotax instructions for Form 8949 say:

Usage

Form 8949 is fully-calculated by the program. Do not make entries directly on Form 8949. Instead use the Form 1099-B Worksheet to enter this information.

Even though I list the correct gross selling price and list the selling expenses separately on the worksheet, then the correct basis, and the correct gain is showing, the only thing that flows to the adjustment column g on the 8949 is just the difference between selling price and basis.  Turbotax ignores the selling expenses part of the calculation.   Even the IRS instructions for form 8949 has this:

 In column (g), enter $220,000 ($20,000
selling expenses + $200,000 exclusion) as
a negative number. Put it in parentheses
to show it is negative. In column (h),
enter -0- ($320,000 − $100,000 −
$220,000). If this is your only transaction
on this Part II, enter $320,000 in column
(d) on line 10 of Schedule D (Form 1040),
$100,000 in column (e), ($220,000) in
column (g), and -0- in column (h).

But Turbotax does NOT include the selling expenses in column g adjustment amount.  It is not following IRS instructions and then it tells you not to change the amounts that flow to the 8949 because Turbotax automatically figures this.  So that is why I called support and was told for some reason Turbotax ignores the selling expenses when you don't have a taxable gain.  I know in the long run, it doesn't affect my taxes.  As an accountant, I just have a problem with reporting an incorrect amount on a tax form.  So I am left to override either the worksheet or Form 8949 to get the correct gain to show on my tax return.  

[tagteam]

---

@SuperAcct wrote:

But Turbotax does NOT include the selling expenses in column g adjustment amount. 

---

Actually, TurboTax does but the program does not do so in the manner in which you are expecting. Rather, it does so in accordance with the IRS instructions (below).

Example.

You sold your main home in 2021 for $320,000 and received a Form 1099-S showing the $320,000 gross proceeds. The home's basis was $100,000. You had selling expenses of $20,000 that weren’t included on your Form 1099-S. Under the tests described in Sale of Your Home in the Instructions for Schedule D (Form 1040), you can exclude the entire $200,000 gain from income. On Form 8949, Part II, check box F at the top. Complete columns (a), (b), and (c). Enter $320,000 in column (d) and $100,000 in column (e). Enter “EH” in column (f). In column (g), enter $220,000 ($20,000 selling expenses + $200,000 exclusion) as a negative number. Put it in parentheses to show it is negative. In column (h), enter -0- ($320,000 − $100,000 − $220,000). If this is your only transaction on this Part II, enter $320,000 in column (d) on line 10 of Schedule D (Form 1040), $100,000 in column (e), ($220,000) in column (g), and -0- in column (h).

[SuperAcct]

Thanks. I don't follow your answer.  I explained in my recent post that those are the guidelines in the IRS Publication but that Turbotax says it will automatically calculate the amounts that flow to the 8949.  So Turbotax does NOT follow those IRS guidelines because it does NOT take the selling expenses listed on the worksheet and add the calculated gain from the gross selling price less basis of the house.  Instead Turbotax is ignoring the selling expenses listed on the worksheet and only bringing in the gain without selling expenses to come up with the amount that ends up on column G.  IRS instructions clearly state to put the gain plus selling expenses on the column G.  Then Turbotax tells you it calculates this apparently saying you don't have to enter anything on form 8949.  So my original answer still stands.  Turbotax is not transferring from the worksheet correctly to the 8949.  

So on my home worksheet for example, after I listed three amounts.  For example, Gross selling price, selling expenses and basis, it does calculate correctly the net gain.  For example, gross=400000.  Basis is 200000 and expenses are 20000.  Correct net gain is 180000.  But all that Turbotax transfers to the 8949 and the Schedule D, is the 400000-200000=200000.  The selling expenses are there on the worksheet but it does not add the initial gain plus selling expenses per IRS instructions and transfer the correct amount of 220000 to Column G.  It only transfers the 200000 and ignores the selling expenses.  Thus the gain is incorrect on the 8949 and Schedule D. 

[tagteam]

To confirm, was this the sale of your principal residence (and the gain excluded under Section 121)?

Regardless, TurboTax appears to be handling the transaction properly (see screenshots in the posts below).

[tagteam]

On a test return, the screenshot below is what appears on Form 8949 if gain is recognized.

[tagteam]

On a test return, the screenshot below is what appears on Form 8949 if gain is excluded as a result of the home sale exclusion (Section 121).

[SuperAcct]

I agree.  That is how the worksheet looks on mine.  But on mine, the 150000 in your example flows to the 8949 as 200000 gain,  ignoring the 50000 expenses.  This is what I have been saying all along.  The worksheet is correct, Turbotax transfer the wrong gain to 8949.