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Federal input screens

Screen D - Capital Gains and Losses and Built-in Gains (1120)

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Capital Gains and Losses

Detail schedule
Enter the sale of capital assets that are not sold on installment in the statement. The application reports this information on Form 8949, or directly on Schedule D, based on the code selected in the 8949 Box column.
The Detail schedule statement includes the following fields.
  • Form 8949 Box:
     Use this field to determine which unit of Form 8949 to report the transaction, or if the transaction should be reported directly on Schedule D.
  • 1099B Errors:
     Use this field to identify 1099B errors that were reported to the IRS.
    Use the
    Adj to Gain (Loss)
    and
    Adj Code
    columns to report any other adjustments that may apply to the transaction.
  • Type:
     For S Corporations, enter
    1
     or
    2
     to transfer the non-portfolio capital gain or loss to Schedule K, Other income and Schedule K-1, line 10S. If you leave the
    Type column
     blank, the transaction defaults to portfolio and transfers the gain or loss to Schedule K, Net short-term capital gain (loss) or Net long-term capital gain (loss). Enter
    3
     to report capital gain/loss determined under the net asset value method (NAV) with respect to shares in a floating-NAV money market fund. Enter
    4
     to report replacement stock purchased by the corporation that is eligible for section 1045 rollover gain. Enter
    5
     to report replacement stock not purchased by the corporation that is eligible for section 1045 rollover gain. Enter
    6
     to report the sale of QSB stock with a section 1202 exclusion. Transactions with types 4, 5, or 6 transfer to Schedule K, Other income and Schedule K-1, lines 10M, 10N, and 10O respectively.
    note
    • Type 3 items will always be reported on Form 8949 Part I, with Box C checked.
    • Only the Form 8949 description and gain/loss column will be completed, all other columns will remain blank.
    • UltaTax/1120 will append “(NAV)” to the description.
  • Date Acquired / Date Sold:
     Enter acquired and sold dates in MM/DD/YY format. The following text is also available to print in the date fields on the form.
    • VARIOUS - Enter
      V
      .
    • INHERIT - Enter
      I
      .
    • WORTHLSS - Enter
      W
      .
    note
    • If you leave the date fields blank, the application defaults to short-term holding period.
    • VARIOUS dates are treated as short-term holding period.
    • INHERIT in the
      Date Acquired
      field is treated as long-term holding period.
    • WORTHLSS in the
      Date Sold
      field is treated as short-term holding period.
  • Force:
     To force the holding period of the sale, select a code from the fieldview.
    • For S Corporations, enter
      3
      to designate the asset as collectible. The gain or loss is included on Schedule K, Net long-term capital gain (loss), and Schedule K, Collectibles (28%) gain (loss). UltraTax/1120 automatically prints code C in the
      Form 8949 (f) Code(s) from instructions
      column.
    • S Corporations can also use code
      4
      , 
      5
      , 
      6
      , or
      7
      to designate the asset as qualified small business stock (section 1202 stock). Enter
      4
      if the sale is subject to the 50-percent exclusion at the shareholder level. Enter
      5
      to designate the sale is subject to the 60-percent exclusion at the shareholder level. Enter
      6
      to designate the sale is subject to the 75-percent exclusion at the shareholder level. Enter
      7
      to designate the sale is subject to the 100-percent exclusion at the shareholder level. The section 1202 gain transfers to Schedule K, Other income.
  • Adj to Gain (Loss):
     Use this field to adjust the amounts reported to the IRS on a 1099-B, 1099-S (or substitute statement) is incorrect, to exclude or postpone a capital gain, report a disallowed loss, etc.
    note
    • You must enter a code in the
      Adj Code
      field for every amount you enter in the
      Adj to Gain (Loss)
      field.
    • The
      Gain (Loss)
      field includes the amount you enter in the
      Adj to Gain (Loss)
      field.
  • Adj Code and Adj Code 2
    : Use these fields to enter a code for the adjustment amount you entered in the
    Adj to Gain (Loss)
     field. All adjustment amounts are required to have an adjustment code.
    note
    You may use the
    1099B Errors
    ,
    Force
    , and
    Adj Code
    fields to report multiple codes for a transaction. For example, an excluded gain must be reported for a transaction that received a Form 1099-B with an incorrect Basis and Holding period. The following data entry results in codes
    B
    ,
    T
    ,
    X
    reported in Form 8949 column (h).
    • 1099B Errors
      =
      3
      - 1099-Box 1c and 3 are incorrect
    • Adj to Gain (Loss)
      = amount to be excluded (enter as a negative amount)
    • Adj Code
      =
      X
      - Excluded gain on DC Zone assets, or qualified community assets
  • Gain (Loss):
     UltraTax CS automatically calculates the gain or loss for the sale based on the information you enter in the
    Sales Price
    ,
    Cost or Basis
    , and
    Adj to Gain (Loss)
     fields.
    note
    The Gain (Loss) column calculates before you enter information in the
    Adj to Gain (Loss)
    field, so you may use the calculation to determine the adjustment amount needed for the correct taxable gain or loss.
  • FMV at S Election Date and Adj Basis at S Election Date:
     If the capital asset is subject to the S Corporation built-in gains tax, enter the fair market value at the S election date and the adjusted basis at the S election date. The built-in gains tax allocated to short-term and long-term items transfers to the respective Tax on capital gains lines on Form 1120-S, Schedule D.
  • Form / Unit:
     Enter the form and unit number related to this activity if the sale is related to a basis, at-risk, or passive activity. The forms and schedules that you can enter in the
    Form
     field are listed in the following table and in the fieldview.
Long-term capital gain distributions
Enter the total long-term capital gain distribution, including distributions attributable to collectibles and to section 1202.
Unrecaptured Section 1250 gain from sale or exchange of partnership interest (S Corp)
Any gain entered in this field must also be entered in the Detail schedule statement in either the D screen or Sale screen in the Schedule D folder if the partnership interest was sold on the installment basis.

Built-In Gains (S Corp)

Ordinary income, Recognized Built-In Gain (Loss)
Enter the information needed to calculate the current year recognized built-in gain on the sale of ordinary income assets. The built-in gains tax allocated to ordinary income items transfers to the Taxes and Licenses line on Page 1 of Form 1120-S.
Taxable income (Force)
If the built-in gain recognition period ends during the current taxable year, enter the fair market value and the adjusted basis of the assets that were disposed of before the recognition period ended in the applicable screens. You will also need to enter the taxable income as if the corporation’s books were closed at the end of the recognition period in the
Taxable income (Force)
 field.
Adjustment for income from installment sale
Enter the amount by which the S Corporation's net recognized built-in gain would have been increased from the year of sale to the earlier of (1) the year the income is reported under the installment method or (2) the last year of the recognition period, assuming all income from the sale had been reported in the year of the sale and the built-in gains tax applied.
Were assets acquired in a Section 1374(d)(8) transaction?
The application continues to calculate any built-in gain tax and any carryover when code
1
 is entered. You may also need to adjust the amount entered in the
Net unrealized built-in gain less net recognized built-in gain…
 field in the OthInfoS screen in the General folder to include the amount from the Section 1374(d)(8) assets.
The application does not calculate the built-in gain tax or any carryover when you enter code
2
 in this field, and the S Corporation's built-in gain recognition period has been met.

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