Question

I received amended K1 reclassifying previously inputted ordinary income to short-term capital gains. But, this short term capital gain not offset by other losses.

Forum|Forum|2 years ago
September 7, 2023
1 reply
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Why are my losses not offsetting this short term capital gain? The K1 that I used to file was incorrect and reported activity as ordinary business income (box 1 of 1120-S). I received an amended K1 that reclassifies the 2022 activity as short term capital gain (box 7 of 1120-S). I have capital losses from other activities in 2022. Those should offset 100% of my short term capital gain but when I update the K1, turbo tax is showing no change to my taxes/refund.

TurboTax Premier Online

A

Anonymous_

Employee

I did a quick test and am not getting the results you are apparently seeing on your return.

The K-1 gain is being offset by the capital loss I entered.

Are you sure you selected the right type of K-1 (e.g., the S corp and not the estate/trust)?

R

rt2300Author

Yes, of course I selected it as an S Corp. The Estates Trust (1041) button still shows "start" (ie that I haven't even visited it yet)

R

rt2300Author

I think what is very troubling is that if I delete the K1 and re-enter it, the return updates to reflect this amended K1. However, if I just "edit" the existing K1 to restate the ordinary income as short term capital gain then there is no change reflected in the return. How would someone know that the only way to amend a K1 is to delete and re-enter it. If I had not understood that my tax liability is reduced by this amended K1, I would have just assumed that short term capital gains are taxed as ordinary income and thus there is no change to the amount of tax I owed. This would have been a costly error. Either way I have lost a lot of confidence in Turbo Tax. After nearly 20 years of using this, I am going to a real person from now on, at least until the government allows us to file on-line for free.