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Sale of Partnership Interest Reporting Ordinary Income and Capital Gain in the Individual Module

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Sale of Partnership Interest Reporting Ordinary Income and Capital Gain in the Individual Module

How to enter a portion of the gain from the sale of a partnership interest as ordinary income on Form 4797, Part II, line 10?

Solution:

The sale will need to be entered as two transactions in the Dispositions screen:

To report the ordinary income portion:

  1. Go to Screen 17, Dispositions
  2. Enter a Description of Property
  3. Enter the amount of income to be reported as ordinary income in, Sales Price

    Note:  Leave the Cost or Basis field blank

  4. Scroll down to the Dispositions (Schedule D, 4797, etc) section
  5. Enter 1 in 1 = short-term, 2 = long-term [O]
  6. Scroll down to the Form 4797 section
  7. Enter -1 in the field Depreciation allowed (-1=none, triggers 4797)

This information will show on Line 10 of Part II of the Form 4797.

To report the capital gain portion:
  1. Click the Add button
  2. Enter a Description of Property
  3. Enter the Date Acquired
  4. Enter the Date Sold
  5. Enter the amount of gain to be reported as capital gain in Sales Price
This will report the gain on Schedule D as either short-term or long-term capital gain based on the dates entered.

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