I have a client who has NON- PTP k-1s showing an overall GAIN on worksheet 3, form 8582. The income is from a partnership K-1 using line 11F, described as IRC section 1296 ordinary income. My software is correctly entering it onto the form 8582, worksheet 3, but I think it should go to the 4797, part 2 from there, and it is not. Other than appearing on the 8582, I cannot see that my software did anything with it.
Can anyone verify that it SHOULD go onto the 4797 as ordinary income? If not, where?