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Quicken Classic for Windows
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How to show proceeds from a real estate transaction (sale) as Income
RMW
I recently sold some piece of real estate. The property was previously set up as an asset. So I was able to zero out the asset by transferring the net proceeds from the sale to my checking account. So far so good. It shows up in my account balance report and in Net Worth. But since it was a Transfer, it is not reported as Income which it clearly is. So my NetWorth report correctly reflects the transaction but my Income/Expense report does not.
Is there a way to do justice to both types of reports? Thanks for any suggestion.
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Accepted answers
Axe21
I would create an income category called "Gain/Loss from Asset Sale".
q_lurker
Nothing wrong with the 1099-Misc selection and I agree Quicken is not designed for these situations. But to clear up some other mis-statements or misunderstandings:
The Cap gains report does not make use of any transactions for Action = CGLong or CGShort which get assigned to the hidden categories _LTCapGnDist and _STCapGnDist, respectively. I did not suggest either of those actions or categories. That report was not a factor in the concept being discussed.
With your created "Gain/Loss from Asset Sale" category associated with the "Sched D LT Gain/Loss - Security" tax line (my suggestion), the Tax Summary report will show that transaction under Income associated to that Category with that as the applicable tax line. The Tax Schedule Report will show that transaction as a Schedule D entry associated with "LT Gain/Loss - Security". No actual security is required to get the entry to appear in either report.
Other reports (Income/Expense, Transactions, Categories) will all present the transactions as toed to the category you used. The broad intent (as I saw it) was to get "Income" properly reflected as Income and to the best extent available tied to a tax line.
I will further note that this sort of square peg into a round hole will likely not play well with the Quicken tax planner, however you do it. Just my opinion 'cuz I ain't a tax pro, treating that income portion (not the full payment) as LT Gain is most likely going to match up best with your next year's tax planning.
All comments
Axe21
I would create an income category called "Gain/Loss from Asset Sale".
RMW
That seems to work. Thanks. What tax line item would I assign for the gain?
Schedule D only works for securities and Investment accounts.
q_lurker
Perhaps for other readers, in that situation you would want to change the value of the asset (real estate) being sold up from cost basis to fair market value. That change in asset value transaction is where the "Gail/Loss from Asset Sale" would be applies as an income category. The transfer for the full value would then be, as noted, a straightforward transfer of value from one asset to another.
I would likely choose the "Schedule D LT Gain" tax line as the closest applicable. Depending on circumstances (business, partnership, etc.) other tax lines might also apply.
RMW
Unfortunately, I can't use Schedule D LT Gain. First of all, I don't really know what the actual realized gain is at this point. I will know next year when I file my tax return. Under the Investing/Capital Gains report, Quicken only uses securities held in an investment accounts. Real Estate Assets are not included. To, at least, show the Income (Proceeds from the sale) on the Tax Schedule Report, I just picked 1099-Miscl Income. It seems to me that Quicken is not really designed to handle these kind of transactions easily and no Wizard is currently available either.
q_lurker
Nothing wrong with the 1099-Misc selection and I agree Quicken is not designed for these situations. But to clear up some other mis-statements or misunderstandings:
The Cap gains report does not make use of any transactions for Action = CGLong or CGShort which get assigned to the hidden categories _LTCapGnDist and _STCapGnDist, respectively. I did not suggest either of those actions or categories. That report was not a factor in the concept being discussed.
With your created "Gain/Loss from Asset Sale" category associated with the "Sched D LT Gain/Loss - Security" tax line (my suggestion), the Tax Summary report will show that transaction under Income associated to that Category with that as the applicable tax line. The Tax Schedule Report will show that transaction as a Schedule D entry associated with "LT Gain/Loss - Security". No actual security is required to get the entry to appear in either report.
Other reports (Income/Expense, Transactions, Categories) will all present the transactions as toed to the category you used. The broad intent (as I saw it) was to get "Income" properly reflected as Income and to the best extent available tied to a tax line.
I will further note that this sort of square peg into a round hole will likely not play well with the Quicken tax planner, however you do it. Just my opinion 'cuz I ain't a tax pro, treating that income portion (not the full payment) as LT Gain is most likely going to match up best with your next year's tax planning.
RMW
Yes, understand. To keep it simple, I just treat the sales proceeds as gross income. Since there is a gain, I have to make quarterly estimated tax payments for the remainder of the year and in January of 2021. To keep track of that , I can use the appropriate tax category in Quicken. Hopefully, this will take care of at least 90% of the tax bill. I have never used the Quicken tax planner but will give it another look. Appreciate all the comments. Thanks.
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