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NUA stock sale should not be included in Net Investment Income tax calculation. How do I exclude it?

Forum|Forum|6 years ago
June 5, 2019
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Sale of NUA stock transferred from 401K should not be included in Net Investment Income tax calculation (that is, Form 8960). How do I correctly exclude it? Is there an indicator in Schedule D or Form 8949 to mark a stock sale as excluded?

TurboTax Home & Biz Windows

Best answer by TomYoung

"How do I correctly exclude it? Is there an indicator in Schedule D or Form 8949 to mark a stock sale as excluded?"

I think you've hit upon an "unsupported calculation" within TurboTax:

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"Net Investment Income Tax(Form 8960):The program does not automatically support the following scenarios for the calculation of Net Investment Income Tax (NIIT). Make any necessary adjustments on the Form 8960 worksheet:

Any adjustment to the gain or loss from the disposition of an interest in a partnership or S corporation that should be included on line 5c.
Activities involving trading in financial instruments or commodities which should be included in NII regardless of material participation.
Any adjustment to interest or dividend income or to capital gain/loss that is not related to an activity.
Net operating loss for NIIT purposes.
Any other adjustments or deductions not accounted for on the Form 8960 worksheet.

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I think you'll need to go into Forms Mode and make those adjustments directly. Click on the "Forms" icon in the upper right hand corner, click on the "Open Form" icon above the list of forms/schedules/worksheets that comprise your income tax return, type in "8960" and click on the "Form 8960 Worksheet" item.

Tom Young

T

TomYoungAnswer

"How do I correctly exclude it? Is there an indicator in Schedule D or Form 8949 to mark a stock sale as excluded?"

I think you've hit upon an "unsupported calculation" within TurboTax:

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"Net Investment Income Tax(Form 8960):The program does not automatically support the following scenarios for the calculation of Net Investment Income Tax (NIIT). Make any necessary adjustments on the Form 8960 worksheet:

Any adjustment to the gain or loss from the disposition of an interest in a partnership or S corporation that should be included on line 5c.
Activities involving trading in financial instruments or commodities which should be included in NII regardless of material participation.
Any adjustment to interest or dividend income or to capital gain/loss that is not related to an activity.
Net operating loss for NIIT purposes.
Any other adjustments or deductions not accounted for on the Form 8960 worksheet.

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I think you'll need to go into Forms Mode and make those adjustments directly. Click on the "Forms" icon in the upper right hand corner, click on the "Open Form" icon above the list of forms/schedules/worksheets that comprise your income tax return, type in "8960" and click on the "Form 8960 Worksheet" item.

Tom Young

C

clivtx

This is what I did, but it is a terrible oversight for TT Premier to leave this out. If you edit the form to show the amount not subject to NIIT, then you can no longer file electronically.

Also, if it had a way to indicate the NUA portion of a sale, it would also eliminate having to create two 1099-B forms if sold within a year of distribution (NUA is LTCG, appreciation since distribution is short term).

C

clivtx

I thought that was part of the selling point for the Premier edition: "Designed for all levels of investing and investment types, from simple stocks to complex rental income."

Also, it was frustrating for TT to have kept asking if I wanted to file electronically (even though I thought it had said that with that edit to the form, one could not file electronically). After going through those hoops, it then said I had to undo that form edit to file electronically. When TT forces one to directly edit the form for exception cases, at the end, it should say that electronic filing is not possible due to form edits (and offer doing the Review again if that is not wanted).

I was able to get it to work and still allow electronic filing last year. I don't remember exactly what it was, but I think I found a TT "form" that I could edit. The first time (when it disallowed electronic filing), I edited the IRS form.