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Disposition of passive activities

Enter a code in the
Disposition of activity
 field in the primary input screen if you're disposing of the client's entire interest in the activity in a fully taxable transaction. The application calculates and reports the income and deductible loss for the activity. This code is available on the primary input screens discussed previously. The following examples assume you aren't disposing of assets in the asset module.

Normal dispositions

Enter
1
 if the activity is being entirely disposed of and the sale isn't on the installment basis. The application treats the activity as totally disposed of in the current year and does not proforma the primary input screen next year.
Enter the related sale information in the D screen or Sale. Enter a form and unit number for capital gains entered in the D screen to associate the sale with the activity's primary input screen.

Installment sale dispositions

Enter
2
 if you're disposing of the activity entirely on the installment basis. The application treats the activity as totally disposed of and proformas the primary input screens next year if there are passive carryovers. If this is the final year of the installment sale, enter
1
 in this field.
UltraTax CS treats installment dispositions as follows:
note
  • UltraTax CS calculates any allowed losses for the current tax year by multiplying the overall loss by the current-year gain recognized divided by unrecognized gain as of the beginning of the tax year. Losses in excess of the allowed amount are suspended and proforma'd to the following tax year.
  • When the gain recognized in the current year exceeds all of the current and carryforward losses, all losses will be allowed in the current year.
Enter the related sale information in the D screen or Sale. Be sure to enter a form and unit number for capital gains entered in the D screen to associate the sale with the activity's primary input screen.

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