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Level 5
March 29, 2020
Question

Colorado capital gain subtraction

  • March 29, 2020
  • 1 reply
  • 4 views

I opened a case to report that the subtraction was not limited to $100,000 on a 1041 return. I got the following email back but this is not how it is working at all. For it to be limited on the 1040 it would have to be on the beneficiary's K-1 and gain stays in the trust. Further it being fully reported on the DR 0105 for the full subtraction. There is an override on screen 43.261 but nothing in the email suggests that is required. In fact it says it is working as designed. Of course the case was closed because they provided this response and declared it working but my questions remain. What is the proper way of handling this and why is  support so lacking at times that it shuts down further discussion on a case without any feedback from customer as to whether this worked?

"We reviewed the file you sent in on 3/24. This is working as designed.

On a pass-thru entity the state wants to entire CO source capital gain subtraction amount listed (even if it is greater than $100,000).  Then on the 1040 return the amount will be limited to $100,000.

Please do not reply to this email with your email Reply button. This mailbox is for outgoing communication only. 

Now when I try to post it won't let me use the name of the product

This topic has been closed for replies.

1 reply

George4Tacks
Level 15
March 29, 2020

You are posting a statement for other USERS to see. If you want to get Lacerte's attention, you must contact support. I do not regularly do Colorado, but I did find the following in https://www.colorado.gov/pacific/sites/default/files/Income15.pdf:

LIMITATIONS
The Colorado capital gain subtraction a taxpayer can claim is limited to the lesser of:
1. the amount of the federal net capital gain reported on Schedule D of the taxpayer’s return; or
2. the qualifying capital gain; or
3. $100,000.
-------------

@pat11 Maybe Lacerte is right? The limitation seems to say a cap of $100K to me. 

 

Answers are easy. Questions are hard!
Level 2
March 30, 2020

My post starts with “I opened a case” and quotes the reply received. I have read the spec and it clearly omits guidance for trusts. Please only reply if you have experience with this and know what input is required.