Input screen for S corp K-1 for sale of Goodwill not subject to net investment income tax (2024)

Business was held in an S Corp and was not passive and the business was sold. Final S Corp K-1 was issued showing Goodwill as a capital gain on the sale.

Where is the input screen to indicate the Goodwill on sale of S Corp was not subject to net investment income tax?

• Lacerte Tax

0Cheers

Disposition of property not subject to net investment income tax included in capital gains and losses. [A]Other TaxesScreen 45; Code 363

Enter an adjustment for a disposition of property included in capital gains and losses that not subject to net investment income tax, to carry to Form 8960, Part I. By default, the program will calculate this amount based on if the disposition is a sale of business property.

Non-business dispositions, which carry to Schedule D, are generally subject to net investment income tax. Business dispositions, which carry to Form 4797, are generally not subject to net investment income tax.

Disposition of property not subject to net investment income tax included in capital gains and losses. [A]Other TaxesScreen 45; Code 363

Enter an adjustment for a disposition of property included in capital gains and losses that not subject to net investment income tax, to carry to Form 8960, Part I. By default, the program will calculate this amount based on if the disposition is a sale of business property.

Non-business dispositions, which carry to Schedule D, are generally subject to net investment income tax. Business dispositions, which carry to Form 4797, are generally not subject to net investment income tax.

Provided this is indeed personal goodwill which was created by significant personal effort of the taxpayer, has been negotiated as such, and structured as well as recorded properly in fact, by contractual terms, and on the books, you may be able to rely on§1.469-2T(c)(7)(i) to exclude it from NIIT.

While you may like to demonstrate that the gain was derived from the disposition of a property held in a trade or business (not described in §1411(c)(2)) by flowing it through F.4797, it is, technically, not among the classes of assets covered by the form.

You may, therefore, consider reporting the gain on F.8949/Sch D by making the input on Screen 17.1 and entering "2" for "Subject to net investment income tax 1=yes, 2=no".

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Still an AllStar

You could be right.Just thought I'd bring up when it may be possible since it wouldn't be the first time if the K-1 doesn't fully or correctly reflect the technicalities of an underlying transaction.

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Still an AllStar

Do you know if dividends from a K-1 are subject to the net investment income tax? I would think no but Lacerte is including it on Form 8960.

100% partner, NOT passive activity, S-Corp bought P&G Stock and has a dividend. Company is a service related industry that does not deal in investments.

0Cheers

This topic exists here:

https://proconnect.intuit.com/community/lacerte-discussions/discussion/net-investment-income-tax-k-1...

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0Cheers

@Rod777

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"Level Up" is a gaming function, not a real life function.