LACERTE WRONG ON CA CANCELLATION OF DEBT

SCREEN 14.1 and SCREEN 62 - Cancellation of Debt Income and exclusion for principal residence portion

BEWARE - In my opinion there is a major issue in the Lacerte program in this area. I have contacted the tech department. My program, and the program of three of my fellow accountants, calculate and recalculate the input in this area differently each time you open and close the program, and when you make an alteration or addition of information to Screen 14.1 and Screen 62 (the Form 982), sometimes it disappears. IT'S DOING IT WRONG, and the F-1 input memos for the line input on these screens are wrong, too.

In California, there is no exclusion from income for principal residence Cancellation of Debt like there is in the Federal, but the program is often not including that income on the California 540. Then, when you close the program and open it again, it sometimes DOES include the income (which is usually correct unless another Sec 108 exclusion is appropriate), but when you alter the data on Screen 14.1, even a minor alteration, the income disappears. Also, if you use the Ctrl-E on the Cancellation of Debt line on Screen 14.1 and list multiple amounts, it handles it differently than if you just put a single amount right on the Cancellation of Debt line as a whole total amount. Also, on Screen 14.1 the line "Qualified principal residence exclusion" does not carry to the Form 982 - you have to re-input it in Screen 62, as well as complete the lower portion of Screen 62 with the Tax Attribute Excluded amount. DO NOT BELIEVE THE LACERTE RESULT UNTIL THEY FIX THIS

Answer

see comments in bold from one of our lead tax developers:

SCREEN 14.1 and SCREEN 62 - Cancellation of Debt Income and exclusion for principal residence portion BEWARE - In my opinion there is a major issue in the Lacerte program in this area. I have contacted the tech department. My program, and the program of three of my fellow accountants, calculate and recalculate the input in this area differently each time you open and close the program, and when you make an alteration or addition of information to Screen 14.1 and Screen 62 (the Form 982), sometimes it disappears. IT'S DOING IT WRONG, and the F-1 input memos for the line input on these screens are wrong, too. Unable to duplicate – sounds like a systems problem.

In California, there is no exclusion from income for principal residence Cancellation of Debt like there is in the Federal, but the program is often not including that income on the California 540. We add back the exclusion on Schedule CA

Then, when you close the program and open it again, it sometimes DOES include the income (which is usually correct unless another Sec 108 exclusion is appropriate), but when you alter the data on Screen 14.1, even a minor alteration, the income disappears. Also, if you use the Ctrl-E on the Cancellation of Debt line on Screen 14.1 and list multiple amounts, it handles it differently than if you just put a single amount right on the Cancellation of Debt line as a whole total amount. Unable to duplicate – looks like a systems problem.

Also, on Screen 14.1 the line "Qualified principal residence exclusion" does not carry to the Form 982 - you have to re-input it in Screen 62, as well as complete the lower portion of Screen 62 with the Tax Attribute Excluded amount. We don’t couple the miscellaneous income section (income and exclusion) with Form 982 – they need to make entries in both areas – however, we do issue a diagnostic telling them to make entries in Form 982

You might try emailing the affected return to support for further investigation. Also, make sure you have updated to the current version of the program.

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