A federal return was rejected due to processing error on Form 8960. Net Income from Schedule C went to Line 4a as Rental Real Estate. How can I correct this and refile?

Forum|Forum|3 years ago
February 9, 2023
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George4Tacks

Level 15

in Business Income Scroll down and find Subject to net investment income tax 1=yes, 2=no and enter a 2

That should then add a negative Sch C to line 4b

Answers are easy. Questions are hard!

J

jesusmac2000Author

Level 3

The program already did this - the Business income is on line 4a and then as a negative on Line 4B.

I don't know where you mean "In Business Income" - where is this? On Form 8960 or on Schedule C?

I did not find it in either place. The calculation was correct and yet the return was rejected.

Is this a program error which will be corrected so I can refile the return?

George4Tacks

Level 15

Did you read the instructions for line 4a?

Line 4a—Income From Passive Trades/Businesses, Rental Real Estate, Royalties, Partnerships, S Corporations, and Trusts

Enter the following amount from your properly completed return.

Schedule 1 (Form 1040), line 3.
Schedule 1 (Form 1040), line 5.
Form 1041, line 3.
Form 1041, line 5.
Form 1041-QFT, the portion of line 4 that’s income and loss that properly would be reported by a trust filing Form 1041 on Form 1041, line 5.
Form 1040-NR, the amount properly reported on the attachment to your Form 1040-NR representing the amount that you would properly include on Schedule 1 (Form 1040), line 5, if you were filing Form 1040 or 1040‐SR and including income and loss only for your period of U.S. residency.

Answers are easy. Questions are hard!

George4Tacks

Level 15

When all else fails - READ THE INSTRUCTIONS

https://www.irs.gov/instructions/i8960#en_US_2022_publink100012437

Note.

Income reported on Schedule 1 (Form 1040), line 3, and Schedule 1 (Form 1040), line 5, include both passive and nonpassive income, and are added to line 4a of Form 8960. Nonpassive income included on Schedule C (Form 1040) and Schedule E (Form 1040), Supplemental Income and Loss, is removed (as a negative) on line 4b, so that only passive income from Schedule C (Form 1040), and Schedule E (Form 1040) remain on line 4c.

A passive Schedule C trade or business is any business that you did not materially participate in (for income-producing actions), or any trade that you did not have involvement in on a regular, continuous, and substantial basis (for income-producing actions).

There are two kinds of passive activities.

Trade or business activities in which you don’t materially participate during the year.
Rental activities, even if you do materially participate in them, unless you’re a real estate professional.

Answers are easy. Questions are hard!

Line 4a—Income From Passive Trades/Businesses, Rental Real Estate, Royalties, Partnerships, S Corporations, and Trusts

Note.

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