1. You are filing Form 2555 to claim Foreign Earned Income; and
2. You completed Part VI on Form 2555 to claim the housing exclusion and/or deduction; and
3. You entered 365 on line 29.

Problem: TaxCut enters 9242 on line 30 instead of 9426.
Solution: Update F does not fix this problem. If you think you might be affected, follow these steps for a workaround:

1. Using the Forms tab, open Form 2555.
2. Go to line 30, and change the amount to 9426.

The Calculated Entry dialog box will appear when you attempt to enter the new amount. Enter 9426 in the New Value field; and click the Override button.

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Form 3800 - General Business Credit
Users Affected: This problem affects you only if both of the following conditions apply to you:

1. You are filing Form 3800 to claim the General Business Credit AND
2. You are claiming either of these two new credits:
   
• Adoption Credit (line 10d on Form 3800)
• District of Columbia Credit for First-Time Home Buyers (line 10e on Form 3800)

Problem: TaxCut does not include the adoption credit (line 10d) and the District of Columbia Credit for First-Time Home Buyers (line 10e) in the total amount on line 10j of Form 3800.
Solutions:

1. Manually enter the total of lines 10a through 10i on line 10j by overriding the calculated amount; or
2. Download and install the Update F.

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Form 4797 - Ordinary Net Gain and Loss from a Schedule K-1, Partnership or S Corporation
Users Affected: You are affected only if both of the following conditions apply to you:

1. You completed one or more TaxCut Schedule K-1 Worksheets for a partnership or S corporation; and
2. The total of all Schedule K-1 Worksheet Allocation entries on line 4, column (g) and line 4, column (h) is a net loss (negative number).

Problem: TaxCut enters the net loss from the Schedule K-1 Worksheet as a net gain on Form 4797, line 10.
Solution: Please follow the steps below to correct this problem. You do not need to download Update F.

1. Using the Forms tab, open Form 4797 and go to line 10, column (g).
2. Re-enter the number on the fourth line of column (g) as a negative number. For example, if the number is 100, enter -100.

The Calculated Entry dialog box will appear when you attempt to enter the new value. Enter the correct amount in the New Value field and click the Override button.

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Form 8615 - Child with Investment Income
Users Affected: You are affected only if all of the following conditions apply to you:

1. You are filing a tax return for a child under age 14 (as of January 1, 1998); and
2. There is an amount on Form 8615, line 3 in the child's tax return; and
3. There is an amount on Schedule D, line 22:
   • in the child's tax return; or
   • in the tax return of any sibling whose income is included on the child's Form 8615, line 7.

Problem: After we released TaxCut, the IRS revised the instructions in Publication 929 for calculating the tax on Form 8615, lines 9 and 15. These changes may affect the tax calculated on Form 8615, line 18.
Solution: Follow the steps below to correct the tax on Form 8615.

STEP 1. Download and install the program update.
STEP 2. Print copies of the forms you'll need.

1. Open the parent's tax return.
2. From the Forms tab, open Schedule D and print a copy.
3. Do the following for each child in the family affected by the problem:
   1. Open the child's tax return.
   2. On the Tools menu, click Recalculate
      (Ctrl + R).
   3. From the Forms tab, open Form 8615 Worksheet, and print a copy of the worksheet.

STEP 3. Revise the entries on Form 8615, mini-worksheet for line 9.
Before beginning this step, please read the following note concerning special conditions. Most people will not be affected by these conditions.

Note: If either of the following conditions applies to any child's return affected by the problem, do not complete Step 3.  

1. The amount on Form 8615, line 2 is greater than $1300; or
2. The amount on Form 8615, line 3 is different from the amount on Form 8615, line 5.

Instead, use the worksheets in Publication 929 to determine the amount of net capital gain, 28% rate gain and 25% rate gain to enter on lines a, b and c of the line 9 mini-worksheet and the line 15 mini-worksheet.
Complete the following steps for each child's return that is affected by the problem.  

1. From the Forms tab, open the child's From 8615.
2. Go to the mini-worksheet for line 9.
3. Add the amount from the parent's Schedule D, line 22, and the amount from each sibling's Form 8615 Worksheet, line 4a.
4. Enter the total on line a of the mini-worksheet for line 9.
5. Add the amount from the parent's Schedule D, line 24, and the amount from each sibling's Form 8615 Worksheet, line 4b.
6. Enter the total on line b of the mini-worksheet for line 9.
7. Add the amount from the parent's Schedule D, line 25, and the amount from each sibling's Form 8615 Worksheet, line 4c.
8. Enter the total on line c of the mini-worksheet for line 9.

• Medical Savings Account (MSA)
  Note: This is a pilot program and is open only to 750,000 participants for the 1997 tax year. An MSA is NOT the same as the typical flexible spending account that you may establish at work to cover medical expenses and that is subject to the "use it or lose it rule" at the end of each year.
• Long-Term Care Insurance (LTC)
• Accelerated Death Benefits

Problem: The IRS revised Form 8853 and instructions after we shipped the initial versions of the 1997 Filing Edition.
Solution: Download and install Update F.
Note: If you have already completed one or more Form 8853's, delete them from your return before installing the Update program. You will need to fill out the new version of the form included in the Update program.

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Schedule K-1 with Unrecaptured Section 1250 Gain
Users Affected: This problem affects you only if both of the following conditions apply:

1. You (or your spouse, if married filing jointly) received a Schedule K-1 from a partnership or S corporation; AND
2. The Schedule K-1 includes unrecaptured section 1250 gain from a REIT (real estate investment trust), mutual fund, estate or trust. If you have this kind of gain, it should appear in the "Supplemental Information" or "Other" section of the Schedule K-1 (line 25 if the Schedule K-1 is from a partnership; line 23 if from an S corporation).

Problem: TaxCut carries all unrecaptured section 1250 gain entered on the Schedule K-1 (Partnership/S Corporation) Worksheet to Schedule D, line 25a. The special category of unrecaptured section 1250 gain from a REIT, mutual fund, estate or trust should be included on Schedule D, line 25g.
Solution: If you already have included any unrecaptured section 1250 gain from a REIT, mutual fund, estate or trust on line 25c (23c) of TaxCut's Schedule K-1 (Partnership/S Corporation) Worksheet, then do the following:

1. Finish entering your Form 1099-DIV's (Dividends and Distributions) and any Schedule K-1's from estates or trusts in TaxCut.
2. Go to Schedule D, Mini-Worksheet for Line 25.
3. Subtract the unrecaptured section 1250 gain from the REIT, mutual fund, estate or trust from the amount shown on line a of the Mini-Worksheet, and enter the result on line a.
4. Include the unrecaptured section 1250 gain from the REIT, mutual fund, estate or trust on line g of the Mini-Worksheet.

If the paper Schedule K-1 shows any unrecaptured section 1250 gain from a REIT, mutual fund, estate or trust, but you haven't included it on line 25c (23c) of TaxCut's Schedule K-1 (Partnership/S Corporation) Worksheet, once you've finished your return, do the following:

1. Go to Schedule D, Mini-Worksheet for Line 25.
2. Include the unrecaptured section 1250 gain from the REIT, mutual fund, estate or trust on line g.
3. The calculated entry dialog box will appear when you attempt to enter the adjust the amounts on Schedule D. To continue, enter the new value and click the Override button.

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