2006 TaxAct Irs Schedule - Problem
Q.I've used TaxAct Deluxe for several years with no negative issues. In 2006, we sold a second home and incurred a $6,000 loss. TaxAct offers guided input for sale of a "main" home, not of a 2nd home - I tried inputting as if it was a main home but the resulting loss won't transfer to a Schedule D. The only way I can find to generate a Schedule D is to create a 1099-B, which transfers cost and sale amounts to Schedule D, Line 8, and the $6,000 loss to column f of that line. IRS Schedule D instructions tell me to enter zero in column f of Line 8 because the loss is not deductible. My attempt to enter zero via override generated a TaxAct warning that my return can't be e-filed if I override. Attempts to enter amounts directly to Schedule D result in the same no e-file warning. I've requested additional guidance from TaxAct support and am awaiting their response. Is this a problem specific to TaxAct? Any experience with other software that will allow me to e-file when reporting a nondeductible capital loss?
A.Two ways: (1) Instead of putting actual basis in the "basis" field, put the sales proceeds in the "basis" field so the gain/loss is zero. The IRS doesn't particularly care with the basis is so long as sales proceeds match what was reported to them and that the reported gain/loss is correct (and in this case zero is correct since the loss is non-deductible). (2) Leave the loss as is but create a new dummy sale entry with $6000 of proceeds and zero basis to offset the unallowable loss. This will result in your return showing $6000 more in total proceeds than were reported to the IRS, but the IRS doesn't care about that (they only care when proceeds on your return are *less* than what was reported). Given that the IRS instructions (you say) say to report the sale but put a zero in the gain/loss field, I'd go with (1).
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