CCH ProSystem fx Tax Users – Check your AMT credit carry-forward

We’ve used the CCH ProSystem fx Tax program for many years and I like the program. So, this post isn’t intended to slam the program or the company. However, I recently found out that a series of changes they made had a material impact on one of our returns so I though I’d share what I found out to help other tax preparers out there.

Let’s face it, sometimes software companies make changes and don’t tell their users. I’m sure the developers see this as an improvement and assume the users will naturally accept it and embrace the improvement/change. Of course, if they knew accountants, they’d know we don’t like change, and we especially don’t like sneaky changes that we aren’t informed about.

A screen shot of the 2018 program input sections used to fill out IRS Form 8827.
A screen shot of the 2018 program input sections used to fill out IRS Form 8827.

The change I’m focusing on is the way the program treats the credit for prior year minimum taxes paid in their worksheet view. This came to my attention because the credit carry-forward for one of my clients wasn’t showing up on the 2018 return and they weren’t getting the refundable portion of it back.

I checked in the input section for the credits and it wasn’t there, meaning the prior year amount hadn’t rolled over from 2017. So I went back to 2017 and noticed that it wasn’t there, either. Now this company is an insurance company in receivership and last year (2017) they had a large loss, so there was no tax or AMT. At the time, no one thought twice about the Form 8827 not being included in the return.

It turns out that the program had a switch between 2016 and 2017 cause the 2016 amounts to potentially not roll over into 2017. Here’s what I’ve determined happened.

Prior to 2012, the input section for this credit did not track the credit by year. You simply entered the amounts for the Form 8827, and if it was rolled over from the prior year, the system pulled those number from the prior year return. In the 2012 input screens, they added a second section of inputs where you could input the credit carry-forward by year.

Between 2012 and 2016 there were the two input sections but not a lot of clarification on which one to use or why. If you went to the line item instructions, it said that the amounts in section 1 (the totals) would override the detailed amounts in section 2 but the lines themselves weren’t identified as overrides.

Based on returns prepared in our office, if you didn’t have an AMT credit from before 2012, then any credit going forward would populate the amounts in section 2 so the system tracked the year-by-year details. However, if you had an AMT credit from before 2012, the additional amount of the credit would be added to the total and be tracked in section 1. So basically, if you had a credit from before 2012, the system would continue tracking the amounts in section 1, otherwise, it started using the new section 2.

Starting with 2017, the line items in section 1 of the inputs had the word “override” on the carry forward lines. This is the year they stopped tracking the amounts in section 1. So, if you had been tracking your AMT credits in section 1 of the program, these amounts were not rolled over from 2016 and you could be missing them on your 2018 return.

I had to figure this out for myself because I couldn’t find any information on this and I wanted to know why it didn’t roll over. Hopefully this might help someone else in the same situation. At the very least, it should be a reminder to both preparers and reviewers to double check all rollovers in the system and make sure they are being tracked correctly.