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Common questions about Form 1040 elections in ProConnect

SOLVEDby Intuit4Updated 1 month ago

Below, you'll find answers to frequently asked questions about Form 1040 election in Intuit ProConnect

This section will assist you with making the following elections for Form 3115 in Intuit ProConnect:

  • 1.263(a)-1(f) - De Minimis Safe Harbor Election
  • 1.263(a)-3(h) - Safe Harbor Election for Small Taxpayers
  • 1.263(a)-3(n) - Election to Capitalize Repair and Maintenance Cost

Follow these steps enter the applicable elections:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Other and choose Elections.
  3. Click the blue Misc. Elections link at the top right corner of the screen.
    • In modules other than Individual, skip this step and proceed with step 4.
  4. Locate the Miscellaneous Elections section.
  5. Check the box labeled De minimis safe harbor [1.263(a)-1(f)], if applicable.
  6. Check the box labeled Capitalize repair and maintenance costs [1.263(a)-3(n)], if applicable.
  7. Scroll down to the Election for Safe Harbor for Small Taxpayers section.
  8. Check the box labeled Safe harbor for small taxpayers [1.263(a)-3(h)], if applicable.
  9. Click in the Description of property field.
  10. Enter the election information.
  11. Click OK.
    • The applicable elections should show in the Check Return view now.

The applicable elections should show in the Forms view now.

The IRS Revenue Procedure 2010-13 allows you to group together similar Passive Activities and report them as a single entity as described in Section 1.469-4.

To make the election to report multiple K-1's as a single activity:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Other and choose Elections.
  3. Select Other Elections.
  4. From the top of the Input Return screen select Other.
  5. Scroll down to Other Election.
  6. Enter the Election title and Election text.
  7. Go to the Passthrough K-1 screen.
  8. Enter the totals of the entities that are grouped together as a single K-1 activity.

If you've already entered each K-1 activity, there's no way for ProConnect to group them on the tax return. They'll still be listed as separate activities on the return. If you want them to show as one activity, you'll have to group them manually. Also, you must manually track multiple K-1 activities. The program can't monitor events like a member of the group going final status and freeing up losses. So, you (the preparer) need to track and complete entries based on IRS instructions and pubs for this election.

To make the election to treat all interests in rental real estate acivities as a single activity under IRS Section 469(c)(7)(A) and Regulation Section 1.469–9:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Other and choose Elections.
  3. Select Other Elections.
  4. Select Misc. Elections in the upper right.
  5. Select the box labeled Treat All Interests in a Rental Real Estate as a Single Activity [469 (C)(7)(A)].

The item will now appear in the Elections statement when you Preview, Print and e-file the return.

The program won't combine existing Rental Activities on the Rental & Royalty Income (Schedule E) screen when the Election is generated. You must combine the activities into one manually.

Lacerte doesn't have a specific input for an 83(b) election. But, you can manually create an election.

To manually generate an election for 83(b):

  1. Go to the Input Return tab.
  2. From the left of the screen, select Other and choose Elections.
  3. Select Other Elections.
  4. From the top of the Input Return screen select Other.
  5. Scroll down to Other Election.
  6. Enter the Election title.
  7. In the field Election text, copy and paste all the information listed in the IRS sample below.

Copy and paste the entire text below taken from IRS Rev. Proc. 2012-29, Section 6:

Section 83(b) Election

The undersigned taxpayer hereby elects, pursuant to § 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares.

  1. The name, taxpayer identification number, address of the undersigned, and the taxable year for which this election is being made are:
    • TAXPAYER’S NAME:
    • TAXPAYER’S SOCIAL SECURITY NUMBER:
    • ADDRESS:
    • TAXABLE YEAR: Calendar Year 20
  2. The property which is the subject of this election is shares of common stock of.
  3. The property was transferred to the undersigned on [DATE].
  4. The property is subject to the following restrictions: [Describe applicable restrictions here.]
  5. The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax Regulations) is: $ per share x shares = $.
  6. For the property transferred, the undersigned paid $ per share x shares = $.
  7. The amount to include in gross income is $. [The result of the amount reported in Item 5 minus the amount reported in Item 6.]
  8. The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.

Dated:

Taxpayer

Key points about filing the election:

  • Send the election to the IRS office where the return is filed within 30 days after you received the stock. (Check the instructions for Form 1040 for the address.) 
    • It's highly recommended that you send this election as certified mail with a stamped receipt.
  • Provide a copy of the election to the employer (the company that granted the stock).
  • If the employer transfers the stock to someone other than the taxpayer, provide a copy to that person as well.
  • Attach a copy of the election with the income tax return for that year.

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