Completing Form 4972 - Tax On Lump-sum Distributions

Use Screen 1099R in the Income folder to complete Form 4972. Use distribution code A and answer all questions in the Form 4972 section (on Screen 1099R-2 for individual returns) to determine if the taxpayer qualifies for lump-sum averaging. 

Note: If the same plan participant received more than one qualified distribution, combine the 1099-Rs and enter the totals on one unit of Screen 1099R (and 1099R-2 for 1040 clients). UltraTax CS does not automatically combine 1099-Rs onto one Form 4972, so use only one unit for either taxpayer or spouse.

Entire distribution from qualified pension, profit sharing, or stock plan: Indicate if this distribution was the plan participant's entire balance from the qualified plan. If you enter no, you cannot use Form 4972.

Part of the distribution rolled over: If any part of this distribution was rolled over into another qualified plan (answer yes), you cannot use Form 4972.

Distribution paid to a death beneficiary of a plan participant: Enter 1 for yes if this distribution was paid to a beneficiary of a plan participant who died after reaching age 59 1/2 or who was born before 1936. 

Plan participant born before 1936 and participant for at least 5 years prior to the distribution: Enter 1 for yes or 2 for no to indicate if plan participant who received this distribution was born before January 2, 1936 and was in the plan at least 5 years before the year of distribution.

Note: If both the Distribution paid to a death beneficiary and Plan participant born before 1936 and plan participant 5 years prior to the distribution fields are answered 2 for no, you cannot use Form 4972.

Form 4972 used by participant in a prior year: If Form 4972 was used after 1986 for a previous distribution, you cannot use Form 4972.

Form 4972 used by beneficiary in a prior year: If this distribution is being paid to a beneficiary who used Form 4972 after 1986 for a previous distribution from plan participant, you cannot use Form 4972.

Include net unrealized appreciation in income: Enter information to elect to include unrealized appreciation on employer securities, shown in 1099-R, box 6, in income. UltraTax CS automatically prints the election with the return. If the return is being filed electronically, the tax election will be included in the electronic file.

Note: If you make this election here, do not make the same election in Screen Letter as duplicate elections may print.

Federal estate tax attributable to lump-sum distribution: Enter the amount of federal estate tax paid on this lump-sum distribution. If making the capital gain election, UltraTax CS decreases the capital gain amount by the applicable estate tax.