Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

municipal bonds purchased with accrued interest paid

gn
Level 2

I have a 1099 with box 8 tax-exempt interest and box 13 bond premium on tax exempt bonds. When I enter them on page#11 on the same 1099 input form they net against each other on the 1040 line 2a and do not show up on schedule B or in any detail on the 1040 to show they are netted together. The 1099 also has supplemental information which is for municipal bonds purchased with accrued interest paid. Some of the bonds listed look like they had interest paid in 2020, but not all bonds. I am assuming I have to adjust the bonds which paid interest by reducing the tax exempt interest received by the tax exempt interest paid when they were bought in 2020. In looking at page#11 where do I put the interest paid and how do I enter it as a negative adjustment? Will this show anywhere on the 1040, or be netted like the box 8 and box 13 amounts are?

 

Will the taxpayer get a letter for not having itax exepmt interest rie oput to eh 1099 is lacerte nets this all together without any detial?  

Labels (1)
0 Cheers
6 Replies 6
George4Tacks
Level 15

Here is how I handle it

Capture.JPG


ex-AllStar
0 Cheers
gn
Level 2

Hi George,

Thanks for the reply, if I am understanding your treatment. You create multiple 1099 lines for the same 1099 on the interest screen #11 and give them different descriptions to breakout or gross up the detail where if we use one screen and enter all the data lacerte seems to net it all together and nothing shows up on schedule B. I'm assuming you do the same for 1099 OID for the box 6 and box 11 where the amounts go in and out in the same amount and do not show up on schedule B either if you have the in and out on the same OID adjustment line.

But do they show up on Schedule B using your method, I don't see any detail showing up on Schedule B and there is over $1,500 of non taxable interest. 

 

 so they all show up on schedule B. 

0 Cheers
sjrcpa
Level 15

Tax exempt interest is not reported on Schedule B.


ex-AllStar
gn
Level 2

That's true however you can show the gross interest earned then show the tax exempt part which nets on schedule B which gives a detail of what was entered, sort of a road map. It seems like lacerte does not show the gross amount on schedule B then shows the tax exempt part as an adjustment which nets to the taxable number. I guess its in presentation but gets to the same total on the 1040. I saw your other reply about a worksheet in lacerte I don't see one in the file I see a list of taxable interest income only so the non taxable income doesn't show up anywhere except on line 2a of the 1040. Is there a worksheet im missing of detail which shows all these adjustments?

 

 

 

0 Cheers
abctax55
Level 15
 
Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

If a post answers your question, click on *Accept as solution* for future searches
0 Cheers
sjrcpa
Level 15

Lacerte does have a worksheet that will show the details. I've never had a client get a matching notice for tax exempt interest.


ex-AllStar