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S Corporations - Drake Software

1. A Summary of Stock Ownership worksheet WK SOWN is generated listing all shareholders and the numbers of stocks owned along with the changes in ownership Because a shareholder s percentage ownership may change even if the shareholder s number of stocks owned does not all shareholders are listed on the worksheet IRS K 1 Codes A code sheet can follow the printing of each Form 1120S K 1 to help interpret the var ious codes used on Schedule K 1 In Drake this is the 1120SK 1 PG3 sheet To have this sheet printed with all K 1 schedules go to Setup gt Options gt Form amp Schedule Options tab and mark the Print Page 2 of Schedule K 1 check box The codes can also be printed for a specific return by marking the applicable box on the PRNT screen and are available from Tools 5 Blank Forms N 1 T Codes sheets are not displayed in View mode If the 1120S K 1 is selected for printing it is printed first followed by the statements per taining to that 1120S K 1 These are followed by the code sheets The generated Schedule K 1 may include asterisks with letter codes e An asterisk with a letter code indicates that multiple items have that code e An asterisk at the bottom of a group indicates that there are more items than can fit in the space provided for that group and that a statement is attached or that the statement is required as in the case of other amounts Multiple Shareholders 20 For returns with a large
2. Amended 1120S can be e filed using Drake Software When you amend a return in Drake the amended information replaces the original in the data file Before amending a return you CAUTI UN should archive the original to avoid losing previously submitted data For more information on archiving returns see Archive Manager in Chapter 6 Return Results of the Drake Software User s Manual Tax Year 2011 To file an amended 1120S return 1 Goto screen 1 and select Amended return in section H 2 Make changes as applicable to forms and schedules Tax Year 2011 15 Additional Information Drake Software User s Manual Supplement o Go to the EF screen and mark the 1120S check box on the left side of the screen 4 Go to the AMD screen and list the changes that have been made along with an explanation for each change Use a different AMD screen for each line of the 1120S Press PAGE DOWN to open a new AMD screen If amending just the K 1s go to each applicable K1 screen select Amended K1 and make needed changes When amending an 1120S return all K 1s are amended and the NOTE Amended K 1 box on the return marked by default To override this default go to the PRNT screen and mark Do NOT check amended box on Sch K 1 See Figure 8 on page 20 Additional Information This section covers Schedule B Other Information state specific information and some program overrides Schedule B Enter the accounting m
3. Column Notes Note Description not included in totals The amount is required for importing purposes only but is not included in the totals shown on the trial balance does not carry Information cannot be imported and must be entered on the appropriate screen in Drake Screen is specified in column to the left of Other Information optional Amount is optional not required for import but could require direct entry in the software enter as negative number Some deficits must be entered as negative numbers importincludes the calculated Used for total purchases when calculating cost of goods change in inventory sold COGS in the return the program takes the change in inventory into account for the Form 1125 A calculation Form or Schedule may be Non financial information must be completed in Drake in required addition to the financial data entered in the worksheet Tax Year 2011 49 Importing Trial Balance Information Drake Software User s Manual Supplement All does not carry notes are accompanied by further instructions in the column to the left of the Other Information column as shown in Figure 34 SCH2 Detail Typically a balance sheet subsidiary schedule SCH2 detail screen for Schedule L is required for an item marked does not carry on the trial balance Account Title a a Import to screen line Form Page Sch and or line Other Information L line 1 cold Form 1120 Sch L line
4. 1 C1 athru C1 h attachments Changing within the LIFO Inventory Method a 2 C1 2 attachment If any present method ar submethod is natthe same as indicated on Formis 970 3 C1 3 attachment Ifthe propgsed change is not requested for all the LIFO inventory 4 1 4 attachment Ifthe propgsed change is not requested for all the LIFO pools 5 21 5 attachment LIFO inventory valued on method other than cost 6 C1 6 attachment ing to the IPIC method Part Il 1 Change in Pooling Inventories pP eee eee E MET X Figure 44 Attachment links from Schedule C screen A B C Not all lines that require statements include a link to the ATT screen NOTE Always check the field level help click F1 in a field to determine if a statement is required The program produces an EF Message if any required statements are missing 60 Tax Year 2011 Drake Software User s Manual Supplement Form 3115 Application for Change in Accounting Method Additional ATT Fields PDF Attachments Tax Year 2011 Complete the following ATT fields as applicable for all ATT screen attachments e Multi form codes Use these boxes to associate the attachment with an instance of Form 3115 1f the return contains more than one a particular Sched ule E property if the return contains more than one Schedule E or both See Multi form Codes on page 53 for more information on multi form codes e Schedule Select the line of the form or schedule with which the atta
5. 4 Check the individual and or business form types you will e file for 1o40 Lles41 oo0 M 1040 L ETD 1041 M 1065 C 1120 POL C State Ack C he 112 for 1120 and 1120S Check the 990 box for 990 990 EZ and 8 8868 See TF for additional information on check boxes State Ack and ETD Figure 19 The 1120 box must be marked in order to e file Form 1120S Binary Attachments Binary or PDF files can be attached to certain tax forms These attachments are gen erally signature or third party documents such as a copy of a signed lease or a signed appraisal statement In some instances the IRS requires that a document be attached to an e filed return in other instances a document can be attached voluntarily to sup port or explain an entry in the return In either case a document must be printed scanned into the computer or saved as a PDF document and attached to the return in order to be e filed with the return You can attach PDF files to federal S corporation 1120S returns for e filing The PDF Attachments screen is accessible from the Data Entry Menu The PDF Attachment Process Three main steps are involved in the PDF attachment process in Drake 1 Creating a PDF document to be attached 2 Informing the program that a PDF document will be sent with the return 3 Attaching the PDF document for e filing These steps are described in the following sections Creating a To create a PDF file PDF File 1 Sc
6. All applicants must complete Parts Il and IV Part ll Information for All Requests j lo G d or will the applicant cease to engage in trade or business to which requested change relates 9 Ce 1 Beginning Date Ending Date 4a Are any federal returns under examination ing agas O an a MI i ipn jeg Figure 40 Automatic Change Request information If this section of the Parts I III screen is filled out Form 3115 cannot be e filed with the return It must instead be paper filed before submitting the return A user fee a check or money order payable to the IRS must be included with the paper filed form See Appendix A of Rev Proc 2006 1 for more information For more on applicants who must apply for advance consent see the IRS Form NOTES 3115 instructions Taxpayers filing under an automatic change request procedure do not pay a user fee If the applicant qualifies for a reduced user fee put a check mark in the box on line 23b and go to screen ATT2 to complete the attachment information in the Part III line 23b section located in the bottom half of the screen Include the necessary infor mation or certification required by Rev Proc 2010 1 or its successor Specific statements must also be attached to the return if the applicant answers Yes for line 18 Ts change request allowed under automatic change or No for line 22 All members of consolidated group use proposed method Press F1 in a
7. User s Manual Supplement Drake S Corporations UOS 8 4 AS Support DrakeSoftware com gt 828 524 8020 Drake Software User s Manual Tax Year 2011 Supplement S Corporations 1120S Support DrakeSoftware com 828 524 8020 Copyright Trademarks Drake Software User s Manual Supplement S Corporations The 2011 Drake Software Manual Supplement S Corporations Drake Tax Software and any other related materials are copyrighted material All rights are reserved by Drake Enterprises LTD including all ownership rights This document associated software and related material are the property of Drake Enterprises LTD Drake Enterprises LTD hereby authorizes you to download display print and repro duce the material in this document in an unaltered form only for your personal non commercial use or for non commercial use within your organization Copyright trademark and other proprietary notices may not be removed O 2011 Drake Enterprises LTD All rights reserved While every attempt has been made to produce an accurate and complete manual there is no warranty expressed or implied to that effect Drake Enterprises LTD assumes no liability for damages or claims resulting from the use of the information contained herein The Drake Software Logo and Drake Tax are registered trademarks of Drake Enterprises LTD Other product names mentioned in this manual may be trademarks or registered trademarks of their
8. properly elected the LIFO inventory method by filing Form 970 with its return for the tax year s ended insert date s and otherwise complied with the provisions of section 472 d and Regulations section 1 472 3 57 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Supplement Schedule D Use the D III screen to complete Part III Method of Cost Allocation of Form 3115 Part Ill Schedule D Part III is required for any entity submitting either Part I or Part II Screen D III consists of the following sections e Section A Allocation and Capitalization Methods e Section B Direct and Indirect Costs Required to be Allocated e Section C Other Costs Not Required to be Allocated Section A Click the D3 1 Attachment link see Figure 42 to attach a description of the present and proposed methods used to capitalize direct and indirect costs Sections These sections consist of a series of drop lists under a Present column and a Proposed B and C column Present refers to the current accounting method while proposed refers to the requested change in accounting methods You should address only the items neces sary do not make a selection for any item for which an answer is not required for the entity s situation For each item in sections B and C you can e Select X If you select X the corresponding box on Form 3115 will be marked with an X See Figure 41 e Select B If you s
9. 27 28 29 and 31 and it explains what specifically should be entered for each of these elections Drake Software Data Entry Help Other Date or Year Ending direct entry Enter any additional date or year ending information required for the selected eletion Ihe description field is used on the following election statements for this package Use 15 Date of Occurrence 27 Shareholder s signature date 28 Officer s signature date 29 C Corp tax return ending date 3l Shareholder s tax year r 9 ape asino uh AM a MT Ai aiit ain BE ann PNK RN E ra Figure 16 Help text for Other date or year ending field on ELEC screen If the election option you selected is not listed in the help text for a field NOTE then that field should be left blank For example if you chose election 01 General Election Statement you would not need to enter any thing into the Date or year ending field help text in Figure 16 To open a new ELEC screen for an additional election press PAGE DOWN Election Statements Once an election is made and the return is calculated the election information is pro duced on a statement referenced STM ELXX where XX is the number of the election For example election 01 General Election Statement is generated as State ment ELO1 The election statement includes the election title election wording and any additional information required for the election such a date or
10. Prepare to use Trial Balance Import Enable Excel macros Disable autobalance Force Schedule L Delete unnecessary detail worksheets pun Populate Trial Balance Template Import Trial Balance Import direct entry data cells with so applicable detail worksheets totals for depreciation Schedule L rentals 1120S amp 1065 only Make corrections in TB worksheet Populate Data Entry Enter any trial balance data that cannot be imported via Trial Balance Import Screen SCH2 for Schedule L items Screen 4562 for individual assets depreciation Compare M 1 line 1 Does trial balance match Schedule M a line 1 Trial Balance Import General Process Is an M 1 adjustment necessary YES Make M 1 Adjust adjustment amounts elsewhere in data entry Were rental totals entered 11205 amp 1065 in trial balance Go to data entry an enter individual rentals on 8825 or RENT screens as applicabl Delete imported 8825 and RENT screens Process complete Drake Software User s Manual Supplement S Corporations Appendix B Adjustment Worksheet Tax Year 2011 The Adjustment Worksheet is updated each year to help you understand what happens in the return when certain data is changed through the use of adjustment fields The following pages contain the 2011 Adjustments worksheet
11. use Form T Forest Activi ties Schedules and oil and gas properties Each shareholder should figure depletion Advertising Enter advertising expenses on the DED screen Pension and Profit Sharing Enter pension and profit sharing expenses on the DED screen Press F1 for informa tion on what expenses to enter The software reduces the expense based on the credit amount calculated from Form 8881 Credit for Small Employer Pension Plan Startup Costs Note that this is an adjustment field the software uses any amount entered here to adjust the amount flowing from Schedule F to the 11208 10 Tax Year 2011 Drake Software User s Manual Supplement Tax and Payments Employee Benefits Program Enter on the DED screen amounts for fringe benefits paid or incurred on behalf of employees owning 2 or less of the corporation s stock Do not deduct amounts that are an incidental part of a pension profit sharing etc plan included on line 17 or amounts reported elsewhere on the return Report amounts paid on behalf of more than 2 shareholders on line 7 or 8 which ever applies A shareholder is considered to own more than 2 of the corporation s stock if that person owns on any day during the tax year more than 2 of the out standing stock of the corporation or stock possessing more than 2 of the combined voting power of all stock of the corporation Note that this is an adjustment field An amount entered in here adjusts the amoun
12. xls suffix assigned to all Excel files as shown in Figure 27 NDrake11NTBNEntityName rB x1s File location Name of client TB indicates Excel file trial balance file extension Figure 27 Example of trial balance template file name 44 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information To change the name of a file in Excel select File 5 Save As in Microsoft Vista and Windows 7 click the Office button in the upper left corner and select Save As and assign the new name If saving a trial balance to a different location make a note of where NOTE youre storing it The program automatically looks in the default direc tory Template The trial balance template consists of three title rows and six columns The Entity Structure Name and Year End title rows can be edited double click a row to change the title Columns are described in Table 4 Table 4 Trial Balance Template Columns Column Description Account Title Title of account Debit Credit Debit and credit amounts Import to Screen and line in Drake to which the debit or credit amount is imported Reported on Form Page Location of the amount on the printed return Sch and or line Other information Additional details for preparers see Details for Pre parers on page 49 Displayed at the bottom of the trial balance worksheet are the calculated amount for Schedule M 1 line 1 the credit and debit totals and a cel
13. 1120S and all attachments and schedules including Schedule M 3 The Schedule M 3 section of the Data Entry Menu provides direct access to the fol lowing screens e M3 M32 and M33 for Parts I IL and III of the Schedule M 3 e M3S for supplemental statements e SCH3 for subsidiary schedules for Schedule M 3 and Form 8916 A e 8916A for Form 8916 A Supplemental Attachment to Schedule M 3 Certain income deductions gains and losses flow from the 1120S to the M 3 in the program but all other M 3 data must be entered manually on the M3 screens Parts Il and Ill of Schedule M 3 reconcile financial statement net NOTE income loss for the U S tax return per Schedule M 3 Part line 11 to total income loss on Form 1120S page 3 Schedule K line 18 The SCH3 screen is similar to the SCH2 screen and is used to provide detailed infor mation for Schedule M 3 and Form 8916 A It can be used in place of the actual M3 and 8916A screens For more information on using this type of screen see The SCH2 Screen on page 25 Tax Year 2011 Drake Software User s Manual Supplement Schedule M 2 Analysis of Accounts Schedule M 2 Analysis of Accounts NOTE On an 1120S return unlike an 1120 return Schedule M 2 is not a rec onciliation of retained earnings For an S corporation return Schedule M 2 is the analysis of the Accumulated Adjust ment Account Schedule M 2 information can be entered on the M2 scre
14. 7 Tax year of change begins Tax year echange ends Name of applicant if different from filer ID number of applicant if different from filer Name of contact perso aaa NG E aaa se SAPAT PA Wg atn eT LOT RM anm s amie a Y FX ETT n3 r7 Mg a Figure 39 Override fields in the General Information sections of the Parts I III screen Tax Year 2011 Drake Software User s Manual Supplement Form 3115 Application for Change in Accounting Method Part Part Ill Parts Il and Tax Year 2011 IV Not all applicants are eligible to use the automatic change request procedures After answering la 1b and 2 in Part I Information for Automatic Change Request click the blue Parts II IV tab at the top of the screen In Part II Information for All Requests answer question 3 see Figure 40 If the answer is Yes you are stating that e The entity would be required to take the entire amount of the section 481 a adjustment into account in computing taxable income for the year of change e Section 4 02 8 of Rev Proc 2002 9 applies to the applicant s accounting method change request and the applicant is therefore not eligible for a change under auto matic change request procedures See IRS Form 3115 instructions for details Parts IIl Parts lll IV ABC D Parts il D Part Ill Form 3115 Application for Change in Accounting Method Multiformcode
15. 785 Lines 2 amp 3 Ordinary income and other additions 58 440 Lines 4 amp 5 Loss and other reductions 489 Line 6 Combine lines 1 5 46 165 Line 7 Distributions total 60 000 45 155 Lines Balance at the end of tax year 0 The rules from the preceding chart apply when the net adjustment for lines 2 through 5 is positive When the net adjustment for lines 2 through 5 is negative the ordering rules are switched and AAA is decreased by ordinary distributions but not below zero before the net negative adjustment for lines 2 through 5 sch M 2 Item Amount Line 1 Balance at beginning of tax year 11 786 Line 6 Net negative adjustment lines 2 5 57 951 Line 7 Distributions total 60 000 11 785 Line 5 Balance at end of tax year 57 951 A corporation can make distributions greater than the amount on line 6 of the M 2 but those distributions could be taxable to the shareholders Enter distributions on the DIST screen this way the amounts flow automatically to Schedules M 2 and K 1 but are limited based on the rules described previously For more information on the DIST screen see Entering Distributions on page 29 Line 7 1s limited to the lesser of the amount for line 7 or the positive amount from line 6 If line 6 is negative line 7 is then limited to the positive amount on line 1 If line 1 and line 6 are both negative line 7 is completely disallowed on the Schedule M 2 Distributions are entered on the DIST scr
16. Accumulated Adjustments Account 1 S Nensdividend distributions es the amount that flows from Schedule K screen 3 line chedule M 3 Net Income Loss Reconciliation CA 9n 92929m 2 Income statement period Overrides default calendar year dates or fiscal year dates Beginning entered on screen 1 Overrides default calendar year dates or fiscal year dates 2 Income statement period Ending entered on screen 1 lectronic Funds Withdrawal Information Ro Overrides line 25 of Form 1120S or Form 7004 line 8 software Federal payment amount calculated ederal Requested Payment date Overrides federal return due date ederal daytime phone number Overrides phone number entered on screen 1 General Info KA An entry here overrides the selection on Setup 5 Options Optional Documents tab for printing the federal return and 141 or 14m not charged against book income this o 1 U m rint Options Print general filing instructions An entry here overrides the selection at on Setup gt Options Prin filing instruction TT int state filing Instructions Optional Documents tab for printing the state return An entry here overrides the option that was entered in on Setup Print S Corporation s envelope coversheet gt Options Optional Documents tab for the S corporation envelope coversheet An entry here overrides the option that was entered on Setup gt Print IRS envelope coversheet Options Optional Doc
17. Data Entry Menu the program displays the first of five 3115 screens These five screens are Parts I III Form 3115 Parts I and IIT e Parts II IV Form 3115 Parts II and IV A B C Form 3115 Schedules A B and C e D LII Form 3115 Schedule D Parts I and IT e D III Form 3115 Schedule D Part III As shown in Figure 38 you can access these 3115 screens by clicking a link at the top of any other 3115 screen Form 3115 Application for Change in Accounting Method Multi form code General Informatian BOSD RMB INES S OCI CONE MUA saamiaan asi Nu man hne gfftnh itl SS Figure 38 Tab links on 3115 screen The next few sections of this document provide instructions for completing the vari ous screens for Form 3115 including Schedules A through D Use the Parts I III screen to complete the following sections of Form 3115 e General Information e Part I Information For Automatic Change Request e Part III Information For Advance Consent Request NOTE Information should be entered in either the Part section or the Part Ill section but not both Complete all applicable fields in the General Information section Note that the fields for business activity and tax year change are override fields Figure 39 Com plete these fields only if you want to override the equivalent information entered on screen 1 or screen K General Information Principal business activity code number LL
18. Drake To indicate that a return is inactive 1 Go to the PRNT screen accessible from the General tab 2 Under Items to Print mark the Print inactive return box When the return is calculated the program displays the words Inactive Return on the main form of the return specifically on lines 1c and 2 Zeros are displayed where required by the IRS in order for amounts to be properly included in the e file data NOTE All EF messages must be cleared in order to e file an inactive return For detailed instructions on e filing returns in Drake see Drake Software User 5 Man ual Tax Year 2011 Common Error Codes 38 If one or more of the following IRS error reject codes 1s generated when e filing an 1120S return the preparer must contact the IRS for further information The IRS e Help Desk telephone number 1s 866 255 0654 e Reject Code 239 Filer s TIN and Name Control in the Return Header must match data in the e File database unless Form 1120S Item H 2 Name Change box is selected e Reject Code 905 Electronic Filing Identification Number EFIN in the Return Header must be listed in the e File database and in accepted status If you get this reject code you must update your e file application to include the 1120S return Tax Year 2011 Drake Software User s Manual Supplement Binary Attachments type Figure 19 This can be done at the IRS website or by calling the IRS e file Help Desk at 866 255 0654
19. Recapture of other credits Adjusts amounts flowing from the K1P screen line 20 code I Adjusts the amounts flowing from the WK 179 net gain or loss 17d K Dispositions of property with section 179 deductions on sale of an asset subject to section 179 and the K1P screen line 20 code L 17d L Recapture of section 179 deduction Adjusts amounts flowing from Form 4797 line 35 and K1P screen line 20 code M 17d M Section 453 l 3 information Adjusts amounts flowing from the K1P screen line 20 code O 1 a 16b 6c 16c 3 17d N Adjusts amounts flowing from the K1P screen line 20 code P 17d O Adjusts amounts flowing from the K1P screen line 20 code Q 17d P Adjusts amounts flowing from the K1P screen line 20 code R 17d Q Adjusts amounts flowing from the K1P screen line 20 code S hareholder s Adjusted Basis Worksheet 7a Nondeductible expenses and credit adjustments Soe eee om ie MOERORE current year losses and deductions line 7a chedule M 1 Reconciliation of Income Loss per Books with Income per Return 2 Income recorded on Sch K lines 1 2 3c 4 5a 6 7 8a 9 Adjust the amounts coming from Forms 6478 and 8864 and 10 not on books i o Adjustments Worksheet Screen Line Field Name Location of Information Being Adjusted 1120S Adjust amounts credit adjustments made from Forms 5884 6765 8820 8844 8845 8846 8881 nondeductible expenses entered on the bottom of screen 3 for line 16c an
20. Shareholder Information e By completing the Name and Title fields in the KIL screen entries here override entries on the PIN screen Producing Ifno default has been set to produce K 1 cover letters with all returns you can take the Letters for following steps to generate letters for a single return Single Return 1 Open the return and go to screen K1L 2 At the bottom of the screen enter the name and title of the person who will be signing the K 1 cover letter 3 optional Mark Do not print entity information at the bottom of the screen in order to prevent the corporation s name and address from being generated in the header of the K 1 letter To have the corporation s name and address generated for K 1 letters NOTE go to Setup gt Letters gt Setup gt Letterhead and Margins and select Use Firm Info on Letters Once the required signing information has been entered a K 1 cover letter will be generated for each shareholder receiving a K 1 Editing the As with other letters provided by the program you can edit the text to suit your office K 1 Letter needs and style Review the following sections of the Drake Software User s Manual Tip Tax Year 2011 before making changes to letter templates Introduction to Letters in Drake in Chapter 2 Installation amp Setup he Letter Keywords section of Appendix C Keywords To edit the text of the K 1 letter 1 From the Home window select Setup 5 Letters The Clien
21. When required taxpayers must reconcile book income with taxable income Use the MI screen to enter book to tax difference for Schedule M 1 Book to tax dif ferences are classified as permanent or temporary and as favorable or unfavorable Examples of both kinds of differences are shown in Table 2 Table 2 Examples Book to Tax Differences for Schedule M 1 Permanent Book or tax items that will never be Meals amp entertainment limitations reported for book or tax purposes Penalties Tax exempt interest Temporary Items that will be reported for both Depreciation tax and book purposes but not dur Gains or losses on the sale of ing the same tax year depreciated assets Favorable Items that reduce taxable income Instances in which tax depreciation amount is greater than book depre ciation amount Unfavorable Items that increase taxable income Disallowed meals amp entertainment The program may make an adjustment for book to tax depreciation or amortization differences The calculation is done with the following steps This procedure refers to depreciation throughout but it applies for either depreciation or amortization 1 The amount reported on Schedule L Beginning of Year accumulated deprecia tion line 10b column a is subtracted from the End of Year accumulated depre ciation line 10b column c This is the book depreciation amount 21 Schedules M 1 M 3 Reconciliation of Bo
22. by buttons If these cells do not work you may need to enable them see the Note in Opening a Template on page 44 3 line 7 Form 1120 pap does not carry detail required detail require gs K requires detail equires deta moa Form 1120 Figure 29 Example of cells that require worksheets Click a worksheet button to open a worksheet in a new tab Figure 30 shows an exam ple of the Other Income worksheet 46 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information Statement Required Other Income Form 11205 page 1 line 5 INC lines 1 7 Amount of credit for tax on fuels Form 4136 INC line 1 Interest income on receivables 5 ING line 2 nM L Recoveries of bad debts deducted in earlier years 1 INC line 3 Section 481 adjustments INC line 4 State tax refund cash basis 1 INC line5 f Taxable income from insurance proceeds 6 gt bi SBS TB Other Income 7 4 Figure 30 Trial balance worksheet for Other Income To return to the previous worksheet click the TB tab labeled 1 in Figure 30 or click the Return button above the worksheet tabs labeled 2 in Figure 30 Note that a detail tab the Other Income tab in Figure 30 might include one or more detail worksheets labeled 3 in Figure 30 Do not create detail worksheets in data entry if the trial balance work NOTE sheet does not provide an equivalent detai
23. codes Q and R When this box is selected the information flows to attachment K 1 8903 instead of box 12 on the K 1 Attach ment K1 8903 is referenced on a statement Code P is printed on box 12 of the K 1 which refers to domestic production activities information Review the screen 8903 screen level help and the 8903 instructions accessible through the Screen Help button on the 8903 screen to determine when the K1 8903 in needed Line 11 Income limitation of Form 8903 is not applicable for the S corporation because the income limitation is calculated at the share NOTES holder level Form W 2 wages on the 8903 screen refers to the corporation s W 2 wages paid that are applicable to the Domestic Production Activities Deduction K 1 Cover Letters 22 Producing Letters for All Returns K 1 cover letters can be produced to accompany each Schedule K 1 in a return You can set up the global option to produce K 1 cover letters for all returns containing K 1 schedules or you can choose the option on a per return basis To have the K 1 cover letters produced automatically with a applicable returns go to Setup gt Options Under the Optional Documents tab mark the box labeled Include K 1 letter with returns The signature on the return can be indicated in one of two ways e By completing the Signature and Title fields on the PIN screen Tax Year 2011 Drake Software User s Manual Supplement Schedule K 1 for 1120S
24. difference between the current depreciation and AMT depreciation totals on the Federal Depreciation Listing amounts flowing from K1P screen line 17 CO _or the K1F screen line 12 co or G Adjusts amounts flowing from K1P screen line 17 code B or the K1F screen line 12 code C F Adjusts amounts flowing from K1P screen line 17 code C or 15c Depletion other than oil and gas alike lban code 15d Gross income from oil gas and geothermal Adjusts amounts flowing from K1P screen line 17 code D 15e Deductions from oil gas and geothermal Adjusts amounts flowing from K1P screen line 17 code E 15f Other AMT items attach schedule Adjusts amounts flowing from K1P screen line 17 code F and K1F screen line 12 codes and J i Gi 0 Post 1986 depreciation adjustment 15b Adjusted gain or loss Q D gt Oo gt ho Q o gt my O Adjusts amounts flowing from K1P screen line 18 code A and from the K1F screen line 14 code A Adjusts amounts flowing from the bottom of screen 3 line 16b and from K1P screen line 18 code B Adjusts amounts flowing from the bottom of screen 3 line 16c and from K1P screen line 18 code C Otficer ite insurance premiums Aust amounts flowing from the bottom of screen 3 line 16c 17a Investment income Adjusts amounts flowing from the K1P screen line 20 code A 17b Investment expenses Adjusts amounts flowing from the K1P screen line 20 code B 17d H
25. the excess net passive income tax calculation Screens 3 and TAX have been eliminated from the 1120S package Multi State Apportionment Previously in order to prepare a multi state return in Drake for a company doing business in more than one state you had to go to each individual state s screens and enter its sales payroll and property factors Drake would then calculate the apportion ment factor on that state s tax form With the new APPT screen you can enter the apportionment information for all states in one global location The link to the APPT screen can be found on the States tab or you enter APPT in the selector field and press ENTER See Multi State Apportion ment on page 16 Cost of Goods Sold Form 1125 A In years past Schedule A Cost of Goods Sold was located on page 2 of Form 1120S Beginning with tax year 2011 entries on screen A produce a separate form Form 1125 A Cost of Goods Sold 8609 Screen The 8609 screen for Form 8609 Low Income Housing Credit Allocation and Certifi cation has been reorganized for easier data entry Among the changes e Fields required for both Form 8609 and Form 8609 A are now separated on the screen from the other information fields e Other fields for Form 8609 A are now located in the middle of the screen e Other fields for Form 8609 are now located in the bottom half of the screen e Screen 8586 has been removed from the program The program will generate
26. the Data Entry Menu Schedule K 1 Shareholder s Share of Income Credits Deductions etc Ki Supplemental Info Sharehalder Name and Address Information BA BENI TUUM 400001001 Type E Mame Hugh Rogers Figure 10 K1 screen tab for accessing the Adjusted Basis Worksheet Increases 7 Increases to basis can include additional stock purchases and capital contributions and separately stated income including tax exempt income and depletion in excess of Decreases basis of property Decreases to basis can include distributions of cash or property to shareholders sepa rately stated losses and deductions nondeductible corporation expenses and credit adjustments Annual When the program is updated to the next tax year the end of year basis and share Update of holder loan amounts are automatically updated to the beginning of the new year Any Shareholder loss deduction carryover is updated to the beginning of the year and its character Information ordinary loss section 179 expense charitable contributions etc maintained The program also tracks the amount of debt applied to losses and the total amount of loss carryforwards NOTE If a K1 screen is marked as final none of the related screens for that shareholder are updated for the next year 24 Tax Year 2011 Drake Software User s Manual Supplement Schedule L Balance Sheet Per Books Schedule L Balance Sheet Per Books Schedule L is required if the corp
27. 1 col d t hh te cadit At diii TOP am NPA addi Ab n o ons M 2 PELLEM LEN U S gramman ae uias alid uu 7 Uline 4 col d a5 Gai kad l o oo Tax exempt securities 0 ine alc orm D h L line Other current assets 0 Loans to shareholders 0 L line 7 col d Form 1120 Sch L line 7 col d Mortgage and real estate loans 0 L line 8 col d orm I hL line 8 cold Other investments 0 Buildings and other depreciable assets 0 L line 10a col c Form 1120 Sch L line 10a col c optional ROOTS cada CRGO TQ era magmana aa alimenti ds qma darf LANG Ph Ghana LEAN 120 ScboL nigga Opo an ARN Figure 34 SCH2 screen required for do not carry items To complete an SCH2 detail screen in data entry 1 Open the SCH2 screen in the return 2 Select the line number from the SCH2 drop list 3 Enter the applicable item descriptions and beginning and end of year totals To enter details for additional lines of the Schedule L press PAGE DOWN and repeat steps 2 and 3 Data is saved automatically upon entry When the return is produced the Schedule L of the return reflects both the amounts imported from the trial balance worksheet and the totals of the amounts entered on the SCH2 screen See The SCH2 Screen on page 25 for more details on using the SCH2 screen Depreciation S corporation returns can have up to four components of total depreciation e COGS e Real estate renta
28. 120S is to be withdrawn on the return due date To indicate otherwise complete the Requested payment date override field for the applicable payment Tax Year 2011 13 Filing an Extension Drake Software User s Manual Supplement If the return is e filed on or before the due date the requested payment date cannot be later than the due date If the return is transmitted after the due date the requested pay ment date cannot be later than the current date Required Information A Withdrawal selection item 1 in Figure 6 is required if the program is to direct tax authorities to withdraw funds from the taxpayer s account Federal Account and State if same as Federal 1 Withdrawal selection Federal selection M State city selection ame of financial institution RTN Account number Type of account 2 Wa SJ Checking Savings Repeat Account Information Checking Savings obe diss abs I at ide Federal payment amount Requested payment date Daytime phone number Payment is for 11208 7004 Amended 1120S State State payment amount Requested payment date Daytime phone number Federal Figure 6 Required fields on PMT screen withdrawal selection 1 account information 2 specified return 3 The name of the financial institution routing number RTN account number and account type are required As with
29. 120S return also files 150 W 2 forms each W 2 would count as a separate return within the 250 return threshold Calendar year returns are due on March 15 2012 Fiscal year returns are due on the 15th day of the third month two and a half months after the S corporation s year end Returns can be e filed after these dates however if an extension has not been filed penalties and interest are applied Additional Return Types Short year returns 52 53 week year returns and inactive returns can all be e filed using Drake For information on how to indicate a short year return in Drake see Short Year Returns on page 5 Information on e filing 52 53 week returns and short year returns 1s provided in the following sections Electing a To elect a 52 53 week year a new entity one that has never filed a return must enter 92 53 Week data on both screen 1 and the ELEC screen Year Initial Return To elect a 52 53 week year for any entity 1 In the If not calendar year section of screen 1 enter the Fiscal year begins and Fiscal year ends dates Use MMDDYYYY format as shown in the example in Figure 17 2 Mark the 52 53 week tax year box lf not calendar year Fiscal year begins 09 29 2011 Fiscal year ends 03 26 2012 52 53 week tax year ELEC Figure 17 In this example the fiscal year begins 09 29 2011 and ends 09 26 2012 the Wednesday closest to the end of September givi
30. 4 39 42 PIN electronic signatures 15 printing cover letter for K 1 23 K 1 items 20 line 22a worksheet 11 statements for Schedule L 25 suppressing forcing documents 35 R real estate 50 receipts 6 references to forms and worksheets 36 refunds direct deposit of 13 state tax 8 reject codes 38 rent paid on business property 9 rental activities 31 33 repair costs 8 retained earnings reconciliation worksheet 36 returns 52 53 week year 37 amended 15 bankruptcy 37 extensions for 12 14 fiscal and calendar year 5 inactive 38 short year 5 signing 15 tax exempt organizations 990 39 42 updating prior year 3 revocation of S election 5 S S corporation changing to 4 electing as 4 termination of 5 scanning PDFs for e filing 39 SCH2 screen for Schedule L 25 Schedule B Other Information 16 Schedule D Capital Gains and Losses and Built In Gains bad debts 9 Parts I IIL and III 12 Tax Year 2011 Index Schedule E Officer Information 18 Schedule K Shareholders Pro Rata Share Items 18 19 Schedule K 1 Shareholder Information 19 24 Schedule L Balance Sheet per Books 25 27 35 Schedule M 1 27 35 Schedule M 2 29 31 Schedule M 3 28 schedules on Form 3115 56 60 section 179 income limitations 8 481 adjustments 8 481 a adjustments 55 shareholders adjusted basis worksheet 24 compensation of 8 foreign addresses for 21 multiple 20 number of 6 Schedule K 1 19 updating data annually 24 short year r
31. 7 l Adjusts amounts flowing from the K1P screen line 9b and the Il les 28 Collectibles 28 gain loss KIF screen line db Other portfolio Adjusts amounts flowing from the K1P screen line 11 code A and the K1F screen line 5 10B Involuntary conversions Adjusts amounts flowing from the K1P screen line 11 code B 10D Mining exploration costs recapture Adjusts amounts flowing from the K1P screen line 11 code D Adjusts amounts being carried from screen K1P line 11 code 10E h i J UMC EINCOM 11088 F and K1F screen line 11 code D 12a A Cash contributions 5096 Overrides amounts flowing from screen 3 and from the K1P screen line 13 code A 12a B Cash contributions 3096 Adjusts amounts flowing from the K1P screen line 13 code B H o 10A Adjustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted 1120S Adjusts amounts flowing from the 8283 screen and from the 12a D Noncash contributions 30 K1P screen line 13 code D 12aE Capital gain property to a 5096 organization 3096 Adjusts amounts flowing from the K1P screen line 13 code E 12a F Capital gain property 2096 Adjusts amounts flowing from the K1P screen line 13 code F 12aG Cash contributions 100 Adjusts amounts flowing from the K1P screen line 13 code G 12b H Investment interest expense Adjusts amounts flowing from the K1P screen line 13 code H 12c J Section 59 e 2 expendit
32. Attach PDF button 2 Click the Message file to view EF messages including information on how to attach the required documents to the return 3 Click the Attach PDF button The EF PDF Attachments window displays the information entered on the PDF Attachments window in data entry A red X means the document has not yet been attached a green check mark indicates an attached document Drake 2011 EF PDF Attachments Required PDF Attachments The list below contains PDF Attachments that are required for electronic filing Select an item from the list and click Browse to locate the associated POF file Items with a green check mark already have the PDF file Items with a red 7x7 are missing the required PDF File Reference Description Required POF FileName I Fom 11205 Box G Form 2553 FORM 2553 PDF Proposed Change Documents PROPOSEDCHANGEDOCUMENTS PODF Tas Form Selections TAs FORM SELECTION POF MO NAS NONRESIDENT SHAREH MONRS POF MO NAS NONRESIDENT SHA amp REH MONRS POF Wish sl an teni man cal hom nome a ig ee Figure 22 The EF PDF Attachments window 4 Click the row of a document to attach m Click Browse 6 Browse to the proper folder select the PDF file to attach and click Open or dou ble click the file name Repeat for all documents with a red X When all documents have been attached to a completed return recalculate to clear the EF Message The return is now ready to be e file
33. EORCTERETRRTCTRRTRCPEPT 20 Multiple Shareholders sss 5 043 640 cbe a eee oire LIM anrai aAa eSa AGA 20 Override Fields 0 0 0 ccc ennea rr eere rr 21 POKE AdUUCSSCS ues portar KOKO NGA hd Sa SO WRENS ED OE RG TALON DENG er 9a AUR RC eee FESS AGA 21 AB DAA PAA AA ee 21 Supplemental Info 046004045605 KNA bee DBA TAKANG theo P Geto PR een Rd LANG Hah dads 21 Domestic Production Activities anaana 22 ESDCOVSFLOBHBSIS a secos sh uio wd ee ee ee Oe eee OR Oe he RES CREE PET EER EE ES 22 Shareholder s Adjusted Basis Worksheet 2 2 24 Schedule L Balance Sheet Per Books 25 Flow of Information hes 29 The SC H2 SOFeell uoces der Bec DIE Raya eI WE EX E PDA RCRUARR be hates SO RUE ob ead es 25 Autobalance cese 26 Schedules M 1 M 3 Reconciliation of Books Return 27 Schedule M 1 ccc cc ce an 27 OCC NE sc 5 4 AKDA oo oe oe AA APA NADA DAO eh a es se eee 28 Schedule M 2 Analysis of Accounts 4 cc eee ee 29 Entering Distributions s sses vee eee we ob oe KALA GAMMA MAN eee ees oe ee eee Gee cee 29 Column A Accumulated Adjustments Account 2 eee eee e eens 29 Column B Other Adjustments Account 222 ee eee eee e eee e eens 30 Column C Undistributed Taxable Income Previously Taxed 0 0 0 0 cece 31 Rental ActivitieS 0 000 cee es 31 Line l4 Dep hek vencecetc cuneees o cone e ORG DAKO
34. Form 3115 e Schedule A Change in Overall Method of Accounting screen covers Part 1 Change in Overall Method e Schedule B Change in Reporting Advance Payments e Schedule C Changes Within the LIFO Inventory Method screen covers both Part I General LIFO Information and Part II Change in Pooling Inventories Schedule A Part II Change to the Cash Method for Advance Consent NOTE Request requires attachments and is not addressed on the A B C screen Schedule A This section is required for all applicants filing to change their overall method of Schedule B 56 accounting It requires the entry of amounts as they were at the close of the tax year preceding the year of the requested change Leave blank any lines that aren t required for the entity s application In NOTE addition exclude amounts not attributable to the change in method of accounting for example amounts that correct a math or posting error or that correct errors in calculating tax liability The IRS requires a worksheet for lines la 1c 1d le and 1f of Schedule A When you enter an amount on any of these lines in Drake a CTRL W worksheet 1s automatically opened allowing you to begin entering the descriptions and amounts of multiple items for the worksheet When you close a CTRL W worksheet the program returns to the original screen and displays the total in the field The field is shaded default is red to indicate that a CTRL W worksheet has been use
35. Form 8586 Low Income Housing Credit depending on entries made to screens 8609 K1P and K1F Schedule K Screen Changes The screens for Schedule K Shareholders Pro Rata Share Items have been changed for more efficient data entry Changes include e Ifa form is required for a particular line the corresponding field has been replaced with a link to the screen for the required form For example an entry on line 10 Other Income might require that Form 6781 Gains and Losses From 2 Tax Year 2011 Drake Software User s Manual Supplement Before You Start Section 1256 Contracts and Straddles be completed Rather than include a field for this line on screen K the program now provides a link to screen 6781 e Ownership change dates originally located on a third K screen can now be found on the new OWN screen For more information about the OWN screen see Ownership Changes on page 19 Book Depreciation Schedules A book depreciation schedule will now be printed when the Carry book accumu lated depreciation amp amortization to Schedule L check box is marked on the L screen if a 4562 screen has also be completed Adjustment and Override Worksheets The Adjustment Worksheet and Override Worksheet are updated each year to help you understand what happens in the return when certain data is changed through the use of adjustment or override fields Figure 1 Book to tax depreciation adjustment Other Bowe 2 Book t
36. L epa AUR inde E Rd OR dera du AG RUE es 31 Lane 15 Other Expenses list 2a 420 pr Roe FEES ERE ABG WEEE KPA ee hea ene oe ESAE 32 Viewing Rental Activity Information 0 0 0 0 0000 eee hn 37 Credits and Adjustments leeren 33 IV Tax Year 2011 Drake Software User s Manual Supplement S Corporations Table of Contents EO NAN BANA he eee ene BANANA LUNI hee ea KEAN NABANG NAG NANA KA eens 34 Making an Blection nm Dike ua uae deae pa eae Ra ANA AA PU RC dol AAP o NAKAIN MAG 34 IJecHon SEE HIOHIS 2 xcudgeudeuou med eure nde qe NEDYOOA TOY N NGA LENG M Uu ONES Ku ees NG AN opa 35 Making Changes on the Fly eere 35 Suppressing Forcin MEMS caasa ede RP READ CPRESPASMEEI P PPATSCad Ray esp exa PP AYALA PASA 35 Overidino Other Setup OP ONS easque Daum X303 pues Hep 649465 wur LEAN KNB NN eae da Rire 36 EIBCITOBIE FIRE de dE MA KA oca 30 35 4 dict dead te d CE ae RR ded ey a ae a ee eee ee 37 Additional Return Types when Na xRtRRPGRA AORTA DRESS RAS ee AR APANG AK GAAN PNP LA KAPLO KNA 37 Common Bror C Odes cu osuere So dhe errea bu ssh eqs adc KNA Na ALI 38 Binary Attachments enhn 39 The ng BI Attachment Procesi AA AA AA 39 Printing Generated Documents nad AKA ob 65940044 base be eens be da PEERS SPUR NAGA 41 Importing Trial Balance Information 4 44 42 Preparing to Use Trial Balance Import AA 42 Preparing Financial Data for Import 0 00 ee eee e ee e
37. MT Current column Override regular depreciation Book if different Overrides the calculated book amount izo enerne elected this vear Federal Overrides Form 4562 Part line 6 column c and the amount p dinh for the WK S179L 179 expense elected this year Book if different ghia calculated book amount and the amount for the 562 Detail Override regular depreciation Federal Overrides Worksheet Override Location IEEE REEF Pocreen Line J Fie Name Location of Information Being Overridden 77 1120S Overrides Form 4562 line 12 If Method M is chosen there must be an entry made on line 179 expense elected this year or Method EXP must be used Overrides amount calculated for WK S179L convention in service during the year nie Overrides how the system calculates depreciation for the Life MACRS 9e Placed in Service and Like Kind Exchange Info h BO KASO tables and Method columns of the Depreciation Detail Listing 4562 Parti i ni the maximum of 179 expense for 2011 of 500 000 on ine 1 of Form 4562 5 Overrides the software calculated amount of section 179 current year property placed in service during the tax year 19 Overrides line 5 on WK s179L orm 3468 Computation of Investment Credit Qualifying advanced coal project credit Basis of investment in gasification for section determined by the code CA entered in the Investment credit 49A d S B i projects code drop list Qualifying advanced coal pro
38. Return Elections Sk 000r oe RB ANA Descrplion Cost basis amount years Date or year ending Other cost basis or amount Other date or year ending CMD en a A A AAN Other information Explanation YY ee ST T AAP LEE PP NT ICE S EY TEEN ae Figure 14 Return Elections portion of ELEC screen Making an Election in Drake 34 To indicate that the S corporation 1s making an election 1 Open the ELEC screen accessible from the Miscellaneous tab of the Data Entry Menu 2 Make a selection from the Election drop list Return Elections ENCBN a aaa an oe Mag 01 General Election Statement Descipion pg Capitalize and Amortize Circulation Costs over 3 Years Cost basis amount years 03 Capitalize and Amortize Research and Experimental Expenditures i E 04 Capitalize and Amortize Intangible Drilling and Development Date or year ending Sgt i qeu MP ree Mitos Kag GN EU SAY AA Ta ZS and po a e RR RM pes Figure 15 Election drop list 3 Complete all other fields as applicable Press F1 in any field to learn if a field is required for your selection and the type of information that may be needed For example the help text for the Other date or year ending field shows that the Tax Year 2011 Drake Software User s Manual Supplement Making Changes on the Fly field is required only for election options 15
39. These worksheets are also available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window Adjustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted E N o NC Income and Common Schedule K Items 4 Schedule K Most Common Items Interest income Adjusts the amount that flows from Form 6252 Se ee ule MOSESOIMONENS NENGEAULIIG Adjusts the calculated nondeductible expenses and limitations expenses other DED Deductions 14a maala Oo O Depreciation Adjusts the amount that flows from Form 4562 calculations Depreciation claimed elsewhere on return Other than Adjust the amounts carried to or entered elsewhere in the Schedule A return such as the Schedule A line 5 1 O1 Depletion do not deduct oil and gas depletion Adjusts the amount entered on the K1F screen line 9 code B Adjusts the amount that flows from Schedule F line 17 to this line Adjusts the amount that flows from Schedule F lines 23 a and 23 b Adjusts the amount that flows from Schedule F line 25 mah 8 Employee benefit programs mama DA N O 3 Interest expense 1 Pension profit sharing and other plans Repairs and maintenance Adjusts the amount that flows from Schedule F line 27 Adjusts the amount that flows from Schedule F lines 26 a and 26 b Adju
40. You would then need to obtain or complete the statements scan them into the computer save them as PDF documents and attach them to the return Importing Trial Balance Information Drake s trial balance import feature allows data to be imported into an 11208 return from a trial balance worksheet The trial balance template and importing function has the following benefits e Eliminates the need to duplicate entries e Reduces data entry errors by automatically importing data to the correct fields e Allows preparers to merge basic accounting functions with tax preparation NOTE A flow chart of the trial balance importing process is available as an appendix at the end of this manual Preparing to Use Trial Balance Import 42 The trial balance import function can be used only on returns that were created in Drake 2008 or later If you haven t already create a client file in Drake or update an existing client file from the prior year Like several other functions of the tax software this new feature requires Microsoft Excel version 2000 or later In addition take these actions to ensure the trial balance import works properly e Enable Macros The trial balance import function uses macros in Microsoft Excel Check your Excel settings to ensure that macros are activated and that macro security is set to medium To do so go to Tools gt Options in Excel and Tax Year 2011 Drake Software User s Manual Supplement Importi
41. a on a 4562 detail screen or enter the total depreciation on the override screens screens 6 7 8 and 9 Figure is from 1120S data entry menu Entering the remainder of the depreciation on the trial balance work sheet helps ensure that the balance sheet balances and provides a way to check that the amount on line 1 of Schedule M 1 is correct Compare NOTE the calculated line 1 at the bottom of the trial balance to the equivalent line on Schedule M 1 of the calculated return If the depreciation amounts match but the line 1 amounts differ an M 1 adjustment could be required Rental The following information applies only to S corporations with multiple rental proper Expenses ties The S corporation trial balances include lines for rental income and expenses Both rental expense items require a trial balance detail worksheet Account Title pent cred mportto Reportedom Cash L line 1 cold Form 11205 Sch L line 1 cal d Trade and accounts receivable L line 2a cal c Form 11205 Sch L line 2a cal c Form 11205 Sch L line 2a cal c x d maikli a it Me nu N a J Allowance for bad debts L line 2b cal c ee a E GAN i M PF c wc RENE Low xw PEE pa 2t r P ma pa 5 E PGH Lm T Tl teens oT bee T met TA Tee a TT a dec et te Doe muet UA i X E atti T id is 207 eu Lar ees ad line d ox s un Y E hal ical verte kd Tax exempt interest Bu k line 15a HE line 158 Hi ine Gr
42. aid on Certain Employee Tips should be entered on screen 8846 which is accessible via a link from the DED screen These amounts also appear on the Taxes and Licenses Attachment referred to on line 12 with the printed ATT STL reference Figure 4 a ee a rey 677 qs oaa Site hamir 77217707 YU eT Da cre ree ive w PEE XCTI ME bee eee eee AA a AA Oe Se oe a a 12 Taxesandlicenses aa a Cams STL a 13 Interest ais Bo a aa sa els AA PAP AA AA a ee sa hy ks it Ad ta AA ey a lali DEPEGRHOMDA GODS eR NGC CGI SAP alpawnere on return aftach OC A Figure 4 Notification on line 12 of the 1120S return that the Taxes and Licenses Attachment has been produced with the return To keep the notification from appearing on line 12 of the return go to the PRNT screen and select Suppress printing of form and attachment references State tax amounts income tax and franchise tax entered on the ES Estimated Taxes screen are carried to the tax computation ATT TAX worksheet The state tax amount carried from the ES screen may differ depending on which method of accounting cash or accrual is used Tax Year 2011 9 Income and Deductions Drake Software User s Manual Supplement Interest Using the 11208 instruction guidelines enter interest expense on the DED screen Note that the Interest expense field is an adjustment field Any amount entered here is combined with the amount if any entered in the Interest fields on scre
43. al Conditions on NOTES Pese 49 If you are already in the Trial Balance Import tool for the selected return go to the Trial Balance Import window in Drake and start at Step 3 of the following procedure To import a trial balance into a return 6 ba Open the return to which you will import the trial balance information Click Import 5 Trial Balance Import from the menu toolbar The preliminary Trial Balance Import dialog box is opened Click Next Enter or select the trial balance file to be imported If necessary click the button to the right of 1 Import File Name to browse to the proper folder By default each trial balance file is an Excel x1s file showing the client name and ending in TB for trial balance as shown in the example in Figure 32 See Naming Con vention on page 44 1 Import File Name C DRAKETIATBSPartnersInGrimeTB XLS a Figure 32 Selected file to import Select the Trial Balance Additional Import Options See Additional Import Options following this procedure Click Next and wait for the import to be completed Click Finish The program returns to the Data Entry Menu for the open return Note that all selected data from the trial balance worksheet has been imported into the return This can be seen both in the data entry screens and on the generated return If the program does not calculate the trial balance information as NOTE expected you can return to the trial balance
44. am and are prompted to update it When you update an 1120S return that was previously marked as final the program informs you that the return was marked final before prompting you to proceed Indicating an S Corporation If the corporation is electing as an S corporation for the first time it 1s necessary to indicate this in the program S Corp Onscreen 1 in the General Information section line A enter the date of election as Election an S corporation On line E enter the date incorporated Form 2553 Election by a Small Business Corporation is required if the entity is mak ing the election with the return In Drake use screen 2553 accessible from the Other Forms tab or by clicking the Form 2553 link on screen 1 If attaching a signed Form 2553 to the return as a PDF mark the NOTE Attaching Form 2553 as a PDF document box on screen 1 If not sent as a PDF the form must be mailed separately to the IRS before filing the tax return See Form 2553 instructions at www irs gov 1120 to To change a C corporation to an S corporation 1120 to 1120S 1120S Go to Tools gt File Maintenance gt Change File Type Enter the EIN of the entity Click Continue Select the new return type 1120S Click Continue to save changes Click OK pm a O NO m Header Information Screen 1 contains fields for the general information that is printed in the top section of page 1 of Form 1120S Name and Address Use screen 1 t
45. amount Entries for certain fields are sometimes included in the actual election statement other times they are included as separate lines Signature lines are printed as needed on some statements Making Changes on the Fly Use the PRNT screen to override program defaults Suppressing Forcing Items 1120S Items Tax Year 2011 To suppress the printing or production or force the printing or production of certain documents go to the PRNT screen and select the desired options Many on the fly changes override the options established in Setup These items can be forced forcing the program to generate the item on a return e Schedules L and M 1 35 Making Changes on the Fly Drake Software User s Manual Supplement K 1 Items e Form 4562 Depreciation and Amortization e Next year depreciation listing e Inactive return printed on first page of the 1120S e Preparer and officer signature on printed copy of return The following 1120S items can be suppressed kept from being generated on a return e Schedule M 2 e WK M2 Retained Earnings Reconciliation Worksheet e Form and worksheet references Form and worksheet references are for the benefit of the preparer and client but are not required for the tax return References appear on tax NOTE forms to clarify which worksheets available in View mode correspond to which calculations and which forms screens certain amounts are carried from Th
46. an the document to be attached to the return TIP Its a good idea to use the DDM scanning feature for this step 2 Save the document to your client s DDM file your computer s desktop or any where you can readily find it Many types of documents for instance documents created in Microsoft NOTE Word can be printed or saved as PDF documents if you have a PDF printer such as Adobe Reader installed Tax Year 2011 39 Binary Attachments Drake Software User s Manual Supplement Adding PDF To indicate in the software that a PDF document will be sent with the return Documents inDrake 1 Open the return in Drake From the Data Entry Menu click PDF Attachments or type PDF in the selector field and press ENTER KI 7 Scheuiile KY Shareholder Information PIN amp Pw did alus K1G Global Supplemental Information DD Direct Deposit PMT Electronic Funds Withdrawal Schedule L Balance Sheet j EE 1s Qverri L Assets L Liabilities and Capital SCH Balance Sheet Subsidiary Schedule FAQ Frequently Asked Questions PRNT Print Options Enter Screen State or City Code PDF Figure 20 Select PDF Attachments or type PDF into the selector field and press ENTER 2 Fill out the columns on the PDF Attachments screen See Table 3 for examples Table 3 PDF Attachment Window Columns Reference Source Name or number of regulation IRS Pub xxx 1 4 publication or form instruction that Form I
47. ar 2011 Schedule K Shareholders Pro Rata Share Items 18 Screen K which consists of two screens can be used to enter data for Schedule K Shareholders Pro Rata Share Items Note the K fields are primarily adjustment fields Tax Year 2011 Drake Software User s Manual Supplement Schedule K 1 for 1120S Shareholder Information Press F1 or use the right click menu to see what amounts are adjusted from else where in the program You can also find information on adjustment and override fields in the NOTE Adjustment Worksheet and Override Worksheet available through the FAQ screen Open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window Navigation Press PAGE UP and PAGE DOWN to navigate back and forth between the two K screens e Shareholders Pro Rata Share Items Income and Deductions e Credits amp Credit Recapture amp Foreign Transactions The most commonly used Schedule K items can be answered on the p INC screen If these amounts are entered there they do not need to be entered on the K screens Because charitable contributions are separately stated to the share holders there is no Charitable Contributions line on the 1120S return NOTE Charitable contribution information belongs instead on the Schedule K Enter charitable contributions in the bottom section of the INC screen or in the line 12a Contributions fields of the K screens Any co
48. ation is entered or if additional descriptions are required for the line press PAGE DOWN to access a new screen Statements The total amounts entered on the SCH2 screen do not show up on the actual L screen in the program They are however printed on the return as applicable with references to the corresponding statements The type of statement produced by the program depends on the selected line and the IRS requirements If a line is required a statement labeled STATEMENT is pro duced and is e filed with the return If a line 1s not required a statement sheet STMT is produced and is not e filed with the return Note that an e fileable STATEMENT is referenced in the return as shown in the example of Figure 11 Tax Year 2011 25 Schedule L Balance Sheet Per Books Drake Software User s Manual Supplement SCH2 and Trial Balance Autobalance 26 Select line number from drop list E OTHER CURRENT ASSETS Cash Trade Notes and Accounts Receivable Allowance for Bad Debts Inventories 4 U 3 Government Obligations 5 Tax exempt Securities 6 Other Current Assets STATEMENT 7 Loans to Shareholders 8 9 Mortgage and Real Estate Loans Other Investments STATEMENT l a Buildings and Other Depreciable Assets dbi ifle nde ee mago M ates ato tolo sape amt NG ds q LESS allowance TF eed debis vr cd v v IGVERTORES E Bee US government obligations Tax exempt securities see instr
49. chment is to be associated If an item begins with a number it refers to the part of Form 3115 for example 2 4e refers to Part II line 4e If it begins with a letter it refers to a particular Form 3115 schedule for example C2 b refers to Schedule C line 2b C2 5 refers to Schedule C Part 2 line 5 Explanation Enter the statement explanation If the explanation requires more than 900 characters press PAGE DOWN for a second screen If the explanation requires more than seven screens only the first 6 500 NOTE characters of the explanation are transmitted with an e filed Form 3115 There is no character limit for paper filed returns The ATT screen has a separate section to be used only for Part II line 10 The IRS requires that the attached statement in addition to providing an explanation include the taxpayer s name and ID number Enter the name and ID number and indicate if the ID number is an EIN in the applicable fields at the bottom of the ATT screen Figure 45 Far STM 2 10 Part ll Line 10 Statement ONLY Figure 45 Special section for entering taxpayer name and ID number for Part II line 10 located at bottom of the ATT screen Some Form 3115 items require the attachment of documents that cannot be created in Drake Software for example line 4d of Part II requires written consent from a direc tor You can however attach such a document to the form as a PDF See the PDF screen for directions on gen
50. d NOTE If nothing is entered in a Schedule A field the program automatically displays the word NONE in the field on the generated form This section has just two lines both referring to the request for deferral for advance payments Tax Year 2011 Drake Software User s Manual Supplement Form 3115 Application for Change in Accounting Method Schedule C Schedule D Parts and II Schedule D Part Schedule D Part Il Tax Year 2011 Line 1 Request change to the deferral method for advance payments from sec tion 5 02 of Rev Proc 2004 34 Line 2 Request change to the deferral method for advance payments from sec tion 1 451 5 b 1 11 See IRS Form 3115 instructions for more information on making these requests This section has two parts e Part I General LIFO Information This section is made up of attachment links see Figure 44 on page 60 If any of the conditions on lines 1 6 match the entity s situation click the corresponding attachment link to access the ATT screen where you can complete the required statement Select the corresponding line code from the Schedule drop list on the ATT screen e Part II Change in Pooling Inventories Enter the descriptions of the contents and the base years of the present and proposed pools If any of the conditions on lines 2 4 match the entity s situation click the corresponding attachment link to access the ATT screen where you can c
51. d Printing Generated Documents Tax Year 2011 In some instances Drake generates a document that must be printed signed and scanned back into the computer to be attached to the return For example if Form 2553 Election by a Small Business Corporation is present in an S corporation return message 1513 1s generated when the return is calculated 41 Importing Trial Balance Information Drake Software User s Manual Supplement 1513 ATTACH FORM 2553 The check box for Attaching Form 2553 as a PDF document on screen 1 has been marked but no Form 2553 has been attached Form 2553 must be prepared and attached before the return can be e filed To prepare Form 2553 for attachment Ensure that the 2553 screen has been completed in data entry Calculate the return In View Print mode select and print Form 2553 Have all shareholders sign the form Ae UC NH To attach the signed Form 2553 to the return 1 Scan the signed form and save it as a PDF document 2 Go to View mode of the return 3 Attach the scanned PDF document to the return using the PDF icon at the top of the screen For detailed instructions on attaching this form to a return go to the FAQ screen and click Attaching Form 2553 as a PDF Document N anth giair po Mone AA eT ae n at nage aa nhi m toman po mt TERN am nain fttt aat e Figure 23 EF message page As shown in Figure 23 the EF Message states that attachments are required
52. d Expenses of a Partnership or an S Corporation To make entries in Drake use the 8825 screen If there are multiple 8825 properties press PAGE DOWN for a new 8825 screen Use one screen per rental property If a return has more than one 8825 screen the program reports each property s information on a separate column of Form 8825 up to eight properties can be included on a form Data from all 8825 screens are transmitted to the IRS when the return is e filed NOTE Special steps are required if using the trial balance worksheet for multi ple rentals See Rental Expenses on page 51 Line 14 Depreciation Carrying Information to Form 8825 Tax Year 2011 If the program is calculating depreciation entered on the 4562 screen for the property listed on Form 8825 do not enter the depreciation on the 8825 screen Depreciation should be entered only if it is figured outside of the Drake program and then the net results should be entered on screen 8825 The amount entered on line 14 is added to the depreciation calculated from the 4562 screens NOTE Form 4562 is required for assets placed in service during the year To indicate that the information should be carried to Form 8825 select 8825 from the For drop list on screen 4562 If there are multiple 8825 screens use the Multi form code box For information on using the Multi form code box see the Drake Software User s Manual Tax Year 2011 31 Rental Activities Drake So
53. d amounts entered on K3 screen for line 16c for nondeductible expenses and officer life insurance premiums Expenses recorded on books this year not included on Schedule K lines 1 through 12 and 141 or 14m Other Income recorded on books not included on Schedule Adjust the amounts entered on screen 3 line 16b and from K lines 1 through 10 Other Schedule K screen line 16b for officer life insurance proceeds o chedule M 2 Analysis of Accumulated Adjustments Account 3 a Other additions Adjusts the amounts that flow from Schedule K line 10 Adjusts amounts flowing from screen 3 line 16b officer life 3 b Other additions insurance proceeds and amounts entered on Schedule K line 16b for tax exempt interest Adjusts the sum of the amounts coming from Schedule K line 5 a Other reductions 11 Schedule K line 12d Other Deductions S and Schedule K line 16c Nondeductible expenses Adjusts amounts from screen 3 line 16c or Schedule K screen 5 b Other reductions 2 l 3 line 16c Officer life insurance premiums Adjusts amounts from screen 3 line 16d and from Schedule K Non dividend distributions line 16d subject to limitations due to negative amounts on line 6 or both lines 6 and 1 7 a 4562 Parti Carryover of disallowed deduction from prior year Adjusts amounts from the 4562 screen orm 5884 Work Opportunity Credit Work opportunity credit from pass through entities Adjusts amounts fro
54. d to Form 8825 lines 20a and 20b No entry is required on the 8825 screen Viewing Rental Activity Information Rental activity data is viewed on the 8825 forms and accompanying statements e 8825 Forms The two page Form 8825 can contain information for up to eight rental activities Each Form 8825 in View mode contains up to eight rental activities If more are entered a second Form 8825 is created 32 Tax Year 2011 Drake Software User s Manual Supplement Credits and Adjustments 11205 PG2 11205 PG3 11205 PG4 Rental activities 1 6 Rental activities 5 TATMENT starting at 9 WK M2 FOLDA FILEINST LETTER PRIVACY BILL SUMMARYS COMPARES PEFEPEPEPEPEPEPEEEF Figure 13 Multiple 8825 pages are created 1f more than eight rental activities The Form 8825 in View mode consists of one or more pages depending on the number of rental activities listing up to four rental activities per page If more than four rental activities are entered scroll down to the second page of the Form 8825 when viewing e 8825 Statements Statements are titled STM 8825 XX where XX equals the instance of the 8825 screen For example the statements for the first and second 8825 screens would be labeled STM 8825 01 and STM 8825 02 respectively There are also 8825 attachments 8825 ATT for other report ing information Credits and Adjustments Certain credits require an adjustment to either income or expenses The program car ri
55. de P corporations estates and trusts orm 8909 Energy Efficient Appliance Credit Energy efficient appliance credit from partnerships S An entry here adjusts amounts being carried from 24 corporations estates trusts and cooperatives the K1F screen line 13 code S chedule F Farm Income Informational Purposes Only Adjusts amount being carried from screen 9 calculations for 10 Car and truck expenses automobile expenses Amount is carried from Form 4562 calculations RENT Rental Other than Real Estate Tl TI TI TI T1 Tl Tl TI Qo TI TI o Adjustments Worksheet Field Name Location of Information Being Adjusted 1120S WT Adjusts depreciation amounts calculated by the program from 15 Depreciation entries on the 4562 screens Form 8825 Rental Real Estate Adjusts the depreciation calculated from the 4562 screens Form 8903 Domestic Production Activities Deduction 7 Qualified production activities income from pass Adjusts amounts from K1P screen line 13 code U and K1F through entities screen line 14 code C Form W 2 wages from pass through entities Adjusts amounts from K1P screen line 13 code V and K1F screen line 14 code D Drake Software User s Manual Supplement S Corporations Appendix C Override Worksheet Tax Year 2011 The Override Worksheet is updated each year to help you understand what happens i
56. des amount carried from ES screen TH General Info am i Nr o1 Overrides amount flowing from Form 3115 section A line 1h TH Tl TH Form 8716 Other Than Required Tax Year Election oU Form 8822 Change of Address DSSS SS ea 6 New mailing address Overrides information entered on screen 1 V2 8 Daytime phone number jOverrides information entered on screen 1 Cd Form 8873 Extraterritorial Income Exclusion MEME Form 8925 Report of Employer Owned Life Insurance Contracts 6c Type of business Overrides information entered on screen 1 Cd Client Bill Adjustments and Payments KC EN c Billing option overrides what is set up in options Override the option selected in Setup 5 Options Billing tab pl e ai i i Override the option selected in Setup gt Options Billing tab Date to be printed on bill Overrides current date Drake Software User s Manual Supplement Tax Year 2011 Drake Software User s Manual Supplement S Corporations Index Numerics 52 53 week year returns 37 A accounting method changing 52 62 entering 6 accumulated adjustments account Schedule M 2 29 address change of 5 e mail 18 entering on Form 1120S 4 foreign 21 on K 1 letter heading 23 out of state 18 adjusted basis worksheet 24 36 adjustments depreciation 27 sectio
57. e following K 1 items can be forced forcing the program to generate the item on a return e Shareholder s adjusted basis worksheet WK SBAS e K I codes page 2 of the Schedule K 1 The following K 1 items can be suppressed kept from being generated on a return e Related documents Schedule K 1 K 1 cover letter K1 ATT worksheet for K 1 statement overflow and shareholder s adjusted basis worksheet WK SBAS e Marking of Amended K 1 box on printed Schedule K 1 e KI DIST worksheet Overriding Other Setup Options 36 Filing instructions and envelope coversheets can be either forced or suppressed from the PRNT screen to override the global setting in Setup The PRNT screen also includes options to disable autobalance see Autobalance on page 26 calculate the Form 2220 penalty and prepare an extension Form 7004 based on the data entered on screen 1 see Filing an Extension on page 14 Tax Year 2011 Drake Software User s Manual Supplement Electronic Filing Electronic Filing Steps for e filing Form 1120S are the same as for e filing Form 1040 with the excep tion of bankruptcy returns which must be paper filed S corporations with 510 million or more in total assets that file 250 or more returns a year are required to e file their Form 1120S returns NOTES Every 1099 W 2 940 and 941 form that is filed is counted as part of the 250 return threshold For example if a corporation filing an 1
58. ee ese ys 6 Cost of Goods Sold Form 1125 A 0 0 s 6 Ordinary Gains and LOSSES maa acod amer der de n ooo eee se RESCUE ndr eh abe EUR HE qe s 7 Une Comic LOS e anc aes P3 Ead qu Ida AA 7 Compensation and WIES cam kh NAAN ee S RR nine ae dE RR CR E a RR RAYE ec utes aca eue iced 8 Repairs and Maintenance i eom deor rae wae Pe eeu a deer dre NGA RE TAAS ded rin 8 Ie AB CA AA 9 i nce c2ccae apace aus meee ees NOUWE NANANG NDN oes ae Gere LAAN Rees NOAAANG Na GL ees as 9 Taxes and Licenses conc Soe NON eicere m dentur dead ng nh heen see hound HA NA hem es AK Ae heeds 9 liii naka oda GA ANAL o sae dad od goin e et ou wees ee OE Aad ee anew es 10 Depi ealon 44 464 dtd ex ch AKA Fede ede one ede eens tee ek elemento ees T dard 10 BG HOD coca ae ae HE SAE Ge Hae a ns AAP APERTE 10 NEGA NG a NG AA Gee bE JA RE as Doe oh gan AGA Fo eS Ban eens ee er es 10 Pension dtd PONG NUNG 4 acce d vucdero s one dos neues oda Ses vu de LUKO ar dun aed ees Bee GUDANG 10 Employee Benefits Program cesa KA ee 3 9 KGG 179 9 8 4 9t in SAE Row AL eh ESA KPAG Ka 11 Other TUGQUCLIORIS AA PA AA AA 11 Foe anm Paves ow cee ed aca ks MAD PBA KK AWA KS GANA 3 BEN EY RAY WA 11 Net Passive INCOMIG osos ew PANG GERA NAA EROS ULA BINA NATO LED eda INO ree YANA Rd Ed 11 SAna AA AP O 12 DOLLE maed lak AP a a E EEEE A 12 Payments With EXCODSIOfIS x 2 5 909 9999 AKMANG kA anto 39 qo KG EG RC E AL RO a e ar eto ens 12 TEP LII AA AA APA 12 Estimated Taxes P rne 12 EspmatedPaymen
59. ee nee 44 Entering Financial Data sse woos ee ae eee DINALA BA doh he esd oh wet RR DELO AA PAA 46 PaO ANC AA AA 48 Importing Data MoA ReMi e as eae dE SS ENSE NGA ICGuveRcu She SS NAA ROE RRS AA So PSP 48 Special CORON 52 29 sre excu baths 8a S64 UE RAPERE NBA DIGNA KID dac See doe ie HAAN 49 Form 3115 Application for Change in Accounting Method 52 Accessing Screens for Changing Accounting Method 0000 cece eee eens 53 Form OTS O AA dng TII 54 Jut P 59 E GIOI NERTETERTTTTT REST TOR TO TOTO TL TT TT 60 Appendix A Trial Balance Import llelen A 1 Appendix B Adjustment Worksheet esllles B 1 Appendix C Override Worksheet 20 cee eee C 1 io ea ee vii Tax Year 2011 V Table of Contents Vi This page intentionally left blank Drake Software User s Manual Supplement S Corporations Tax Year 2011 S Corporations 1120S The basics of data entry for an S corporation 1120S return are the same as for a 1040 return Field and screen level help shortcut keys and navigation throughout data entry all function as they do in the 1040 See the Drake Software User s Manual Tax Year 2011 for the basics of using the program What s New in Drake for S Corporations Drake programs its tax software according to the latest IRS rules and regulations The 2011 program reflects a
60. een to be reported to the shareholders regardless of the Schedule M 2 limitation The AAA cannot be negative as a result of distributions but it can be negative 1f it arises from losses Column B Other Adjustments Account 30 Use column b to enter any amounts you want printed in the corresponding column in the printed return Officer life insurance and applicable tax exempt income flows to Tax Year 2011 Drake Software User s Manual Supplement Rental Activities Schedule M 2 column b Other adjustments account line 5 All other amounts such as expenses must be entered manually on the M2 screen Column C Undistributed Taxable Income Previously Taxed The total of column c cannot be negative This column is active in an 1120S only if the entity was ever a C corporation thus having earnings and profit E amp P or if it was a pre 1983 S corporation By design Drake does not allow negative numbers in col umn c If a corporation becomes an S corporation and has net operating losses NOLs the NOL is not generated for the return because it cannot be carried to an 1120S the IRS does not want the NOL to be used by the shareholders to offset income it either runs out within the years allowable for the NOL by statute or is used if the S corporation terminates its S status within those years Rental Activities Income and expenses for rental real estate properties appear on Form 8825 Rental Real Estate Income an
61. eens in data entry now contain the figures entered on the trial balance worksheet 5 Enter the amounts on additional screens that require details For more informa tion on data that cannot be imported see Special Conditions on page 49 6 Compare the M 1 line 1 amount on the trial balance to the M 1 line 1 amount on the calculated return to ensure that they match If the amounts do not match review the imported amounts to ensure NOTE that all data was imported If the data appeared to import correctly an M 1 adjustment could be necessary 7 Complete all 8825 or RENT screens in data entry as applicable for the individual rental properties or items 8 Delete the 8825 and RENT screens that were imported from the trial balance the screens reflecting the total rental expenses To delete a screen in data entry open the screen and press CTRL D If NOTE a multiple forms list appears ensure that the screen to delete is selected then click Delete Form 3115 Application for Change in Accounting Method 52 Form 3115 Application for Change in Accounting Method is an application to the IRS to change either an entity s overall accounting method or the accounting treat ment of any item Drake customers can fill out Form 3115 and related schedules and attachments for corporate returns This section provides instructions for completing this form and related schedules and attachments in Drake In some cases Form 3115 must still be pap
62. elect B the corresponding box on Form 3115 will be left blank and an attachment will be required explaining why the line was left blank Select nothing If you select neither of the above options N A will appear in the corresponding box on Form 3115 No attachment is necessary for a box marked N A are ficus dd Ted bhe ar purrbozrre s a rosca ec oh Eras a da MAAM SE CONTE dre nana Ay Troad ea to the Eu a a A ML required Attach an explanation for boxes that are not checked Direct material a ee Direct labor no mon omonom mmm on mon son sonos on Won om on ow om som mom mu Indirect labors e e x x n n mom momom omm om omn mom mon hom om on mon mom moms mom m mw n Officer compensation not including selling activities riiritrnRm Pension and other related costs ee Iso E A Figure 41 X was selected for column 1 line 1 B was selected for column 1 line 2 nothing has yet been selected for any other line See also Figure 42 To attach a statement for section B or C click the D3 2 Attachment link at the top of Section B See Figure 42 A single statement may contain all necessary explanations for sections B and C 58 Tax Year 2011 Drake Software User s Manual Supplement Form 3115 Application for Change in Accounting Method Parts Ill Parts Il IV A B C D Parts Il D Part Ill Form 3115 Schedule D Part I
63. en F Depreciation Enter depreciation on the 4562 screen Select a form from the For drop list to associ ate the depreciable item with the correct form or activity Data from the 4562 screens is calculated and carried to Form 1120 and to the selected schedules or forms For more information on depreciation and the 4562 screen in Drake see the Drake Software User 5 Manual Tax Year 2011 Line 14 Line 14 of Form 1120S is reserved for depreciation that 1 is from Form 4562 and Depreciation 2 is not claimed on Form 1125 A or elsewhere While the program pulls data from the 4562 screen for this line it also provides field 14b on the DED screen specifically for depreciation that is claimed elsewhere Both lines 14a and 14b on the DED screen are adjustment fields Line 14a See field level help for further instructions and information on how this field ties in to Form 4562 Line 14b Drake recommends entering depreciation on the 4562 screen and then selecting COGS from the For drop list at the top of the screen You can also use screen A rather than the DED screen to enter depreciation claimed on Form 1125 A An entry on screen A adjusts any entry on line 14b of the DED screen and is calculated into the total deductions for page 1 of the 1120S If there is an entry on line 14b but not on screen A only the line 14b amount will be calculated into total deductions Depletion Enter depletion amounts on the DED screen Omit timber
64. en and else where in the program but most information is carried to the M 2 automatically See Entering Distributions following Schedule M 2 represents a corporate picture of the income losses and distributions to shareholders and tracks tax free distributions and helps determine if excess distribu tions might be taxable to shareholders If a shareholder receives more in distributions than he or she has in basis the result might be taxable Entering Distributions Code Section 6037 states that an S corporation return must report the amount and date of distributions made to each shareholder The DIST screen is used for entering date and distribution amounts for Schedule K line 16d Distributions In addition to line 16d the total from the DIST screen may flow to Schedule M 2 line 7 subject to lim itations and to the Schedules K 1 based on the shareholder s ownership percentage Schedule K 1 distribution information 1s displayed on the KI DIST worksheet pro duced with the return Column A Accumulated Adjustments Account Tax Year 2011 The Accumulated Adjustments Account AAA column generally reflects the S cor poration s accumulated undistributed net income after 1982 Non dividend distribu tions flow to Schedule M 2 from Schedule K line 16d An entry in the Non dividend distributions field line 7 of the M2 screen adjusts the amount from the K screen subject to limitations see balance sheet examples on the followi
65. entered in the Investment credit or energy placed in service during 2009 vy code drop list Energy Credit Qualified fuel cell property Basis of Overrides the cost entered on the 4562 detail screen as 12c determined by the code EC entered in the Investment credit property installed code drop list Energy Credit Qualified microturbine property Basis of Overrides the cost entered on the 4562 detail screen as 12i determined by the code ED entered in the Investment credit property installed code drop list 179 expense ALLOWED this year Federal lt D ium Ss Q D n Lam si gt D O O n Fr D 5 mp D D Q O 2 ond 3 D n Qi o N Q D ccp B n O D D z D n TH jab Qualifying gasification project credit Basis of investment property not included in a above ar on C1 o O A CO Rehabilitation property Certified historic structures in vm the Gulf Opportunity Zone Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit 2 Alcohol 190 proof or greater Overrides the default rates Refer to form instructions 38 Alcoholless than 190 proof Overrides the default rates Refer to form instructions 2 3 4 O lt D D o D 3 O c 2 e n A O 3 A Tl o O D D 2 5 D Co Q O Q D r Set Poneto eeuced ane DOO MSIE Overrides the default rates Refer to form instructi
66. er filed See Parts and Ill starting on page 54 for details NOTES Applicants filing Form 3115 must refer to the Internal Revenue Bulletins available at www irs gov to determine if the IRS has published an accounting method revenue procedure revenue ruling notice regula tion or other guidance relating to the specific method to be changed See Pub 538 Accounting Periods and Methods Tax Year 2011 Drake Software User s Manual Supplement Form 3115 Application for Change in Accounting Method Accessing Screens for Changing Accounting Method Several screens may be required to complete Form 3115 These screens are accessible from the Change in Accounting Method box located under the first Other Forms tab of the Data Entry Menu Figure 37 General Assets Sales Recapture Credits mds F Farm Income and Expense 7004 N Schedule N 8027 8082 Schedule K 1 Received 8283 KiF Schedule K 1 from a Fiduciary KIP Schedule K 1 from a Partnership RENT Rental Non Real Estate 554 Application for Employer IDs 982 Debt Discharge 2220 Underpayment of Estimated Tax 2553 Election as Small Business Corporation 2848 Power af Attorney Change in Accounting Method 3115 Change in Accounting Method 311E Schedule E ATT Explanations and Attachments ATT2 PtliLn 12 amp PHI Ln 23b Attachment M TS P ae rr aud Figure 37 Screens for Form 3115 Application for Change in Accounting Method The screens accessible f
67. er than lines 4a and 7 Note that lines 5 and 6 are links to required attachments e Schedule E Line 7 Present Method and Schedule E Line 7 Proposed Method For the line 7 sections enter information on the Present Method and Proposed Method in the supplied text boxes and choose the applicable conven tion from the Applicable Convention drop list Options are as follows e HY Half Year e MM Mid month MQ Mid quarter e S L Straight line Attachments Attached statements are required for many Form 3115 items Depending on the nature of the attachment you will attach statements to the form in one of two primary ways e From Data Entry The ATT screen is the most common screen for attaching statements to Form 3115 The ATT2 screen is used for Part II line 12 and Part III line 23b See the Parts I and III and Parts II and IV sections of this docu ment for more information on completing the ATT2 screen for these items e From View Mode Used for PDF attachments ATT Screen There are two ways to access the ATT screen in Drake Attachments From the Data Entry Menu In the Change in Accounting Method section of the Other Forms tab click ATT See Figure 37 on page 53 From the line that requires an attachment As shown in Figure 44 some lines have attachment links Click an attachment link to open the ATT screen Schedule C Changes Within the LIFO Inventory Method Part
68. erating and attaching PDFs Click the Screen Help button for directions on converting other types of documents into PDF Do not enter data on the PDF screen itself If using the directions pro vided on that screen skip Step 2 which instructs you to fill out the col NOTES umns at the bottom of the PDF screen A PDF document may be attached using any filename When you attach the document the program automatically assigns it the filename required by the IRS When the return is generated an EF Attachments worksheet is produced See Figure 46 This worksheet shows in table format the Reference section of Form 3115 the Description and the IRS required Filename of each required PDF docu ment This worksheet is displayed as EF PDF in View mode 61 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Supplement KEEP FOR YOUR RECORDS CF MES EF Attachments Name of corporation PARTHERS IH GRIME CLEANING Reference Description Filename 3115 III Line 70 Proposed Change Documents ProposedChangeDocuments pdf 3115 A I Line 3 Proposed Change Documents SchAPartIProfitLossStatements pdtft Qe TREE CART 0 WF Pa NA CN ge eee Aa BI be ad nl m hs Figure 46 Example of an EF Attachments worksheet Notices of Inaddition to Form 3115 and related schedules and statements the program produces Missing EF message pages as applicable when the return is calculated All forms schedules Attachme
69. erences in the balance sheet These dif ferences can come from amounts entered incorrectly but are usually the result of one of the following causes e Anasset was deleted from the 4562 screen Depreciation Detail instead of being indicated as sold e Beginning inventory amounts were adjusted on screen A or ending inventory amounts were entered incorrectly Tax Year 2011 Drake Software User s Manual Supplement Schedules M 1 M 3 Reconciliation of Books Return e Amounts were erroneously deleted from or changed on screen L To reconcile the differences it is best to compare the corporation s beginning and end ing balance sheet amounts for the tax year To deactivate the autobalance feature for a specific return go to the PRNT screen and select Turn off autobalance Schedules M 1 M 3 Reconciliation of Books Return Schedule M 1 Depreciation and Amortization Adjustments Tax Year 2011 Schedule M 1 is required if the balance sheet s total assets at the end of the year are greater than 250 000 Schedule M 3 is required if the balance sheet s total assets at the end of the year equal or exceed 10 million If the S corporation is filing Schedule M 3 and there are entries on the NOTE M1 screen it s best to delete the M1 screen To do so open the M1 screen and press CTRL D Schedule M 1 shows all items of income and expense that are not subject to tax plus those accounting items that are not income tax items
70. es the required adjustments to the appropriate line of the return and to either Sched ule M 1 or Schedule M 3 Manually reducing the expenses or deductions or increasing the income for these credits causes the return to be out of balance Adjustments are made to other income for the credit amounts for the following cred its e Form 6478 Alcoholic and Cellulosic Biofuel Fuels Credit e Form 8864 Biodiesel and Renewable Diesel Fuels Credit e Form 8912 Credit to Holders of Tax Credit Bonds interest income Adjustments are made to the appropriate deduction or expense for the credit amounts for the following credits Form 5884 Work Opportunity Credit e Form 6765 Credit for Increasing Research Activities e Form 8820 Orphan Drug Credit Tax Year 2011 33 Elections Elections Drake Software User s Manual Supplement e Form 8845 Indian Employment Credit e Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Cer tain Employee Tips e Form 8881 Credit for Small Employer Pension Plan Startup Costs Form 8844 Empowerment Zone and Renewal Community Credit e Form 8912 Credit to Holders of Tax Credit Bonds e Form 8932 Credit for Employer Differential Wage Payments e Form 8941 Credit for Small Employer Health Insurance Premiums The ability to make certain tax elections is included in the business packages Elec tions are selected from the Return Elections section of the ELEC screen Figure 14
71. ethod principal business activity and product or service on screen 1 This information questions 1 and 2 of Schedule B flows to Schedule B Use screen B to answer questions 3 8 of Schedule B If the S corporation owned directly or indirectly 50 or more of the voting stock of a domestic corporation click the B3 link to enter information about the domestic corporation owned You can enter information for up to 15 corporations per B3 screen to add more click PAGE DOWN State specific Information Resident The program automatically generates a return for the corporation s resident state Use State screen 2 to enter company information as it should appear on the state return The company information fields on screen 2 apply for the resident state NOTES o The link to screen 2 now appears under the States tab or enter 2 in the selector field and press ENTER Company information includes the type of return that applies for state purposes con solidated composite controlled group multi state and state specific dates and num bers for identification Other States Data for other states must be entered manually in state data entry To access state data entry select the States tab from the return menu and choose a state Multi State New for 2011 Enter sales payroll and property factors on the APPT Multi State Appor Apportionment screen accessible from the States tab or by entering APPT in the tionment selector field and pres
72. eturns 5 signatures electronic 15 state address 18 specific information 16 tax refunds 8 13 tax and payments 11 12 on fuels credit for 7 returns see returns years fiscal vs calendar 5 taxes and licenses 9 termination of S election 5 trial balance import and depreciation 7 and Schedule L 25 26 instructions for using 42 52 U underpayment of estimated tax 12 undistributed taxable income previously taxed 31 updating an 11208 return 3 shareholder data annually 24 V Vista Windows operating system 43 vouchers 12 Index Drake Software User s Manual Supplement S Corporations wages 8 X Tax Year 2011
73. f the entity is filing a full calendar year return If filing a short year return other than an initial or final return you will need to pro vide an explanation To do so go to the ELEC screen and select an explanation from the Other short year reason drop list The explanation will be displayed at the top of the first page of the tax return If you do not select an explanation an EF message will be generated with the return and the return cannot be e filed For more information on short year explanations see IRS Pub 4163 NOTES The program may not correctly calculate depreciation gains or losses for a short year return Depreciation for a short year return can be entered on screen 4562 and or screens 6 7 8 and 9 Boxes A through Tax Year 2011 Enter most information for boxes A through I top of Form 1120S on screen 1 Note that boxes C M 3 attached and F Total assets are completed automatically by the program based on data entered elsewhere Other boxes are e Box A S election effective date e Box B Business activity code From screen 1 choose a code from the line B drop list or click in the line B field and press CTRL SHIFT S to search for a code e Box D Employer Identification Number EIN program uses setup data as default e Box E Date incorporated e Item G Indicates first year as S corporation and inclusion of Form 2553 with return tem H Check boxes for fina
74. field on screen 4 Estimated Payments for 2012 Use the ES screen for 2012 estimated payments To enter the amount to be credited used the OP to 2012 field Note that this information will be overridden by any entry in the Amount to be credited to next year s estimated tax field on screen 4 Underpayment of Estimated Tax For underpayment of estimated tax complete all applicable fields on screen 2220 12 Tax Year 2011 Drake Software User s Manual Supplement Direct Deposit of Refunds Direct Deposit of Refunds The IRS requires that Form 8050 Direct Deposit of Corporate Tax Refund be submit ted with an e filed return in order for a corporate refund to be directly deposited To complete this form in Drake use the DD screen Figure 5 Federal Account and State if same as Federal Deposit selection Federal selection iz State city selectian m Name of financial institution RTIN Account number Type of account Checking Savings Repeat Account Information Checking Savings Figure 5 Federal section of DD screen also 8050 screen When filling out the DD screen e If the federal refund is to go to the account listed select Yes for the Federal Account selection otherwise select No Default is Yes e Jfa state refund is to go to the account listed select the state abbreviation from the State city selection drop list e Enter the name of the financia
75. for more information on using detail worksheets in the trial balance Preparing Financial Data for Import To prepare the financial data for importing into the return the data must be entered into Drake s specially designed trial balance template Once this information 1s entered and saved it can be imported into the return Openinga The first step in preparing financial data for importing is to open a trial balance tem Template plate for the return and enter the financial data To open a trial balance template for a return i 1 Open the return to the Data Entry Menu rw Click Import gt Trial Balance Import in the menu toolbar The preliminary Trial Waah Balance Import dialog box is opened 3 Click Create New or Open Existing If opening an existing file click Open after selecting the correct file 4 Ifa Security Warning box appears click Enable Macros In Microsoft Vista and Windows 7 you will see a Security Warning NOTE message with an Options button Click Options to open the Security Options dialog box then select Enable this content Click OK The trial balance template 1s displayed in Microsoft Excel Naming Whenever a new template is opened the tax software assigns it a default file location Convention and name Trial balance templates are saved in the TB folder of your Drake11 soft ware The file name consists of the client name as entered in Drake plus TB for trial balance plus the
76. from on the 4562 detail screen or the 10b a Less accumulated depletion Overrides calculations from on the 4562 detail screen or the 10b c Less accumulated depletion 12 b Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen 12 d tand Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the 13a a l aa pangpiga Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the 13a c l m Mn add Subsidiary Schedule for the Balance Sheet SCH2 screen E Overrides calculations from on the 4562 detail screen or the 13b a Less accumulated a t Me um Overrides calculations from on the 4562 detail screen or the 13b c Less accumulated amortization Overrides Worksheet Override Location CC 9creen Line Field Name Location of Information Being Overridden 1120S Schedule M 1 Reconciliation of Income Loss per Books with Income per Return 3 Expenses recorded on books this year not included on Overrides the amounts carried from the Schedule K lines 1 12 schedule K line 1 12 and 141 or m and 141 or m Deductions included on Schedule K line 1 through 12 Overrides the amounts carried from the Schedule K lines 1 12 and 141 or m year chedule M 2 Analysis of
77. ftware User s Manual Supplement Form 4562 p 3825 11205 COGS 8825 RENT F i X Multi form cade 1 999 1 is assumed if left blank Date Acquired Cost Basis 4 rental units 01 01 2010 554433 1 Figure 12 In this example the program will carry the 4562 information to the third 8825 screen created Any depreciation information entered on the 4562 screen is carried to the correct Form 8825 based on the form and multi form code selections at the top of the 4562 detail screens When selecting a multi form code note that the code should refer to an 8825 screen not the 8825 form For example data from the third 8825 screen will be generated on the first Form 8825 To IMPORTANT associate an asset with that information you would enter a 3 for the screen not a 1 for the form in the Multi form code box For more information on Form 8825 see Viewing Rental Activity Information below Line 15 Other Expenses list Enter meals and entertainment subject to 50 limit in the appropriate field on line 15 of the 8825 screen To enter additional other expenses begin typing into the Addi tional other expenses field to open a Detail CTRL W Worksheet Enter descriptions and amounts on this worksheet A statement from each 8825 property is printed with the return and is submitted to the IRS when the return is transmitted Use the K1P screen to enter rental income the S corporation receives on a K 1 This amount is carrie
78. he total depreciation that is carried to page 1 of Form 1120S For Other costs excluding depreciation use a CTRL W worksheet The depreciation amount is included on the statement for other costs and should not be included in the Other Costs worksheet NOTE Line 14b on the DED screen is for Form 4562 depreciation that is not entered on screen A or elsewhere on the return Importing Ifusing the trial balance import feature see Importing Trial Balance Information on Trial Balance page 42 enter depreciation amounts directly into the appropriate fields on the trial to Form balance worksheet not into the fields in data entry When the trial balance 1s imported 1125 A the COGS depreciation expense amount flows directly to the appropriate line of Form 1125 A and is calculated accordingly Ordinary Gains and Losses The amount on line 4 Net gain loss from Form 4797 Part IL line 17 of Form 1120S flows from Form 4797 Amounts can also flow from screen 4562 but only if that screen shows assets sold and property type Other Income Loss Enter all amounts for line 5 Other income loss on the INC screen INC screen data is displayed on attached statements in View mode Amounts from the following screens also flow automatically to line 5 e 6478 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit e 8864 Form 8864 Biodiesel and Renewable Diesel Fuels Credit Additional fields on the INC screen include e Amount of credi
79. ject credit Basis of Overrides the cost entered on the 4562 detail screen as investment in coal based generation for section determined by the code entered in the Investment credit code A 3 B ii projects drop list Overrides the cost entered on the 4562 detail screen as determined by the code entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as Rehabilitati Pre 1 ildings in th If ue Poet E a AE a determined by the code RA entered in the Investment credit Opportunity Zone code drop list Overrides the cost entered on the 4562 detail screen as 11g Rehabilitation property Other pre 1936 buildings determined by the code RB entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as determined by the code RC entered in the Investment credit code drop list Rehabilitation property Other certified historic Overrides the cost entered on the 4562 detail screen as J structures determined by the code RD entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as 12a Energy Credit Basis of property using geothermal determined bith de TEA enteredinthel t t credit energy placed in service during 2009 etermined by the code EA entered in the Investment credi code drop list E 4 IOverrides the cost entered on the 4562 detail screen as 12b eec ape JANG aman determined by the code EB
80. l Qualified Subchapter S Trust QSST Election Overrides the entry made in Part line H Title on screen 2553 Officer title for signature section orm 3115 Change in Accounting Method General Information Principal business activity code l number Overrides entry made on screen 1 Tax year of change begins Overrides entry made on screen 1 General Info Tax year of change ends Overrides entry made on screen 1 General Info Contact person s telephone number Overrides entry made on screen 1 General Info Parts Il IV Section Net Section 481 a adjustments for the year of change orm 7004 Application for Automatic Extension for Form 1120S i i m m 112 1 li 6 Tentative tax before credits Payments Credits UU ME amount CA CURE OHIO 0S page 1 line p m 112 1 li 7 Prot aene indere o the amount calculated on Fro OS page 1 line orm 8027 Employer s Annual Information Return of Tip Income and Allocated Tips WEN Overrides calculated amount for line 7 of form place x in line 6 7 Allocation of tips if using other than calendar year to activate this override AAR Form 8082 Notice of Inconsistent Treatment or Administrative Adjustment Request Corporation s tax year Overrides dates entered on screen 1 orm 8283 Noncash Charitable Contributions e Changes information on Form 8283 from section A to section B Restrictions Override section l or vise versa SS pp rf tl E TI Overri
81. l e Rental other than real estate e Any remaining depreciation For trial balance purposes enter depreciation amounts directly into the appropriate fields on the trial balance worksheet Note that for 1120S trial balances rental expense detail worksheets are required for 8825 and RENT depreciation Enter 8825 and RENT depreciation amounts in the detail work NOTE sheets for importing purposes but be aware that the 8825 and RENT screens in the program will have to be edited if 4562 detail screens see Figure 35 are used 50 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information When the trial balance is imported the COGS depreciation expense amount flows directly to the appropriate line of Form 1125 A of the return and the rental deprecia tion expense amounts flow directly to the appropriate lines of the 8825 and RENT screens as applicable Because the remaining depreciation can comprise any number of assets the amount entered on the trial balance does not flow to the return To ensure that each component of the total remaining depreciation is calculated into the return each asset must be entered on the applicable depreciation screens in data entry Figure 35 Depreciable Assets 4562 Depreciation Detail Item B 4562 Part 1 T 4562 Parts 2 and 3 a 4562 Parts 4 5a and 6 4562 Parts 5b and 5c Additional Depreciation Elections Figure 35 Enter depreciable asset dat
82. l institution the routing number RTN the account number and the type of account Checking or Savings e Re enter the RIN account number and type of account to verify If receiving refunds from different state tax authorities use the State Account boxes on the DD screen to indicate where other state refunds should be deposited International ACH Transactions In 2009 state taxing agencies added foreign account questions to their forms to com ply with NACHA rules regarding International ACH transactions LAT however processing IAT is not yet supported by any federal or state tax authority If you were to indicate that the account was outside the U S the state tax authority would automati cally ignore the account information and either issue a refund via paper check or con tact the taxpayer requesting the payment of a balance due via check or domestic bank account If you indicate that an account is located outside of the U S Drake Software generates a message page instructing you to choose an account located in the U S For more information see Screen Help on the DD screen and PMT screens Electronic Funds Withdrawal Direct Debit Use the PMT screen accessible from the General tab to indicate that the balance due for an e filed return should be withdrawn direct debited from an account Program Defaults and Overrides By default the program indicates that the entire balance due the Amount owed sec tion of Form 1
83. l return name change address change amended return and S election termination or revocation Income and Deductions Drake Software User s Manual Supplement Item I Number of shareholders during the year completed automatically based on the number of K 1s number can be overridden on line I of screen 1 NOTE Enter accounting method at the bottom of screen 1 Income and Deductions Income and deductions are entered primarily on the INC Other Income and DED Other Deductions screens For information on the Schedule K items at the bottom of the INC NOTE screen see Schedule K Shareholders Pro Rata Share Items on page 18 Gross Receipts Enter gross receipts Form 1120S line 1b and returns and allowances line 1d on the INC screen The program calculates gross receipts or sales after returns and allowances based on gross receipts sales and any direct entry on line 1d The IRS does not require a detail Ctrl W worksheet for gross receipts therefore if you are using the trial balance import feature do not N TE include a detail worksheet for this line or for any other line that does not require a detail worksheet For more on the trial balance worksheet see Importing Trial Balance Information on page 42 NEW FOF Line la Merchant card and third party payments is new for Form 11208 in 2011 however because the IRS requires that a zero 0 be 7 Ill entered on this line for 2011 the field for line la on
84. l showing whether or not the balance sheet is out of balance and if applicable the out of balance amount Figure 28 see also Figure 31 on page 47 ii a zc vou POE a m _ E ak o mapag aa e cU ma AM LAE Hi PE P 7 mum 7 That w vam Salari amp s and wages shareholder employees TU Y Waste removal 0 1 gt Income Loss Schedule M 1 line 1 100 600 gt 2 COMME oola 549 050 LOUT OF BALANCE F Figure 28 Schedule M 1 amount 1 totals 2 and indication of balance 3 Following are instructions and guidelines for using the trial balance template to assemble financial data for importing into data entry Tax Year 2011 45 Importing Trial Balance Information Drake Software User s Manual Supplement Entering Financial Data When a new trial balance file is opened for a return all debit and credit amounts are zero S0 All data must be entered manually into the template Some data cannot be imported with the trial balance and must be NOTE entered directly into the data entry fields within the program For more on these categories of data see Special Conditions on page 49 Direct Entry Most cells in the trial balance worksheet are view only In a new template editable debit and credit cells are indicated by a dollar amount S0 and are not gray Detail Some cells require more detail than can be entered on a single line These cells are Worksheets indicated
85. l worksheet or the trial bal ance will not be imported correctly Totals Totals are displayed at the bottom of each worksheet If credit and debit columns are out of balance the worksheet highlights the out of balance amount Figure 31 te imc g umm owe emt o Aa Ng Totals OUT OF BALANCE PH SBS TB fue Figure 31 Out of balance amount is highlighted if columns are out of balance In addition to credit and debit totals the main trial balance worksheet shows the net income loss to be calculated for line 1 of Schedule M 1 after all entries and adjust ments are made in the software NOTE The data cannot be imported if the worksheet is out of balance Tax Year 2011 47 Importing Trial Balance Information Drake Software User s Manual Supplement Saving a File To save a file click the Save icon or select File 5 Save from the menu bar In Microsoft Vista and Windows 7 click the Office button in the upper left corner and select Save To re name a file when saving select File 5 Save As For more informa tion on file names in the trial balance program see Naming Convention on page 44 Importing Data into a Return a Import 48 Once a trial balance worksheet has been set up for a client in Drake the trial balance information can be imported into the program and calculated into the return Not all trial balance data can be imported directly into a return For information on program limitations see Speci
86. ll Method of Cost Allocation Section A Allocation and Capitalization Methods D3 1 attachment Allocation and capitalization methods detail Multiformcode Sects Direct and Indirect Costs Required To Be Allocated Explanation for boxes that are not checked X Check B Blank No Selection N A Present Proposed iTO o ceo ee NG EEE oe SE REE AA x 2 Directlabor PINA AA AA ER INIRE ANA AA E END IE IB xl 3 Indirect labor a a OE NER IER NR a a RES taal a NER NE a a Officers compensation not including selling activities x x x is a Rs n P a Mo satin tt lt a Paco Figure 42 If any box is marked B click the D3 2 Attachment link to open the ATT screen and complete the fields for an attached statement Schedule E Use screen 311E accessible from the Change in Accounting Method section of the Other Forms tab to complete Schedule E Change in Depreciation or Amortization If changing this method under the automatic change request proce NOTE dures see the List of Automatic Accounting Method Changes in the IRS Form 3115 instructions Screen 311E Unlike the other 3115 screens screen 311E contains two multi form code text boxes Multi form Codes Multi form code for 3115 This box is applicable if the return contains more than one Form 3115 Enter the code for the instance of the 3115 screen with which this 311E screen should be associated Multi form code for Sch E This box i
87. ll changes to credits and deductions including discontinua tions For details on the new regulations for the 2011 tax year see the IRS instructions for Form 1120S ELEC Screen Changes The ELEC screen has been revised for easier more efficient selection of various elec tions available to corporations For more information on choosing elections in Drake see Elections on page 34 Ownership Changes New in 2011 all ownership change information is entered on the OWN screen which is accessible from the General tab of the Data Entry Menu For more information see Ownership Changes on page 19 Income and Deduction Screens The data entry screens for income and deductions have been revised for easier data entry Only three screens are now required in order to calculate taxable income for a return INC Includes all items of income reported on Form 1120S page 1 lines 1b through 5 that do not require a separate form schedule Form 1125 A or addi Tax Year 2011 1 What s New in Drake for S Corporations Drake Software User s Manual Supplement tional information income reported on Form 1065 Schedule K 1 also includes the Schedule K Most Common Items previously included on screen 3 e DED Includes all deduction items reported on Form 1120S page 1 lines 7 through 19 that do not require a separate schedule or form Form 8846 e 4 Includes additional tax amounts tax payments and data entry fields for
88. m K1P screen line 15 code J and K1F screen line 13 code F orm 6478 Alcohol and Cellulosic Biofuel Fuels Credit 9 Pass through credit from other entities Adjusts amounts from K1P screen line 15 code and K1F screen line 13 code H orm 6765 Credit for Increasing Research Activities Pass through research credits Adjusts amounts from K1P screen line 15 code M and K1F screen line 13 code l orm 8820 Orphan Drug Credit Orphan drug credit s from pass through entities Adjusts amounts from K1F screen line 13 code M orm 8826 Disabled Access Credit Disabled access credits from pass through entities Adjusts amounts from K1P screen line 15 code K orm 8844 Empowerment Zone Employment Credit Form 8844 credits from pass through entities Adjusts amounts from K1P screen line 15 code L and K1F screen line 13 code K orm 8846 Credit for Employer SS and Medicare Taxes Paid on Certain Employee Tips Form 8846 credits from pass through entities Adjusts amounts from K1P screen line 15 code N orm 8864 Biodiesel Fuels Credit a Biodiesel and renewable diesel fuels credit from pass Adjusts amounts from KIF screen line 13 code O through entities 882 Credit for Employer Provided Childcare Facilities and Services Adjusts amounts from KIF screen line 13 code N orm 8907 Nonconventional Source Fuel Credit vonconventiona source tuel from partnerships SS Adjusts amounts from K1F screen line 13 co
89. n the return when certain data is changed through the use of override fields The follow ing pages contain the 2011 Override worksheet These worksheets are also available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window C 1 Overrides Worksheet J Qverride Location Oy J J O 9creen Line Field Name Location of Information Being Overridden 1120S 1 S Corporation General Information screen cc CU Number of shareholders at tax year end Overrides number of K1 screens in return Preparerfee 1 jOverrdesthe system s fee calculation jFm Overrides the program default setting 1 Data entry op Overrides the login name MEM ERO number Overrides the selection made from the ERO SSN Indicator drop list at Setup Options EF tab DED Deductions O O Overrides the other insurance amounts below EI KATA Overrides state income taxes calculated from information entered on ES screen using code IN Overrides state franchise taxes calculated from information 2 State franchise taxes entered on ES screen using code FR Tax amp Payments bottom of page 1 of Form 1120S CG AY Current year estimated tax payments Overrides payments made as entered on ES screen 23b Tax deposited with Form 7004 ndo amount entered on 7004 screen Amount paid with Amount to be c
90. n 481 8 to income and expenses 33 advertising expenses 10 amended 1120S returns 5 15 K 1 letters 23 amortization 11 25 analysis of accounts Schedule M 2 29 31 asterisks on K 1 codes 20 attachments binary PDF 39 42 Form 8825 statements 33 auto balance 26 B bad debts 8 9 basis 24 see also adjusted basis worksheet binary PDF attachments 4 book to tax differences Schedule M 1 27 business activity codes 5 C calendar year returns 5 change of name or address 5 charitable contributions 19 Client Communications Editor for letters 23 Tax Year 2011 Index codes business activity 5 error reject 38 K 1 20 36 miscellaneous screen 1 18 multi form 31 53 59 61 compensation of shareholders 8 contact information for state returns 18 cost of goods sold see Schedule A Cost of Goods Sold cover letters K 1 23 coversheets 36 credits 33 Ctrl W detail worksheets 6 7 43 D data entry for state information 16 importing trial balance into 42 52 dates of incorporation 5 payment changing 13 tax year 5 decrease to basis 24 deductions 8 11 depletion 10 depreciation 7 and auto balance errors 26 expense 10 for cost of goods sold Schedule A 7 of rentals 31 on short year returns 5 printing Form 4562 36 trial balance business returns only 50 detail Ctrl W worksheets 6 7 43 direct debit of balance due 13 14 direct deposit of refunds 13 distributions 29 domestic production ac
91. ng Trial Balance Information Tax Year 2011 select the Security tab Click Macro Security and select Medium then click OK In Windows 7 and in Microsoft Vista click the Office button in the upper left and then click the Excel Options button at the bottom of the win NOTE dow Next select Trust Center from the list at left then click the Trust Center Settings button Select Macro Settings from the list on the left then choose Disable all macros with notification Click OK Disable Autobalance optional When autobalance is disabled the program is prevented from automatically adjusting the year end retained earnings or capital amounts thus allowing you to see any discrepancies in the balance sheet To dis able autobalance go to the PRNT screen and select Turn off autobalance Calculations and Other Options Turn off autobalance Calculate Form 2220 penalty Prepare Form 7004 based on screen 1 data For an extension to include payment information screen 4 may also need to be completed Figure 24 Disable autobalance in the Calculations and Other Options section of PRNT screen Force Schedule L By default the program does not display the balance sheet amounts on the return if the entity does not meet the filing requirement If this is the case you must override the default setting in order to have the amounts shown on Schedule L To force the Schedule L amounts to be printed go to the PRNT screen and select
92. ng page Distributions reported on line 7 flow differently from the amount entered on the DIST screen See the previous section Entering Distributions The distributions are lim ited following the ordering rules under Reg 1 1368 2 TIP See Form 1120S instructions for more details and examples These rules are for Schedule M 2 column a e Line 1 balance The balance at the beginning of tax year line 1 is either zero or the balance carried forward from line 8 of the previous year Due to prior year net losses and reductions the amount on line 1 can be negative e Changes to AAA The AAA is increased for ordinary income from page 1 line 21 line 2 and other additions listed on line 3 The AAA is then decreased for any loss from page 1 line 21 line 4 and other reductions listed on line 5 29 Schedule M 2 Analysis of Accounts Drake Software User s Manual Supplement Important Note about the AAA e Reduction of AAA Once these adjustments are made the AAA is reduced by ordinary distributions on line 7 but not less than zero Thus if the distribu tions are 20 000 but the net amount on line 6 1s 10 000 line 7 1s limited to 10 000 If line 6 is a negative number then line 7 will be zero in this exam ple To allow an amount on this line would take the AAA to a larger negative number That is even more below zero than it really is Schedule M 2 Item Amount Line 1 Balance at beginning of tax year 11
93. ng the entity a 53 week year for 2011 An entity that has filed returns in the past must complete only steps 1 NOTE and 2 of this process An entity that has never filed a return before must continue with steps 3 through 6 3 Click the ELEC link to open the Election Options screen Figure 18 on page 38 Tax Year 2011 34 Electronic Filing Inactive Returns Drake Software User s Manual Supplement Election Options 52 53 Week Tax Year Election 1 Month in which new 52 53 week tax year ends rtr rents E 2 The day ofthe week on which the tax year always ends nemen teni aene atestne tar wes AA UM Figure 18 Elections for 52 53 week tax years 4 For line 1 select the month in which the 52 53 week year ends for the current fis cal year 01 January 02 February etc 5 For line 2 select the day of the week the tax year always ends 6 For line 3 enter the actual date that the tax year ends the same date entered in the Fiscal year ends field on screen 1 Once a 52 53 week year is selected the entity must use that account NOTE ing period every year To change accounting periods the entity must submit to the IRS Form 3115 Application for Change in Accounting Method In subsequent years only the 52 53 week tax year check box on screen 1 must be marked the program automatically updates the dates Entities that are inactive but are still required to file returns may e file inactive returns in
94. nstructions for 1120S makes attachments necessary Description Description of form or document to Title of house on Oak Street be attached Appraisal of Lot 1234 File name Distinctive easily recognizable file TitleHouseOakSt pdf name followed by pdf AppraisalLot1234 pdf 3 Exit the PDF Attachments window Because you ve indicated that a PDF document is attached the program generates an EF message page regarding the attachment when the return is calculated Attaching To attach a PDF file to a return Documents to the Return 1 From the return click View If anything was entered in the PDF Attachments window see Adding PDF Documents in Drake previously there will be two PDF related items in the View Print window e An EF Message item 1 in Figure 21 e An Attach PDF button on the toolbar item 2 in Figure 21 on page 41 40 Tax Year 2011 Drake Software User s Manual Supplement Binary Attachments E c E C Data Entry Print Setup Archive Email Refresh Select Farms to Yiew Print All Forms Sets F Federal Worksheets Notes Messages Missouri Morth Carolina Ohio Pennsylvania J Fall E L o BR 4120S U S Income Tax R Si ee Form pp Do not file this form ui J xm Department of the Treasury eg Tom en i ro Sr Internal Revenue Service p See 5 E x SL Piian i dus a TA F1 mih s d M M n et Figure 21 The Message file and the
95. ntribution limitation is made at the shareholder level Schedule K 1 for 1120S Shareholder Information Use the KI screen to enter data for Schedule K 1 Shareholder s Share of Income Deductions Credits etc The program now calculates percentage ownership based on the num NOTE ber of shares owned This amount can be overridden on line F of the K1 screen Use of the Shareholder s of stock ownership field however is not recommended Ownership Changes Entry of ownership changes has changed in the 2011 program Previously ownership changes were entered on a third K screen New in 2011 all ownership change infor mation is entered on the OWN screen which is accessible from the General tab of the Data Entry Menu To use the OWN screen e Enter the date of ownership change at the top of the screen e Select the applicable shareholder from the drop list in the Change in Shares sec tion The drop list consists of the names and ID numbers entered on the K1 screens and is updated automatically e Enter the change in ownership as a positive amount for an increase and a negative amount for a decrease See field level help for more information Tax Year 2011 19 Schedule K 1 for 1120S Shareholder Information Printed Data Drake Software User s Manual Supplement To enter additional ownership changes press PAGE DOWN NOTE See FAQ item P in the program for more information on entering own ership change information
96. nts EF message pages and worksheets are accessible from View mode EF messages for Form 3115 provide information about required attachments includ ing PDF attachments that are missing from the return Some messages list all state ments required for a particular section but do not indicate which statements specifically are missing To best understand which attachments are still required compare the ATT screen and the EF PDF worksheet to the list on the EF message page All EF messages must be eliminated before the return is eligible for NOTE e file EF messages for Form 3115 attachments are eliminated when all required statements have been attached to the return 62 Tax Year 2011 Drake Software User s Manual Supplement S Corporations Appendix A Trial Balance Import Tax Year 2011 The trial balance import allows data to be imported into a corporate tax return from a trial balance worksheet Drake s specially designed trial balance template and importing function has the fol lowing benefits e Eliminates the need to duplicate entries e Eliminates data entry errors by automatically importing data to the correct fields e Allows preparers to merge basic accounting functions with tax preparation See next page for a flow chart describing the use of the trial balance import ARA PAANAN HPHP EYE AA AAP SPEY HVEN AA NAA ANA AA AA AA AA ANA AA AA AA AA AA AA AA AA AG AA AA Aa 990 990 EZ Or 990 PF return
97. number of shareholders you have the option to deactivate cal culation and printing of the K 1s while working on the Form 11208 This option which eases the process of reconciling the 1120S is available by going to the PRNT screen and marking the box under K 1 Items to Suppress Figure K 1 Items to Suppress if Suppress Sch K 1 K 1 letter K 7 ATT and WK SBAS Do NOT check amended box on Sch K 1 from Screen 1 Suppress K1 DIST Figure 8 Check box for suppressing K 1 items located on PRNT screen When the return is ready to be filed return to the PRNT screen and remove this check mark before calculating the return Tax Year 2011 Drake Software User s Manual Supplement Schedule K 1 for 1120S Shareholder Information Override Fields It is not possible to override the calculations for a single shareholder To override cal culated data it is necessary to override the calculated amount on all K 1 schedules MPORTANTI Shareholder overrides should not be done for an S corporation except in certain circumstances such as ownership changes Foreign Addresses K 1 Export If the shareholder has a foreign address enter Province State country and postal code information on the Foreign address line of the Shareholder Name and Address Information section along with the street address and city in the Address and City fields Do not enter anything in the U S State or ZIP fields Conversely for a U S address d
98. o complete the corporation name and address section of Form 1120S For state purposes only 1f the corporation has an alternate address such as a P O box you can enter that address on screen 2 in the Address Line 2 field at the bottom of the screen Access screen 2 from the States tab or enter 2 in the selector field and press ENTER 4 Tax Year 2011 Drake Software User s Manual Supplement Header Information Tax Year Fiscal and Calendar Years Short Year Returns The software uses the calendar year as the default period for all corporate returns no date entries are required on screen 1 for a December 31 tax year end The program adjusts calculations for depreciation and for gains and NOTES losses on sales of assets based on the entity s tax year For information on filing with a 52 53 week year see Electing a 52 53 Week Year Initial Return on page 37 If the S corporation uses a fiscal year where the year begins in the current calendar year and ends in the next specify the beginning and ending dates in the If not calen dar year section of screen 1 An entity may have a short year return if changing accounting periods with IRS approval Form 3115 or if this is its first or last year in business and the tax year 1s not a full year To indicate a short year return use the fiscal year date fields on screen 1 to indicate the beginning and ending dates for the current year These fields should not be used i
99. o not enter anything into the foreign address fields Take the following steps to export a K 1 from an 1120S return into a 1040 return 1 Ensure that K 1 data is entered in the 1120S and that the 1040 has been created The KIS screen in the 1040 does not have to be created beforehand 2 Inthe 1120S return go to View mode 3 Click K1 Export in the View mode toolbar If any K Is are not eligible to be exported that list appears Click Next to continue otherwise the list of K 1s eli gible for export appears 4 Select the SSNs to be exported by marking the boxes to the left of the SSNs 5 Click Export The K 1 data will be displayed in the 1040 return in the program Basis information for individual shareholders should be entered in the NOTE 1040 package in Drake this information cannot be exported from the 1120S package to a 1040 return Such an import would override limita tions and carryovers calculated in the 1040 program Supplemental Info Tax Year 2011 Two types of supplemental information can be added to Schedules K 1 e Supplemental data for all K 1s in a return e Supplemental data for a single K 1 in a return To add supplemental information globally to all K 1s from the Data Entry Menu open screen K1G Global Supplemental Information and enter the informa tion in the Supplemental Information text box This information will appear on all printed shareholder K 15 To add supplemental information to an indi
100. o tax amortization iit stment acil a AA Bi eae CS Figure 1 Adjustment and override fields By default fields that allow overrides are preceded by an equal sign and display red text Data entered in these fields replaces or overrides program calculations Fields that allow adjustments are preceded by a plus minus sign and display blue text Data in these fields adjust program calculations by the amount entered A posi tive number increases the calculated amount a negative number decreases it The Adjustment and Override worksheets are available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window Before You Start Actions you might need to take before starting an 1120S return in Drake include e Updating a prior year return if you prepared the tax return last year e Electing as an S corporation if the corporation was not an S corporation last year Updating a Prior Year Return in Drake Tax Year 2011 A prior year return can be updated in three ways e With all other returns in the program using Last Year Data gt Update Clients 2010 to 2011 not recommended e Asa single return updated one at a time using Last Year Data gt Update Clients 2010 to 2011 recommended Header Information Drake Software User s Manual Supplement e When you open the return for the first time in the 2011 progr
101. o the Payroll Property and Additional Property information tabs for each state selected Figure 7 These screens and their uses are listed in Table 1 NOTE Table 1 APPT Screens Screen Information Sales Select state enter sales returns and allowance and other income related information for each selected state Payroll Enter salary wage commission and labor amounts for each selected state Property Enter beginning and ending amounts of common apportion ment factors plus select additional apportionment factors from drop lists Additional Property Select additional apportionment factors from drop lists The Ending amount entered on the Property and Addition Property screens in Drakell will become the Beginning amount for property on the APPT screen when the client s return 1s updated next year in Drake12 17 Schedule K Shareholders Pro Rata Share Items Drake Software User s Manual Supplement Contact Information Officer Information You may enter up to four states on one APPT screen If you need more than four states press PAGE DOWN for a new APPT screen The same state can be entered more than once when additional fields are needed select OT Other Reconciliation from the State Selection drop list when using the reconciliation worksheet Not every item appearing on the federal return may be sub ject to multi state apportionment When you select OT the data entered becomes a reconciling adjustment amount to aid in
102. oks Return Schedule M 3 28 Accessing the M3 Screens The SCH3 Screen Drake Software User s Manual Supplement 2 This book depreciation amount is compared to the tax depreciation amount The tax depreciation amount is calculated from the Forms 4562 including any section 179 amounts 3 The difference between the book and tax depreciation amounts is carried to the appropriate form and line e Ifthe book depreciation amount is greater than the tax depreciation amount the difference is carried to one of the following locations Schedule M 1 line 3a Schedule M 3 Part IIL line 24 as a negative amount Form 8916 A line 21 as a negative amount for assets selected on the 4562 detail screen for COGS e If the tax depreciation amount is greater than the book depreciation amount the difference is carried to one of the following locations Schedule M 1 line 6a Schedule M 3 Part III line 24 as a positive amount Form 8916 A line 21 as a positive amount for assets selected on the 4562 detail screen for COGS Any domestic corporation or group of corporations that report on Schedule L of Form 1120S total assets at the end of the S corporation s tax year that equal or exceed 10 million must complete and file Schedule M 3 instead of Schedule M 1 If the S corpo ration is required to file or voluntarily files Schedule M 3 it must file Form
103. omplete the required statement Use the D I II screen to complete the following parts of Form 3115 Schedule D Change in the Treatment of Long Term Contracts Under Section 460 Inventories or Other Section 263A Assets e Part I Change in Reporting Income From Long Term Contracts e Part II Change in Valuing Inventories Including Cost Allocation Changes If an entity is currently using a LIFO inventory method or submethod NOTE and is changing to another LIFO inventory method or submethod Part ll of Schedule D is not applicable Use Schedule C Changes Within the LIFO Inventory Method instead A long term contract refers to any contract for the manufacture building installation or construction of property that 1s not completed in the tax year in which it is entered into Answer the questions in Part I that apply to the entity s situation This section concerns changes in the identification and valuation methods of invento ries Note that some lines require attachments To access the ATT screen and complete a required statement click the desired attachment link The items on this part of the screen match the items on the actual Form 3115 Sched ule D For information on completing individual lines see the Form 3115 instructions If the entity is unable to furnish a copy of Form s 970 line 5a the attachment must include the following statement N TE certify that to the best of my knowledge and belief name of applicant
104. ons Form 8609 Low Income Housing Credit Allocation amp Certification Schedule A Annual Statement Override of computed rate 8845 Indian Employment Credit Form 8845 credits from pass through entities Schedule K 1 for 1065 K 1 P 2 Overrides computed rate on Form 8609A Part Il line 2 Overrides Worksheet Override Location 9creen Line Field Name Location of Information Being Overridden 1120S For section 179 Use Only 2010 179 exp allowed Overrides the allowed amount calculated on the WK_S179L worksheet For section 179 Use Only 2009 179 exp allowed Overrides the allowed amount calculated on the WK_S179L worksheet Current year QRP 179 exp allowed Overrides calculated amount 4 Application for Employer Identification Number County amp state Overrides the county and state entered on screen 1 Date business started acquired Overrides the date entered on screen 1 orm 982 Reduction of Tax Attributes Due to Discharge of Indebtedness ous Overrides default calendar year dates or fiscal year dates Beginning of tax year entered on screen 1 Overrides default calendar year dates or fiscal year dates End of tax year entered on screen 1 State of Incorporation Overrides entry made on screen 1 General Info orm 2220 Underpayment of Estimated Tax Screen 1 of 2 OVERRIDE installment amounts required tor 1 or 2 10 a d orm 2553 Election by a Small Business Corporation Part Il
105. oration s total receipts for the tax year or its total assets at the end of the year is greater than 250 000 To force the program to print Schedule L even if not required go to the NOTES PRNT screen and select Force print Schedules L and M 1 With the Trial Balance Import feature you might not need to use screen L at all See Importing Trial Balance Information on page 42 Flow of Information Many of the entries made elsewhere on the return flow automatically to the generated Schedule L for example inventory information from Form 1125 A Depreciable asset information from the 4562 screen and intangible assets and amortization also flow to Schedule L The SCH2 Screen The SCH2 screen is used to provide detailed information required by the IRS for cer tain lines on Schedule L This screen can be used in place of the actual L screen in Drake In other words if you use this screen for all applicable lines on Schedule L you do not need to make any entries on the L screen All line selections are carried to the SCH2 screen in next year s pro gram when the returns are updated Line descriptions are updated with NOTES the year end amounts carried to the beginning of year column To access the SCH2 screen from the L screen click the SCH2 Screen link on lines 6 9 or 14 or press CTRL 2 To create a statement for a line select a line from the drop list and enter descriptions and their corresponding amounts Once the inform
106. oss real estate rental income 8825 line 2 Form 8825 line 2 Total real estate rental expenses 600 eel Esteve anita Baa requires detail Gross other rental income RENT line 1 Rent Line 1 Total other rental expenses 0 Binar Haniel Bse requires detail Gross royalties FOO K line 6 Schedule K line 6 R Capital FW a lasses X d o d FUL AG sas dees not GALEY PEN UM Geta pci rag on HELD aya Figure 36 Rental expense rows on an S corporation trial balance worksheet When imported the rental expense data entered on the trial balance worksheet appears on either the 8825 screen if real estate rental or the RENT screen if rental other than real estate Tax Year 2011 51 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Supplement Because the trial balance worksheet has only one detail screen per rental type the importing function does not accommodate entities with multiple rental properties or expenses however the following procedure allows the trial balance to remain in bal ance 1f there are multiple rental properties or expenses To accommodate entities with multiple rental properties or expenses 1 Calculate the totals for both types of rental expenses 2 Enter the income totals on the trial balance sheet and the expense totals on the applicable detail sheets Figure 36 3 Ensure that the balance sheet is in balance 4 Import the trial balance worksheet into the return The applicable scr
107. oyee Tips 9 34 Form 8864 Biodiesel and Renewable Diesel Fuels Credit Ts II Form 8873 Extraterritorial Income Exclusion 11 Form 8881 Credit for Small Employer Pension Plan Star tup Costs 34 Form 8903 Domestic Production Activities Deduction 22 Form 8912 Credit to Holders of Tax Bonds 33 Form 8912 Credit to Holders of Tax Credit Bonds 34 Form 8916 A Supplemental Attachment to Schedule M 3 Vill Drake Software User s Manual Supplement S Corporations 28 Form 8932 Credit for Employer Differential Wage Pay ments 34 Form 8941 Credit for Small Employer Health Insurance Premiums 34 Form 8941 Credit for Small Employer Health Insurance Premiums 11 Form T Forest Activities Schedules 10 G gains and losses 7 gross receipts 6 H header information 4 import trial balance 42 52 inactive returns 36 38 income 6 8 increase to basis 24 instructions for filing 36 insurance proceeds income from 8 interest expense 10 income 8 inventory 6 K K 1 Schedule for 1120S 19 24 L labor 8 letters K 1 23 maintenance costs 8 Multi State Apportionment 2 16 N name change 5 net operating losses NOL 31 next year depreciation listing 36 number of shareholders 6 O ordinary gains and losses 7 other Tax Year 2011 Drake Software User s Manual Supplement S Corporations adjustments account 30 costs Schedule A 7 income loss 7 P passive income 11 PDF binary attachments
108. r Part III of Schedule D Form 11205 For information on using the Schedule D import feature in Drake see Schedule D Imports in Chapter 5 of the Drake Software User s Manual Tax Year 2011 2011 Estimated Tax The 1120S does not have a federal estimated tax voucher Estimated tax payments are required only in certain situations An S corporation must make electronic deposits of employment excise and corporate income taxes using the Electronic Federal Tax Payments System EFTPS Use the ES screen to enter estimated tax payments made for tax year 2011 and esti mated amounts for tax year 2012 Future year amounts appear on the ES SUM work sheet generated with the return Payments with Extensions To make a payment with an extension request enter the amount being paid on the 7004 screen If an extension was previously requested and a payment was made then enter the amount paid on screen 4 line 23b Tax Paid on Fuels Use screen 4136 to enter information for Form 4136 Credit for Federal Tax Paid on Fuels Note that this screen actually consists of two screens with lines 1 through 8f on the first screen Press PAGE UP or PAGE DOWN to go from screen to screen Estimated Taxes Use the ES screen to enter federal and state estimated taxes paid in 2011 If the return was updated in Drake from 2010 this information is carried over Note that this infor mation will be overridden by any entry in the Current year estimated tax payments
109. redited to next year s estimated tax Overrides overpayment amount as entered on ES screen Form 1125 A Cost of Goods Sold D S S M 9252 5 o0 DO ZZ1ALOIO Overrides calculated amount for entries on 4562 detail screen directed to the COGS in the Form selection box Schedule K 1 Shareholder s Share of Income Credits Deductions etc Amounts entered on the K1 screen override the amounts automatically calculated by the K screen Shareholder s Adjusted Basis Worksheet KA 5 AA AG AA AA Overrides the calculations from Schedule K or the overrides in Schedule K 1 Overrides the calculations from Schedule K or the overrides in Loans repaid by corporation during the year Schedule 4 a Allowed Decreases for Losses and Deductions Items a Overrides the calculations for column F of shareholder s basis p worksheet page 2 ETT T Overrides the calculations for column F of shareholder s basis worksheet page 2 Oil anduns depletion Overrides the calculations for column F of shareholder s basis worksheet page 2 Schedule L Balance Sheet Assets Cd 3 b Overrides entries from screen A Cost of Goods Sold line 1 Inventory at beginning of year 3 d Overrides entries from screen A Cost of Goods Sold line 7 Inventory at end of year Overrides calculations from on the 4562 detail screen or the 10a a Depreciable assets Overrides calculations from on the 4562 detail screen or the 10a c Depreciable assets Overrides calculations
110. respective companies Tax Year 2011 Drake Software User s Manual Supplement S Corporations Table of Contents Table of Contents What s New in Drake for S Corporations 4n 1 ELEC Screen Chan eS AMA NAAN GA NADAAN ma NAAN BATUHAN oe eee hehe RA RE EVE La 1 Ownership CHANGES eire go ea rnEeE Goes AKA DAI DAN BNG RE EE ae NANANA MG eee 1 Income and Deduction SCEGellS da sadcncesuedoees NGPA coer Pay Sends ae GA Pda Eq ES RE Padus 1 Multi State Apportionment a 2 Cost of Goods Sold Form 11259A o iai eroe y ka 9079828 NAA KEAN Oe OSE ER ACE OS Re rena 2 BOW CG EE E E EE E N eRe AA E a E EE wees 2 ochedule K Sorcenm Chanees lt 4 soma dab enue dsoaee ep seo het eh RE Re eee Se eae eSe haha E RR A 2 Book Depreciation Schedules 22s nns rure oe erre P949 POR Hd SAUCE NUR HEAR X RUN SCR o9 3 Adjustment and Override Worksheets 2 3 BEIDIE TOM SIME Eo oeosoc S AUESOFAEORRE NEUE BADD EBA ena doses ae ENTRE EDS NN 3 Updating a Prior Year Return in Drake 1 een ene eens 3 Indicating an S Corporation 2 eee 4 BESOSr INTO atl auo ador ROCA AUR PEN hese E BE he eae ea wee RE 4 Nane and AES 44 v nc ae we he oa E ooo 25d an ioe IPFI eee PIU V PARE TUE RE 4 Tax NO gam AA MEGAN NAN eon cose Gh at E ae meee nee RTL 5 Bo c20 lana N GAWAAN 927992 OR V PAMBAON pa yore eee ee eer 9 dee Y P Rond aes 5 Income and Deductions 0 ccc ee 6 COS RECCID 223164 cae eased ce wnee MG HD seems bees PENILA LY ENNA aes eaeeenenanee se H
111. rom the Change in Accounting Method section include e Screen 3115 Change in Accounting Method Used to access fields for Form 3115 including Schedules A through D e Screen 311E Schedule E Used to request a change in depreciation or amorti zation methods e Screen ATT Explanations and Attachments Used to create and view cer tain attachments to be generated by the software Screen ATT2 Pt II Ln 12 amp Pt III Ln 23b Attachment Used to complete certain parts of Form 3115 that require specific attachments Multi form All 3115 and related screens contain a Multi form code text box shown in Figure 38 Codes on page 54 that allows you to link a screen or attachment to a particular Form 3115 If submitting more than one Form 3115 assign a multi form code to each new appli cation you create in Drake The first should be 1 the second 2 and so on When using other screens such as the 311E or ATT screens you can use those numbers to indicate which instance of Form 3115 the 311E or ATT screen should be associated with see Screen 311E Multi form Codes on page 59 for more information NOTE If only one Form 3115 is being submitted you do not need to enter any thing in the Multi form code box Tax Year 2011 53 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Supplement Form 3115 Screens Parts and Ill 54 General Information When you open the 3115 screen from the
112. s applicable if the return contains more than one Schedule E A separate 311E screen should be used for each property Assign each property a separate code in its Multi form code for Sch E This code enables you to associate any attachments with the correct Schedule E property See Attachments starting on page 60 If the return contains more than one Form 3115 and multiple instances of Schedule E both multi code fields should contain numbers Figure 43 shows that the third instance of a Schedule E is to be associated with the second Form 3115 in the return Form 3115 Application for Change in Accounting Method Schedule E Change in Depreciation or Amortization P Schedule E Line 4a Type of property See nie Ear i m er ee E Bui lding Year property was acidi in service oe RET 2003 a ann Proped susetettade ar business or income m4 digiti Ast a e s ants om da Nga aee o sagit ui Figure 43 Example of third instance of a Schedule E to be associated with the second instance of a Form 3115 Tax Year 2011 59 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Supplement Completing The 311E screen consists of four sections Schedule E e Schedule E Line 4a Enter information on the type of property the year it was placed in service and the property s use e Schedule E Change in Depreciation or Amortization This section covers all Schedule E items oth
113. sing ENTER This screen provides one central location for enter 16 Tax Year 2011 Drake Software User s Manual Supplement Additional Information APPT Screens Tax Year 2011 ing all state apportionment information instead of having to open each needed state s screen In addition to making data input faster and easier the new feature provides two new worksheets a summary worksheet SA SUM that can be used for verifying input and a reconciliation worksheet SA REC that ties the total of the state amounts to the federal return figures These worksheets are available in View mode The individual state apportionment screens will continue to be available in Drake1 1 but will be used to override data entered on the APPT screen No state apportionment related screens will be updated from Drake10 to Drakell Drake 2011 Data Entry 212121212 PAT S PACKAGING Sales Payroll Property Additional Property State Apportionment Sales Factor State Selection Sales Returns and Allowz Wihin to WANE UA aaa aaa T T E m ERA m mni m CT Acto nto m n s MM a mri ns 2 Screen links Required field Outside state to inside state Within state to within state Within state to U S Government we Throwback nonta State drop lists Outside to within Figure 7 New APPT screens The new APPT screen is opened to the Sales tab Links at the top of this screen take you t
114. specific field for more information on attachment requirements The method for attaching state ments in Drake 1s covered in Attachments starting on page 60 Use the Parts II IV screen to complete the following sections of Form 3115 e Part II Information For All Requests e Part IV Section 481 a Adjustment 55 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Supplement Part Il Line 12 Schedules A B and C In addition to the Multi form code text box this screen consists of the Part II and Part IV sections Applicants must complete both sections of this screen For more on each line including instructions for required attachments press F1 in a specific field Note that there 1s no field on the Parts IL IV screen for Part II line 12 Fields for line 12 which should be completed if the applicant 1s changing only the accounting method for a particular item or items are located in the top half of ATT2 screen Use these fields to enter information on e The items being changed e The applicant s present and proposed methods for the items being changed e The applicant s present overall method of accounting cash accrual or hybrid Note that the bottom half of the ATT2 screen is for completing Part III line 23b Only the top half for Part II line 12 needs to be completed for Part II line 12 Click the A B C link from screen 3115 screen to complete the following sections of
115. sts the amount that flows from Schedule F line 24 11 Rents Salaries and wages paid to non shareholder employees 11 Other miscellaneous taxes Adjusts the amount that flows from Schedule F line 31 j ax amp Payments Worksheet for Line 22a Adjusts the combined amounts of gross receipts entered on 1 Gross receipts for the tax year screen 3 and Schedule F ad l Adjusts amounts entered on Schedule K for royalties rents 2 Passive investment income MN dividends interest annuities 5 Deductions directly connected with passive income on Adjust amounts calculated from entries on Schedule K for line line 2 12b and for line 12d codes K and L orm 1125 A Cost of Goods Sold 1 Inventory at beginning of year Adjusts amount coming from Schedule F line 46 2 Purchases ss Adjsts amount coming from Schedule F line 47 7 Inventory at end of year Adjusts amount coming from Schedule F line 49 chedule K Shareholders Pro Rata Share Items Screen 1 of 2 Adjusts interest income flowing from the income and deductions 4 Interest income screen screen 3 Form 6252 screen K1P line 5 and screen KIF line 1 5a Total nand nend Adjusts ordinary dividends flowing from screen 3 the K1P screen line 6a and from the K1F screen line 2a Adjusts qualified dividends flowing from screen 3 the K1P eae NIHU screen line 6b and from the K1F screen line 2b 6 Royalty Income Adjusts amounts entered on K1P screen line
116. t flowing to Form 1120S from Schedule F line 17 Other Deductions Enter all other deductions on the DED screen Drake incorporates the total into line 19 Other deductions on Form 1120S The following deductions credits adjustments and exclusions also flow to line 19 e Amortization from Form 4562 e Credit adjustment from Form 8820 Orphan Drug Credit e Exclusion from Form 8873 Extraterritorial Income Exclusion e Credit from Form 8941 Credit for Small Employer Health Insurance Premiums Tax and Payments Screen 4 has fields for completing the Tax and Payments section of Form 1120S Note that some fields are overrides Press F1 to view more information on a field Net Passive Income Line 22a Excess net passive income or LIFO recapture tax could apply to an S cor poration if it was formerly a C corporation or if it engaged in a tax free reorganiza tion with a C corporation To determine if the corporation must pay the tax complete the worksheet fields on screen 4 If completing the IRS worksheet enter the worksheet results on screen 4 Enter LIFO recapture directly on screen 4 NOTE To force the line 22a worksheet to be printed select the applicable box on screen 4 Tax Year 2011 11 Estimated Taxes Drake Software User s Manual Supplement Schedule D Use screen D to enter data for Parts I and II of Schedule D Form 1120S Capital Gains and Losses and Built in Gains Use the DTAX screen fo
117. t Communications Editor is displayed 2 Select Open 5 S Corporation 5 Sub S K 1 Cover to view the template of the S corporation K 1 letter da Make any desired changes to the template 4 Click Save For an amended return the K 1 letter automatically refers to the NOTE amended K 1 To edit the letter for an amended K 1 select Open 5 S Corporation gt Sub S K1 Amended and follow steps 3 and 4 of the previous procedure Tax Year 2011 23 Schedule K 1 for 1120S Shareholder Information Drake Software User s Manual Supplement Shareholder s Adjusted Basis Worksheet Basis information for individual shareholders should be entered in the NOTE 1040 package in Drake this information cannot be exported from the 1120S package to a 1040 return Such an import would override limita tions and carryovers calculated in the 1040 program Use the Shareholder s Adjusted Basis Worksheet Basis Wks screen to calculate a shareholder s new basis after increases and decreases are made during the current year The basis of S corporation stock is adjusted on an ongoing basis unlike for a C cor poration where stock basis remains constant unless additional stock purchases are made or stock is sold A shareholder s beginning basis in S corporation stock 1s the original capital contribution The Basis Wks screen is accessible by clicking the Basis Wks tab at the top of the K1 screen for a shareholder Figure 10 Access the K1 screen from
118. t for tax on fuels Tax Year 2011 7 Income and Deductions Drake Software User s Manual Supplement e Interest income on receivables e Recoveries of bad debts e Section 481 adjustments e State tax refund e Income from insurance proceeds To enter income or loss from a partnership estate or trust use the KIP or KIF screen Click the screen links on the INC screen or access them from the Other Forms tab To enter additional sources of income not shown create a CTRL W worksheet using the Other Income itemize field on the INC screen Compensation and Wages Credit Adjustments Enter shareholder compensation and employee wages on the DED screen Drake has two fields each for officer compensation and employee salaries wages one for non shareholders and one for shareholders The Salaries and wages to non shareholders field is an adjustment field An amount entered here is combined with any amount entered in NOTES the Labor hired field on screen F The shareholder fields are used for calculating section 179 income limi tations see the WK S179L worksheet in View mode A credit adjustment is made for the following forms e Form 5884 Work Opportunity Credit Form 8844 Empowerment Zone and Renewal Community Employment Credit e Form 8845 Indian Employment Credit The adjustment is indicated on Form 1120S with the ATT SSW literal Figure 3 Actual adjustments are shown on the ATT SSW worksheet in View mode Fig
119. the DD screen the RTN Account number and Type of account data must be entered twice item 2 in Figure 6 Finally the PMT screen must indicate the return to which the payment data applies item 3 in Figure 6 Put a check mark in the box of the applicable return type Withdrawal from Multiple Accounts Only one account can be designated for direct debit of funds for payment of federal or state taxes To have state amounts withdrawn from an account other than the account indicated for federal payments complete the fields in the State Account sections of the PMT screen NOTE Neither the federal nor the state balance due can be paid from more than one account Filing an Extension Calendar year returns are due on March 15 2012 By filing Form 7004 an S corpora tion can extend the deadline six months to September 15 Fiscal year returns are due on the 15th day of the third month after the end of their year Form 7004 extends the deadline six months To file an 1120S extension use either of the following options e Go to the 7004 screen in Drake and select Generate an extension Complete any other applicable fields on the screen 14 Tax Year 2011 Drake Software User s Manual Supplement Signing the Return e Go to the PRNT screen and select Prepare Form 7004 based on screen 1 data Signing the Return Electronic PIN signatures are required for e filed returns If e filing a return com plete all fields on the PIN screen A ret
120. the Force print Schedules L and M 1 box Items to Print if Force print Schedules L and M 1 Print Form 4562 Print next year depreciation listing Printinactive return Figure 25 Force Schedule L box for 1120S package NOTE Wording of this option varies by return package The example above is of the Force print Schedules L and M 1 box for an 1120S return Check for Detail Worksheets The trial balance import allows only those detail worksheets required by the IRS Check updated returns for detail CTRL W worksheets that are not required For example the IRS does not require a detail worksheet for the Gross receipts field on the INC screen if a return has a detail worksheet for that field the trial balance will not be imported correctly into the return Detail worksheets are indicated by red shading as shown in Figure 26 on page 44 43 Importing Trial Balance Information Drake Software User s Manual Supplement Income and Common Schedule K Items Form 1120 58 Income 1a Merchant card and third party paymenis CC 1b Gross receipts or sales notreporedoniinela nennen neeaaea 1d Returns and allowances plus any cash back included an line tau 2 FO OMNIS naa AA AA MADE eee ee WERTE MA nt i ee ET ia a HA FUTT onm a EMT meme ias siia ha mr Figure 26 Example of an unnecessary detail worksheet Remove unnecessary detail worksheets prior to import See Detail Worksheets on page 46
121. the INC screen is inactive grayed out Cost of Goods Sold Form 1125 A For cost of goods sold COGS complete screen A Form 1125 A Cost of Goods Sold On screen A items 9a through 9f are direct entry fields and follow the NOTE format of IRS Form 1125 A For more information on completing these fields press F1 or consult the IRS instructions Inventory Inventory amounts entered on lines 1 and 7 of screen A automatically flow to Sched ule L line 3 Inventories Note that the Inventories fields on the L screen Sched ule L Balance Sheet Assets are overrides Anything entered there overrides the inventory data that flows from screen A 6 Tax Year 2011 Drake Software User s Manual Supplement Income and Deductions Line 5 Other Line 5 of Form 1125 A is designated for any applicable costs not entered on the previ Costs ous lines In Drake two fields on screen A are provided for line 5 one for other costs excluding depreciation and one for depreciation Figure 2 4 3 5o Other costs excluding depreciatian T Figure 2 Other Costs and Depreciation In the Depreciation field enter any depreciation that relates to the cost of goods sold unless the amount is flowing from the 4562 Detail screen with COGS selected from the For drop list Note that this field is an override field an entry here overrides the calculations from the 4562 screen Amounts entered in this field automatically adjust t
122. tivities deduction 22 due dates 13 E e filing Form 11208 37 PDF attachments 39 42 statements 25 electronic vii Index funds withdrawal 13 14 signatures PIN 15 employer identification number EIN 5 envelope coversheets 36 error codes 38 estimates 2008 tax 12 2009 payments 12 underpayment of 12 expenses 8 11 exporting K 1 data 21 extensions 14 F filing instructions 36 final return 5 fiscal year returns 5 foreign addresses for shareholders 21 transactions 13 19 Form 1099 K Merchant Card and Third Party Network Payments 6 Form 1125 A 2 Form 2553 Election by a Small Business Corporation 4 5 Form 3115 Application for Change in Accounting Meth od 52 62 Form 4136 Credit for Federal Tax Paid on Fuels 12 Form 4562 Depreciation and Amortization 31 36 Form 4797 Sales of Business Property 7 Form 5884 Work Opportunity Credit 33 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit 7 33 Form 6765 Credit for Increasing Research Activities 33 Form 7004 Application for Automatic Extension of Time to File 14 Form 8050 Direct Deposit of Corporate Tax Refund 13 Form 8820 Orphan Drug Credit 33 Form 8825 Rental Real Estate Income and Expenses of a Partnership or an S Corporation 31 33 Form 8844 Empowerment Zone and Renewal Community Credit 34 Form 8845 Indian Employment Credit 34 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Empl
123. ts Tor 2012 bem ed Teque Pb dads a EO RES EM pP QUE Ed date P quta 12 Underpayment of Estimated Tax eee s 12 Tax Year 2011 ill Table of Contents Drake Software User s Manual Supplement S Corporations Direct Deposit of Refunds 00 cece ee eee 13 International ACH Transactions aaae 13 Electronic Funds Withdrawal Direct Debit 13 Programi Detavlts and Ovetrides 312i aestas sve KAB eR Shs ER RES XUERGAEAGCE eie A AR Boss 13 Required Mormaers Rute PTS MP RII Abas IITS TS PEINE SPORUURT AA AA 14 Withdrawal from Multiple Accounts 2222 2 14 Filing an Extension a ausa ABER oes KABA 596405044594 AARAL AASA NAGA 14 Signing the Return 20 aaah KASH AMA LENDDI BASH ERE ORIG AE AISI K KAG 15 Amending Al PP 15 Additional Information 0 0000 cece eee eee es 16 Sebede B acces scene eso ae fobs NAG hd eeee han eee 4 cee ke bo hes Baer ees wae eee 16 Slate specilic MlOniaAiONn 5 3 2can soe MEAN Be anek E PaATSSae Rd Td Ped ad NG Dr FLATS aces 16 Other Information and Overrides 0 cc ccc cee aaa 18 Schedule K Shareholders Pro Rata Share Items 18 Pola AGA RaGneey need pease eee one ab AMA ENG TUA RE BANGA eee eueneaeaner tases 19 Schedule K 1 for 1120S Shareholder Information 19 Ownership Changes sac caw es baha ha ke dedos as ood awed daw Ae OR e dae db DA gow iem oca d 19 IRS K 1 Codes TRER
124. ts amounts flowing from the K1P screen line 16 code D General category Adjusts amounts flowing from the K1P screen line 16 code E other aust amounts flowing from the K1P screen line 16 code F Interest expense Adjusts amounts flowing from the K1P screen line 16 code G other aust amounts flowing from the K1P screen line 16 code H Passive category Adjusts amounts flowing from the K1P screen line 16 code I General category Adjusts amounts flowing from the K1P screen line 16 code J Ohe Adjusts amounts flowing from the K1P screen line 16 code K Foreign taxes paid Adjusts amounts flowing from the K1P screen line 16 code L and the K1F screen code B Foreign taxes accrued Adjusts amounts flowing from the K1P screen line 16 code M Reduction in taxes available for credit Adjusts amounts flowing from the K1P screen line 16 code N O cop TJ D 14c 14d 14e 14f 14g 14h 14i 14j 14k 14l 14l 4m 1 Adjustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted 1120S 14n0 AA PAPA AA Adjusts amounts flowing from Form 8873 line 15 the K1P 9 99 p screen line 16 code O and the K1F screen line 14 code G TV Adjusts amounts flowing from form 8873 line 52 and the K1P 14n P Extraterritorial income exclusion l screen line 16 code P 14n Q Other foreign transactions Adjusts amounts flowing from the K1P screen line 16 code Q Adjusts the calculated
125. tying to the federal return Enter as much or as little detail as the states require If a state does not require any information to be entered no information will flow to that state s return Click Screen Help on each tab for state specific information If certain contact information required for state purposes is different from that entered on screen 1 use screen 2 for the alternative data for any of the following entities e Registered office e Principal place of business e Books in care of information Screen 2 also has fields for the name title e mail address ID number and telephone number of the S corporation s contact person Access screen 2 from the States tab or by entering 2 in the selector field and pressing ENTER Screen E Officer Information is for state purposes only Nothing entered on this screen 1s carried to the federal return The link to this screen has been moved to the States tab or you can enter either E or OFF in the selector field and press ENTER Other Information and Overrides Use screen 1 to enter the following additional information e Resident State If the corporation has a mailing address in one state but does business in another select the state in which the corporation does business from the Resident State drop list e Drake Codes and Overrides Information on miscellaneous codes invoice numbers and override fields is covered in the Drake Software User s Manual Tax Ye
126. uctions Other current assets attach statement Loans to shareholders o doa NA ks C Mortgage and realestate loans 9 Other investments attach statement 10a Buildings and other depreciable assets i ie ee a mr Figure 11 Data entered on the Other current assets line will be attached as an e fileable statement and referenced on the applicable line of the return Typically one or more SCH2 detail screens are needed for Schedule L items If you are using Drake s trial balance worksheet feature be aware that data for the SCH2 screens cannot be entered directly into the trial balance worksheet and it cannot be imported into the data entry The SCH2 detail screens must be created apart from the trial balance worksheet When the return is produced Schedule L reflects both the amounts imported from the trial balance worksheets where direct entry was allowed and the totals of the SCH2 screen amounts For more information see SCH2 Detail on page 50 Autobalance forces Schedule L to balance for both the beginning and end of year amounts The program adjusts the unappropriated retained earnings amount on Sched ule L by the difference between the total assets and the total liabilities and capital before the adjustment Example If Assets 1 000 and Liabilities and Capital 900 the program increases the unappropriated retained earnings by 100 The program makes the adjustment due to diff
127. uments tab for the IRS envelope coversheet An entry here overrides the option that was entered on Setup gt Print state envelope coversheet Options Optional Documents tab for the state envelope coversheet An entry here overrides the option that was entered on Setup gt Print city envelope coversheet Options Optional Documents tab for the city envelope coversheet Date to print on returns Overrides the default date on the Paid Preparer line at the p bottom of the 1120 page 1 Due date to print on letter and filing instructions A eins default due date that is printed on letters and filing Total assets on Form 1120S page 1 line F Overrides the calculated amount on Form 1120 page 1 line F IRS Center Overrides the IRS Center address generated from screen 1 TI U N dem oO O 2 Notice to Shareholder of Undistributed Long Term Capital Gains Federal ID number Overrides entry on screen 1 Regulated investment company s name in care of aan GERA name if needed address city state and ZIP code y i l mE Overrides default calendar year dates or fiscal year dates Fiscal Year beginning ending entered on screen 1 Shareholder s name in care of name if needed address city state and ZIP code Overrides entries on the K1 Shareholder Information screen Overrides the system calculation for the Current depr column of the Depreciation Detail Listing Override regular depreciation AMT if different usd D for the A
128. ure 3 ATT SSW literal on Form 1120S Repairs and Maintenance Enter repair and maintenance costs on the DED screen An amount entered there is combined with the amount if any entered in the Repairs and maintenance field on screen F Tax Year 2011 Drake Software User s Manual Supplement Income and Deductions Bad Debts Use the Bad debts field on the DED screen to enter the total debts that became worth less in whole or in part during the year but only to the extent that such debts related to a trade or business activity Enter deductible non business bad debts as a short term capital loss on NOTES Schedule D Form 1120S Cash method corporations cannot take a bad debt as a deduction unless the amount was previously included in income Rents Use the DED screen to enter rent paid on business property used for a trade or busi ness activity If the corporation rented or leased a vehicle enter the total annual rent or lease expense incurred in the trade or business activity of the entity and then complete Part V of the 4562 screens 8 and 9 NOTE The Rents field is an adjustment field An amount entered here is com bined with the amount if any entered in the Rent fields on screen F Taxes and Licenses Enter tax and license amounts on the DED screen Amounts are combined and the sum generated on Form 1120S line 12 Taxes and licenses Note that credit from Form 8846 Credit for Employer Social Security and Medicare Taxes P
129. ures Adjusts amounts flowing from the K1P screen line 13 code J 12d Deductions royalty income Adjusts amounts flowing from the K1P screen line 13 code l 12d K Deductions portfolio 2 floor Adjusts amounts flowing from the K1P screen line 13 code K 12d L Deductions portfolio other ust amounts flowing from the K1P screen line 13 code L 12d M Preproductive period expenses Ast amounts flowing from the K1P screen line 13 code P 12d N Commercial revitalization deduction from real estate Adjust amounts flowing from the K1P screen line 13 code Q 12d O Reforestation expense deduction Aust amounts flowing from the K1P screen line 13 code S 12d S Other deductions Adjusts amounts flowing from screen K1P line 13 code W 13d Other rental real estate credits Adjusts amounts flowing from the K1P screen line 15 code F 13e Other rental credits Adjusts amounts flowing from the K1P screen line 15 code G 13g H Undistributed capital gains credit Adjusts amounts flowing from the K1P screen line 15 code H Adjust amounts flowing from various credit forms without O ANGT CGI specific K1 codes and the K1P screen line 15 code P chedule K Shareholders Pro Rata Share Items Screen 2 of 2 14b Gross income from all sources Adjust amounts flowing from the K1P screen line 16 code B Gross income sourced at shareholder level Adjust amounts flowing from the K1P screen line 16 code C o Passive category Adjus
130. urn cannot be e filed if the PIN screen is not completed including the title and signature name of the officer signing the return An 1120S return must be signed and dated by one of the following individuals e The corporation s president vice president treasurer assistant treasurer or chief accounting officer e Any other corporate officer such as a tax officer who is authorized to sign If the return is prepared by a paid preparer the preparer must complete the required information and sign the return in the space provided If it is prepared by an employee or officer of the corporation select NONE in the Firm and Preparer fields on screen 1 To have the preparer s name and address information displayed on the printed return e If the return preparer and ERO entered in Setup gt ERO are the same Goto Setup gt Preparer s and ensure that the Alternative Electronic Signa ture box is marked for the preparer Complete the PIN screen for the return e Ifthe return preparer and ERO are not the same Goto the PRNT screen for the return and complete the field labeled PIN for preparer s alternative electronic signature The PIN entered should match the one entered for the preparer in Setup gt Preparer s For more informa tion press F1 in this field NOTE Setup gt ERO must still be completed for e filing See the IRS instruc tions for further details on signature requirements Amending a Return
131. vidual K 1 open a shareholder s K1 screen and click the blue Supplemental Info link at the top of the screen In the Sup plemental Information pane Figure 9 enter information pertinent to this share 21 Schedule K 1 for 1120S Shareholder Information Drake Software User s Manual Supplement holder When the return is printed this information will appear only on this shareholder s K 1 K1S K 1 Supplemental Information Statement KT Basis wks Supplemental into 400000066 Carl O Hare Enter global supplemental information for all K 15 on the K 1G screen Enter specific information for a single K 1 here This information is added to the global supplemental information entered on the K16 screen Supplemental Information the following information for Carl O Hare X arent ex diat o camen il e n E imde adi aii n idem al ae a Figure 9 In this example the information entered on the KIS screen appears only on the individual shareholder s K 1 Domestic Production Activities An S corporation does not take the deduction for Form 8903 Domestic Production Activities Deduction Because the deduction is subject to income limitations this information must be reported on shareholders individual returns Shareholders use the pass through amounts to calculate their eligibility for the deduction On the 8903 screen 1f the Print K1 8903 for each shareholder box 1s not selected the amounts flow to the K 1 box 12 with
132. worksheet make adjust ments and import the worksheet again Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information Additional The program can import the following additional information when importing the trial Import balance data select the items to import or click Select All Options Buildings amp other depreciable assets Accumulated depreciation Land Goodwill amp other intangible assets Accumulated amortization 8825 Rent information Special Conditions Some items cannot be entered into the trial balance worksheet and must be typed directly into data entry Other items should be entered into the worksheet for balance purposes but are not imported to data entry these must be entered separately and the calculated results compared to the trial balance worksheet Details for Most items go directly to the location indicated in the program and on the return For Preparers example the amounts shown in Figure 33 go to Schedule L line 1 column d in the program and are shown on page 4 Schedule L line 1 column d of the 1120S return Figure 33 Indication of where an amount will go in Drake and on the return Not all figures are imported directly however and some amounts are optional Use the Other Information column to indicate special conditions and additional information regarding certain rows Table 5 describes the most common notes in this column Table 5 Other Information

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