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Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

How does net capital gain from the disposition of property held for investment (Form 4952, line 4d) calculate?

Answer

UltraTax CS classifies the following as dispositions of property held for investment:

• Schedule D sales coded blank, N, C, or E, and entered in Screens B&D and Broker
• Capital gain distributions entered in Screens B&D and Broker
• Form 6252 income reported on Schedule D
• Net short-term capital gain/loss entered in Screen K1-2
• Net long-term capital gain/loss entered in Screen K1-2
• Net short-term items entered in Screen K1T (including carryovers)
• Net long-term items entered in Screen K1T (including carryovers)
• Form 8824 gains reported on Schedule D
• Form 8814 gains reported on Schedule D
• Form 6781 gains/losses reported on Schedule D (non self-employed amounts)
• Short-term capital loss carryover reported on Schedule D
• Long-term capital loss carryover reported on Schedule D
• Partner/shareholder net capital gain/loss basis adjustment

If there is an excess of total gains over total losses from the disposition of property held for investment, an amount displays on line 4d.

UltraTax CS calculates net capital gain as the excess, if any, of net long-term capital gain over net short-term capital loss from the disposition of property held for investment. Capital gain distributions are treated as a long-term capital gain.

Only Form 6252 installment sales forced to Schedule D entered in Screens Sale and InstPY are classified as a disposition of property held for investment. Form 4797 sales are treated as sales derived in the ordinary course of business and not as a disposition of investment property.

Passive activities are not treated as property held for investment (with the exception of rental of substantially nondepreciable property and publicly traded partnerships). If the client has a passive activity that includes a capital gain (loss) that is NOT considered portfolio income, you must enter the information in Screen B&D or Screen Broker and link the sale to the applicable activity in the Form and Unit columns.

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