1031 Exchange Form Issue

[BB2000]

I am having an issue filling out the 1031 form (8824). I sold farm land and purchased another farm. When I fill out the form, everything is calculated correctly but when I get to line 25, it only gives me the choice to put a basis for section 1250, 1245, or intangible property. It is my understanding that bare land is none of those choices, it should be section 1231 property. It is forcing me to put a value into one of those choices for me to continue. Is there a work around for this? 

[Mike9241]

a definite bug in Turvotax sine 25a, b and c should be left blank in your situation. i don't see a workaround.

[BB2000]

So what can I do? I tried calling the help desk but they could not find a work around. Is there a way to report a bug to turbotax? The lady from the help desk said she wasn't able to, which is crazy to me.

[DaveF1006]

Yes.  Here is how to report.

1. Go to Federal
2. Wages and Income
3. Business Items
4. Sale of Business Property
5. The first Screen says "Any other Property Sales"
6. Check only Any Additional Like-kind Sales
7. Answer yes if you have like-kind exchanges
8. Next it asks for information about the property given up
9. Next screen asks for more information, including the basis.
10. The adjusted basis should be the amount you paid for the land plus any improvements such as a graveled road
11. Next you will enter information about the land that you acquired.
12. There will be other questions about different property given up. You may ignore these questions.
13. In the end, you should receive a message that there is no taxable gain.

if you are preparing form 8824, stop. If you report it the manner I described above, you won't be saddled by all these other issues you are experiencing.

@BB2000 

[BB2000]

I did these exact steps. But after doing that I still get a red error message on the 8824 form page on line 25A. It requires me to correct it or else I can't submit my taxes. It wants to know how much basis to allocate to line 25a (section 1250 property), 25b (section 1245 property), or 25c (intangible). None of these apply to my situation as bare land is section 1231.

On the actual tax form it says

Note: Complete lines 25a, 25b, and 25c if you received like kind section 1250, or 1245, or intangible  property. I didn't receive any of those. 1250 is for depreciable assets which bare land is not depreciable. 1245 is for personal property.

I don't understand why it is requiring me to allocate basis to these options. 

[DaveF1006]

The problem is that Turbo Tax does not account for like-kind exchanges for land. Land is certainly eligible for a like-kind exchange according to the IRS in this fact sheet. 

Since this is late in the tax year, make an entry in one of these sections since it asks for the basis of property received to satisfy the program. This will not impact your return or any future returns if you decide to sell the property. Remember, you have a two-year holding period on the new piece of Farmland before you decide to do another exchange or else this event becomes taxable.

As a precaution, save the entire transcript of this thread on the outside chance this transaction is questioned. It shouldn't be but it is better to be safe than sorry. Turbo Tax stands by its positions and advice given.

@BB2000