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Drake Software User`s Manual

1. 14 Program Defaults and Overrides uu users rer m Roan ca wad ower e ae KGa rd ee ee vos Qu RU De as 14 Required Information 0 ee eher s 14 Withdrawal from Multiple Accounts 0 0 0 0 0 00 eee he 15 Tax Year 2013 ill Drake Software User s Manual Supplement Corporations FINNO AN EXIGHSION pec ae sd ceed were SR and ec RR ee RN M Rx RR RU een es ee ees 15 Signing the Return 0 0 ce eee 16 Amending a Return au deam mind hudatdodun ees bese acd cent eR COR CUR Rede eae 16 POMCOUIS ac Lene 17 wi HCCUIC k NAGS Beacons 4 boon ew bs oe ee ee So we ee Ee HO Ee ed hee ex 17 Schedule k Line 4 6si a5 06040806 39 9 Raul ones Orestes Gh ROBUR chee EUR RUP eae de ROI Edo 18 Schedule ke LING iss iade uerum quot tau open FO FREE Wenbeet ne et uS Von E eet ne ane oes 18 Schedule E Me PRTEERERTPETRERRERTTTTRTTEREERRECTTPPPPTPPTTTTPT V T 19 Schedule K I3ne 13 04e mm deed oo Sain que qc ane Eie 91 we QE ears ew V3 owe sw gre sie 19 BONO IU aao was A CR YCSCROR ORI TORHECR E RR SCR AER 18 09 RECRERCA RUP ene nes 19 State Specific Information ee 20 Pesda SING M TTPRCCT r m 20 Olicbisidie Sessa 46a oe eos tee are he E ERAT AM oe E ee NEM EE TUE 20 Contact Imionmauon 24 04 com too e Sea po P Ro eR Ip TUE ORO rU ee Eee bo eee eee ac bue sp ar boe rots 22 Other Information and OverrideS 0 0 0 cece es 22 Schedule L Balance Sheet per Books
2. 2 0 00 cee ee 22 Flow of Information 0 hrs 23 MG CH SE a dcus ence E pane pers ee eA EM ERU EE PET ee ee we Se ee ae eee te ae 23 PANO DAAC G T T TTLT 24 Schedules M 1 and M 3 Reconciliation of Income per Books 25 eeiam m P e m 25 Ulm 25 Schedule M 2 Unappropriated Retained Earnings 26 M 2 Troubleshooting inossurte9 sisien ems EUER S 29 9 hoe 2 0 d ERO RAP TUER EO Hanes Heads s 26 Schedule O Controlled Group Information LL 27 AMT Adjustments and Other Itets 1 vues ee epi ERG HEY Rx VER Y e WE dass 27 Typesof Commolled GrGuns 23m ea serae E A E xe pP P EM dS EE 21 Line 5 Apportionment Plan Status 0 eee 28 Credits and Adjustments 00 cee es 28 Adjusting Charitable Contributions NOL 0 0 2c es 29 S e a Souda cctsenetascabeGennaeeeeeeeeeaceeGhenehaneeeusegena seeeus 29 Makin an Election in Dake 0 2644 docetewasandoy ii aoa om aca qol tap Sede e eee ee ea one E ee 30 Election Statements uas qoe e pue die qe qe oq xd E IHREN Ea E ROSEY d Fane een P abge ees 3l Making Changes on the Fly 0 0 cee es 31 Suppressine Forcine Documents ex ue RRRRER ATGUEEESRICREEEAVARAGXATORAV E 31 Calculation and Other Options 0 0 ee eect ras 32 Overriding Other Setup Options
3. N A 5 Pensionandofherrelatedcosis llle statement ZNAN NA 6 Employeebenefits sees NA N A 7 Inmirectmateriasandsupplies ne Notapplicable lt NuA N A 8 Purchasing COSS eee B to this return NN A N A eau Honda processing assembly eC alt ntum cam o diera a Lnd wm Figure 24 X was selected for column 1 lines 1 3 B was selected for column 1 line 4 nothing has yet been selected for any other line To attach a statement for section B or C click the D3 2 Attachment link at the top of Section B Figure 25 on page 45 A single statement may contain all necessary expla nations for sections B and C 44 Tax Year 2013 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Patsilll ParsiLiV ABC D Lil D N Form 3115 Schedule D Part Ill Method of Cost Allocation Multi orm code Section A Allocation and Capitalization Methods D3 1 attachment Allocation and capitalization methods detail Section B Direct and Indirect Costs Required To Be Allocated D3 2 attachment Explanation for boxes that are not checked X Check B Blank No Selection N A Present Proposed 7I AED ccr ELE E ERU MR X E x 2 DEM B gt gt Z2 BENE c oe ee ere E ee et IE ME TA EA BR Lm ek E 7 7 4 Officers compensation not including sellin 000001 e S SETETE Sie E ner zi x Dt A mice C ri a gptincluding S aling g
4. Supplement Corporations 1120 Support DrakeSoftware com gt 828 524 8020 Drake Software User s Manual Tax Year 2013 Supplement Corporations 1120 Support DrakeSoftware com 828 524 8020 Copyright Trademarks Drake Software Manual Supplement Corporations The 2013 Drake Software Manual Supplement 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 2013 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 respective companies Tax Year 2013
5. This section covers 52 53 week year returns and inactive returns Both types of returns can be e filed using Drake Electing a 52 53 Week Year Initial Return To elect a 52 53 week year a new entity one that has never filed a return must enter data on both screen 1 and the ELEC screen 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 beginning and Fiscal year ending dates Use MMDDYYYY format as shown in the exam ple in Figure 14 2 Mark the 52 53 week tax year box If not calendar year Fiscal year begins 09 18 2013 Fiscal year ends 09 24 2014 W 52 53 week tax year ELEC Figure 14 In this example the fiscal year begins 09 18 2013 and ends 09 24 2014 the Wednesday closest to the end of September giving the entity a 53 week year for 2013 An entity that has filed returns in the past must complete only steps 1 N OTE 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 15 Election Options Tax Year Elections ENTER ONLY OMCE 52 53 Week Tax Year Election 1 Month in which new 52 53 week tax year ends x 2 The day of the week on which the tax year always ends gt 3 The date the tax year ends Other short year reasan Figure 15 E
6. Drake Software User s Manual Supplement Corporations Table of Contents What s New in Drake for Corporations ee 1 Calculation Results Window 2 02529 0404i4 064664864045 44455404445 236540508966 e EOS wo l Searchable Selector Field 2a sreretrater grrr I EOS Oe EERE EEE R E FUA dicia 2 Barore TOU SaN a ea a a a aa nas A a a eed ee teenage a E a ce 3 Updating a Prior Year Return in Drake ll 3 Converting from Another Return Type 0 0 0000 nanana anaa eee 4 Filing Form E1205 or 20O T ia de na a E EEEE EROR PUEDE OE urs Vor x ipee 4 Header Information 2 ou 32 u dcs aca edi d dc dd odegte Dua i ardt di Ue DECR dU IR ea rr RE 4 Name and Address xs order ee geet add qv bees sepe rA RHR dua oe REG oop Se REE SERS Eu pps 4 li rr rrrP 5 Boxes A through E uus cue ia uos obs Rad HES fore De ear ded os dod DEMS 84 804 haw Fc pode oe c pon erede 5 Income and Deductions 0 ccc nnn 5 Cross RGCCIDIS 4 6 Cost of Goods Sold Form 1125 A 00 ees 6 Dividends Schedule C ossa esse de RE be esos 6 Aa Od sae aed heeded obs ened ahaa Cee ars 7 D S eee a E E E E a EE A 7 Ren and Royali ES epar ee sca enw E FERE EOE RETE een ES I CAP pat oie r E R E 8 Ordinary Gains and LOSSES manh Ep HERR eR UR SETS R E rA RA e e 8 Other Income LOSS js an hapa ees ane nee Er wees 5 TOT TT See RE EEr W EEG Oa aes 8 Compensation of Officers Form 1125 E
7. Gb c o R EATR MT gt Other information Explanation sss M ET 15 m I P MN E duis ee UN LEM ek Figure 11 Return Elections portion of ELEC screen Making an Election in Drake To indicate that the corporation is making an election 1 Openthe ELEC screen accessible from the Miscellaneous tab of the Data Entry Menu or by typing ELEC in the selector field and pressing ENTER 2 Make a selection from the Election drop list Figure 12 r Return Elections General Election Statement 02 Capitalize and Amortize Circulation Costs over 3 Years Capitalize and Amortize Research and Experimental 04 Capitalize and Amortize Intangible Drilling and Development 05 Capitalize and Amortize Mining Development Costs Other cost basis or amount 0 amp Capitalize and Amortize Mining Exploration Costs GUT OE 07 Include Commodity Credit Loan in Income sec 77a Reg eto OG PSP dRO aum adit cl nouo imn MO aee ah P MP anh Descrplon s Cost basis amount years Date or year ending Figure 12 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 Date or year ending field shows that the field is required only for election options 08 09 11 and 15 and it explains what specifi call
8. 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 Tax Year 2013 21 Other Information and Overrides Drake Software User s Manual 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 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 Contact Information If certain contact information required for state purposes is different from that entered on screen 1 use screen 2 This screen has fields for the following types of contact information e Name and address of registered agent e Principal place of business e Books in care of e General contact information for the name title e mail address ID number and telephone number of the corporation s contact person Access screen 2 from the States tab or by entering 2 in the selector field and pressing ENTER Other Information and Overrides Use screen 1 to enter the following additional information Resident State If the corporation has a mailing address in one state but does busi ness in another s
9. line 12 Use the A B C screen to complete the following sections of Form 3115 e Schedule A Change in Overall Method of Accounting screen covers Part 1 Change in Overall Method e Schedule B Change to the Deferral Method for 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 N OTE Request requires attachments and is not addressed on the A B C screen This section is required for all applicants filing to change their overall method of 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 N OTE Exclude amounts not attributable to the change in method of account ing 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 is 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 r
10. other than an initial or final return you have to provide an explanation To do so go to the ELEC screen and select an explanation from the Other short year reason drop list Your 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 N OTE 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 E Use screen 1 to enter most information for boxes A through E top of Form 1120 Note that boxes A 4 Schedule M 3 attached and D Total assets are completed automatically by the program based on data entered elsewhere Box 1a Consolidated return is automatically marked if there are entries on screen 851 Form 851 Affiliations Schedule Box A 2 N OTE Personal holding company is automatically marked if there are entries on screen PH Schedule PH U S Personal Holding Company PHC Tax Income and Deductions Tax Year 2013 Only three screens are required in order to calculate taxable income for a return Income and Deductions Drake Software User s Manual INC Includes all items of income reported on Form 1120 page 1 lines 1 through 10 that
11. 000 and liabilities and capital are 900 the program increases the unappropriated retained earnings by 100 The program makes the adjustments due to differences in the balance sheet Incorrect data entry could cause these differences but they are usually the result of one of the following issues e An asset was deleted from 4562 screen Depreciation Detail Items instead of being indicated as sold e Beginning inventory amounts were adjusted on the Schedule A or ending inven tory amounts were entered incorrectly 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 turn off this feature for a specific return go to the PRNT screen and select Turn off autobalance N OTE If you are using trial balance import autobalance must be turned off 24 prior to import See Preparing to Use Trial Balance Import on page 48 Tax Year 2013 Drake Software User s Manual Schedules M 1 and M 3 Reconciliation of Income per Schedules M 1 and M 3 Reconciliation of Income per Books Schedule M 1 is required if the balance sheet s total assets at the end of the year exceed 250 000 but are less than 10 million Schedule M 3 is required if the balance sheet s total assets at the end of the year equal or exceed 10 million N OTE If the corporation is filing Schedule M 3 any entries on the
12. 2013 23 Schedule L Balance Sheet per Books Drake Software User s Manual SCH2 and Trial Balance Import Autobalance 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 is 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 Typically one or more SCH2 screens are needed for Schedule L items Data for the SCH2 screens cannot be entered directly into the trial balance worksheet Although the amounts must be included in the trial balance worksheet for the worksheet to bal ance the SCH2 detail screens must be created separately from the worksheet When the return is produced Schedule L will reflect both the amounts imported from the trial balance worksheets where direct entry was allowed and the totals of the SCH2 screen amounts See Importing Trial Balance Information on page 48 for detailed instructions using the trial balance worksheet for SCH2 items and amounts 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 For example if assets are 1
13. 6 State tax refund cash basis INC line 10 Total other income Figure 35 Trial balance worksheet for Other Income To return to the previous worksheet click the Corp TB tab labeled 1 in Figure 35 or click the Return button above the worksheet tabs labeled 2 in Figure 35 Note that a detail tab the Other Income tab in Figure 35 might include one or more detail worksheets labeled 3 in Figure 35 Do not create detail worksheets in data entry if the trial balance work N OTE sheet does not provide an equivalent detail worksheet Otherwise the trial balance will not be imported correctly 52 Tax Year 2013 Drake Software User s Manual Importing Trial Balance Information 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 36 i Tirages tine deias adie a N Uo ts Officer compensation p0 Salaries and wages p0 Waste removal 0 Het Income Lass Schedule M 1 line 1 301 056 Totals 971 301 OUT OF BALANCE Figure 36 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 see Figure 30 on page 49 N OTE The data cannot be imported if the work
14. 8916 A M3S for supplemental statements 8916 for reconciling of M 3 with taxable income for mixed groups 916A for supplemental attachments to the M 3 25 Schedule M 2 Unappropriated Retained Earnings Drake Software User s Manual Parts I III Schedule B The SCH3 Screen If the corporation is required to file or voluntarily files Schedule M 3 the corpora tion must file Form 1120 and all attachments and schedules including Schedule M 3 Certain income and deduction amounts and adjustments flow from Form 1120 to Schedule M 3 and Form 8916A in the program but all N OIE other M 3 data must be entered manually If Schedule M 3 is present in a return no Schedule M 1 is generated Part I of Schedule M 3 asks certain questions about the corporation s financial state ments and reconciles financial statement worldwide net income loss for the corpora tion or consolidated financial statement group if applicable as reported on Schedule M 3 Part 1 line 4 to net income loss per the income statement of the corporation for U S taxable income purposes as reported on Schedule M 3 Part 1 line 11 Parts II and III reconcile financial statement net income loss for the U S corporation or consolidated tax group if applicable as reported on Schedule M 3 Part II line 30 column d to taxable income loss as reported on Form 1120 page 1 line 28 The software carries certain items that are readily available
15. M1 screen Schedule M 1 S for Schedule M 1 should be deleted chedule 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 When required the corporation must reconcile book income with the taxable income Use the M1 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 kind of differences are shown in Table 2 Schedule M 3 Tax Year 2013 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 Gains or losses on the sale of during 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 Schedule M 3 is completed using the following screens all found on the General tab of the Data Entry Menu M3 M31 M32 and M33 for Parts I II and HI of the Schedule M 3 M3B for Schedule B Additional Information for M 3 filers SCH3 for subsidiary schedules for Schedule M 3 and Form
16. Micro N OTE soft Word can be printed or saved as PDF files if you have a PDF printer such as Adobe Reader installed Adding PDF To indicate in the software that a PDF file will be sent with the return Files 1 Goto the PDF screen in data entry 2 Fill out the columns on the 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 Instructions for 1120 makes attachments necessary Description Description of form or documentto 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 screen Because you ve indicated that a PDF file is attached the program generates an EF message 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 on the PDF screen see Adding PDF Files previously there will be three PDF related items in the View Print window e Ared MESSAGES alert see item 1 in Figure 16 on page 37 e An EF PDF worksheet that lists all items entered on the PDF screen see item 1 in Figure 16 on page 37 e An Attach PDF button on the toolbar item 2 in Figure 16 on page 37 36 Tax Year 2013 Drake Softwa
17. N OTES letins available at www irs gov to determine if the IRS has pub lished an accounting method revenue procedure revenue ruling notice regulation or other guidance relating to the specific method to be changed See Pub 538 Accounting Periods and Methods 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 38 Tax Year 2013 Drake Software User s Manual Form 3115 Application for Change in Accounting Method pu ea a Ye Exit J import CSM Ema Help 1 Credits Other Forms Jother Forms Miscellaneous States k 20C 1120 C Cooperative Associations 5 Affiliations Schedule 851 Parent Corporation lations 851A Subsidiary Corporation Information 851D Descriptions amp Explanations 982 Debt Discharge p 1122 Authorization and Consent Sub Corp 1139 Application for Tentative Refund f 2220 Underpayment of Estimated Tax 2553 Election by Small Business Corp i 2848 Power ofAttorney Change in Accounting Method 3115 Change in Accounting Method 311E Schedule E ATT Explanations and Attachments ATT2 PtliLn 12 amp Ptill Ln 23b Attachment ta ih pM UU ee we Figure 19 Screens for Form 3115 Application for Change in Accounting Method The screens accessible from the Change in Accountin
18. OTE The company information fields on screen 2 apply for the resident state only 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 Data Entry Menu or enter the two letter state code in the selector field and press ENTER Multi State Enter sales payroll and property factors on the APPT Multi State Apportionment Appor screen This screen provides one central location for entering all state apportionment tionment information instead of having to open each needed state s screen In addition to making data input faster and easier this feature provides two work sheets 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 fed eral return figures These worksheets are available in View mode The individual state apportionment screens will continue to be available in Drakel4 but will be used to override data entered on the APPT screen No state apportionment related screens will be updated from Drakel12 to Drake13 20 Tax Year 2013 Drake Software User s Manual State Specific Information Drake 2013 Data Entry 112011201 Seay s Trucking State Selection Additional Property Zero Apportionment No Activity in State Sales Outside state f 123123 34321 Within state to E 112233 10203 Within state to U S GOVEI
19. Tax Refundable Credits and Payments Screen J has fields for completing the Tax Refundable Credits and Payments sec tion of Form 1120 Note that some fields are overrides Press F1 to view more infor mation on a field 12 Tax Year 2013 Drake Software User s Manual Tax Refundable Credits and Payments Total Tax For corporations that belong to a controlled group complete all applicable fields on screen J If allocating income to the various brackets on this screen you must enter 0 zero in the fields of the brackets to which no income 1s allocated The total tax from Schedule J is calculated and carried to line 31 of Form 1120 Controlled groups are also required to complete Schedule O Use the O N OTE screen in Drake to complete Schedule O See Schedule O Controlled Group Information on page 27 Estimated Taxes and Applied Refunds Enter on screen ES the estimated corporate taxes paid If necessary use screen W to override 2013 estimated taxes paid and apply any overpayments from 2013 to 2014 N OTE Estimate vouchers are not used in federal corporation tax returns Over To apply the current year overpayment to next year the corporation s current year payment taxable income must be greater than 0 zero Enter the amount to be carried to next year in the overpayment field at the bottom of screen W If current year taxable income is not greater than 0 and you want to apply the current year overpayment to nex
20. Tax Year 2013 Drake Software User s Manual Supplement Corporations R receipts 6 references to forms and worksheets 32 refunds direct deposit of 14 State tax 8 reject codes 33 rent paid on business property 10 rental amp royalty income 7 repair costs 10 Resident State 20 resident state 22 returns consolidated 7 converting from another type 4 fiscal and calendar year 5 tax exempt organizations 990 35 38 updating 3 S salaries 9 SCH2 screen for Schedule L 23 Schedule A Cost of Goods Sold 6 7 24 Schedule B Additional Information for M 3 Filers 26 Schedule C Dividends amp Special Deductions 7 Schedule D Form 3115 43 Schedule E Compensation of Officers 31 Schedule G Information on Certain Persons Owning the Corporation s Voting Stock 31 Schedule G Schedule G Information on Certain Persons Owning the Corporation s Voting Stock 18 Schedule K 17 Schedule K line 13 19 Schedule K line 3 17 Schedule K line 4 18 Schedule K line 5 18 Schedule K line 7 19 Schedule K 1 19 Schedule L Balance Sheet per Books 22 24 31 Schedule M 1 Reconciliation of Books with Return 25 31 Schedule M 2 Unappropriated Returned Earnings 26 31 Schedule M 3 Reconciliation of Books with Return 25 Schedule O Consent Plan amp Apportionment Schedule for a Controlled Group 27 schedules on Form 3115 46 section 263A costs 6 481 8 Selector field 2 short year return 5 signatures el
21. be included in the Other costs excluding depreciation work sheet If using the trial balance import feature see Importing Trial Balance Information on page 48 enter depreciation amounts directly into the appropriate fields on the trial balance worksheet not in the fields in data entry When the trial balance is imported the COGS depreciation expense amount flows directly to the appropriate line of Form 1125 A and is calculated accordingly Dividends Schedule C Interest Enter dividends and special deductions on screen C Schedule C The Dividends Received Deduction Worksheet WK DRD is generated from data entered in these fields The result of the WK DRD is carried to Schedule C of the return The total from Schedule C line 19 column A is carried to Form 1120 line 4 Dividends and the total from Schedule C line 20 column C is carried to Form 1120 line 29b Special deductions N OTE If the corporation is filing a consolidated return do not enter non included dividends here or anywhere else in the program Line 5 of Form 1120 is for interest income which is entered on the INC screen Note that the Interest income field is an adjustment field an amount entered there is com bined with the interest amount if any entered on screen 6252 Form 6252 Installment Sale Income and interest income entered on screen K1P Schedule K 1 Form 1065 Enter tax exempt interest income on the INC screen Thi
22. but it does not balance the M 3 automatically To ensure that the M 3 balances additional data entry may be required on the M31 M32 and M33 screens Schedule B is required when an M 3 is present in a return Use screen M3B for Form 1120 Schedule B Additional Information for M 3 Filers The SCHG 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 23 Schedule M 2 Unappropriated Retained Earnings Information from Schedule M 2 Unappropriated Retained Earnings form ties to the Schedule L line 25 portion of the balance sheet Increases distributions and other decreases to the retained earnings are entered on Schedule M 2 Unappropriated retained earnings refer to corporation income that has not been distributed to share holders that is available for dividend distribution M 2 Troubleshooting 26 The beginning Unappropriated Retained Earnings flows from Schedule L Balance Sheet and the Net Income Loss per books flows from the completed Schedule M 1 or M 3 on Form 1120 These numbers combined with amounts entered on the M2 screen are used to calculate the ending Unappropriated Retained Earnings If the computed amount does not match the amount in the completed Schedule L Bal ance Sheet the system produces an EF message
23. 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 1 Open the return to the Data Entry Menu Gey mes 2 Click Import gt Trial Balance Import in the menu toolbar The preliminary Trial 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 Excel 2007 and 2010 you may see a Security Warning message N OTE with an Options button Click Options to open the Security Options dialog box then select Enable this content Click OK In Excel 2013 click Enable Content 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 Drake13 soft ware The file name consists of the client name as entered in Drake plus TB for trial balance plus the xIs extension assigned to all Excel files as shown in Figure 32 Drake13 TB EntityName Pad 1 File location Name of meii i extension caont balance file Figure 32 Example of trial balance template file name To change the name of a file in Excel select File gt Save As and assign the new name If saving a trial balanc
24. do not require a separate schedule Schedule C or additional information Income reported on Form 1065 Schedule K 1 also includes tax exempt interest income reported on the Schedule K e DED Includes all deduction items reported on Form 1120 page 1 lines 13 through 26 that do not require a separate schedule or form Form 4562 e J Includes loss carrybacks controlled group tax bracket amounts tax payment information and certain credits Gross Receipts Enter gross receipts Form 1120 line 1a and returns and allowances Form 1120 line 1b on lines 1a and 1b of the INC screen Exclude any amounts that are to be reported on lines 4 through 10 of Form 1120 Cost of Goods Sold Form 1125 A Enter the cost of goods sold COGS on screen A Form 1125 A is not produced unless entries are made on screen A On screen A items 9a through 9f are direct entry fields and follow the N OTE 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 Lines 1 and 7 of screen A are adjustment fields Amounts entered in these fields adjust add to or subtract from any amount being carried from the F screen Form 1040 Schedule F Profit or Loss NI OTES from Farming to line 2 of Form 1120 The fields on screen L Schedule L Balance Sheet Assets f
25. electronic signature Figure 30 Check box for forcing Schedule L 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 or sales 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 31 gM CPC pe be ek tay er 0 o ele US eed S sO eyes aR e bM 1b Returns and allowances plus any other adjustments HCM gos SUM a e A a nem 0 5 E E Oeo A E d cU E A ELO ACE AE 210 ADIN os ee cs ert ree can Me RENE RP EMEN A des N As p cepe cT at as M 0 x o or am Figure 31 Example of an unnecessary detail worksheet Remove unnecessary detail worksheets prior to import See Detail Worksheets on page 52 for more information on using detail worksheets in the trial balance 49 Importing Trial Balance Information Drake Software User s Manual 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 is entered and saved it can be imported into the return Opening a The first step in preparing financial
26. eligible for N OTE e file EF messages for Form 3115 attachments are eliminated when all required statements have been attached to the return Importing Trial Balance Information Drake s trial balance import feature allows data to be imported into an 1120 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 N OTE 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 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 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 48 Tax Year 2013 Drake Software User s Manual Importing Trial Balance Information Tax Year 2013 macro security is set to medium To do so go to Tools
27. go to the PRNT screen and select Force Schedules G 1120 C L M 1 and M 2 to be printed Schedule K 1 Tax Year 2013 The 1120 package includes a K1P screen accessible from the first Other Forms tab of the Data Entry Menu for entering information from Form 1065 Schedule K 1 This screen works the same as it does for the other packages with amounts being car ried automatically to the appropriate forms schedules and lines In addition State Specific Information Drake Software User s Manual e Ordinary income is carried to Form 1120 page 1 line 10 Other income with the partnership name and EIN required information e Ordinary losses are carried to Form 1120 page 1 line 26 Other deductions with the partnership name and EIN required information Codes or lines not included require additional information not available to the pro gram and must be manually entered in the proper place in the return State Specific Information Resident State The program automatically generates a return for the corporation s resident state Use screen 2 to enter company information as it should appear on the state return N OTE The link to screen 2 is on 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 N
28. gt Options in Excel and select the Security tab Click Macro Security and select Medium then click OK In Excel 2007 and 2010 click the Office button in the upper left and then click the Excel Options button at the bottom of the window In Excel 2013 click the File tab then select Options from the menu on N OTE the left 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 and then OK Disable Autobalance 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 disable auto balance go to the PRNT screen and select Turn off autobalance 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 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 the applicable check box Figure 30 Items to Print Force Form 1125 E Officer Compensation I Force Schedules G 1120 C L M 1 and M 2 to be printed Print Form 4562 Print next year depreciation listing Print inactive return FIN for preparers alternative
29. members of consolidated group use proposed method Press F1 in a specific field for more information on attachment requirements The method for attaching state ments in Drake is covered in Attachments starting on page 46 In addition to the Multi form code text box the Parts IL IV screen consists of the Part II and Part IV sections used to complete the following sections of Form 3115 e Part II Information For All Requests e Part IV Section 481 a Adjustment Applicants must complete both sections of this screen For more information on each line including instructions for any required attachments press F1 in a specific field Note that there is no field on the Parts II 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 41 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Schedules A 42 B and C Schedule A Schedule B Schedule C 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
30. 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 N OTE Compare 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 depre ciation amounts match but the line 1 amounts differ an M 1 adjust ment could be required Tax Year 2013 Drake Software User s Manual Appendix A Trial Balance Import Tax Year 2013 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 EHUHUSUHUHUBUESHUIHUHUS HIBUEDHUHUUHPHUBUBUHUSUHUHUHISUEDHUHESYMDHUEUEUHUHUHVUUHUBUEDHUHESVHDHUECHUHUHEHUUUHIBUEDHDHEHEHDHUEUEUHUHIHUSUHIBUEDHOHIHUHDHUECHUHUHPHUNUHUBURCHOHESUHDHUEUEDHUHEEUEUHUBUHCHOHEUHPHUECHUHUHEHUHUHUSUEDHOHEHUEPHUECEUHUHUSUHOHISUEUHDHEHUHDHIHCEHUHUHESUHUHUEUECHUHESUEDHUBUHCHUUPHUNUHUHUECHUHESUEDHUBCHOHUHENSUHUHUHUHUHDHISUEDHUBUEHCHUHENUHUHUHUEUHUHUUEDHUBCHPHUHEBUHUHUHUHUE 990 990 EZ or 990 PF return Prepare t
31. or screen 9022 contains a link to the Financial Crimes Enforcement Network s BSA e Filing System s website Allow yourself time to read and understand all the informa M PO HIANT tion available on the BSA website and to register as a BSA e filer For the 2013 tax year e Assets placed in service in 2013 50 bonus depreciation e Assets placed in service in 2014 0 bonus depreciation Before You Start Actions you might need to take before starting a 1120 return in Drake include e Updating a prior year return if you prepared the tax return last year e Changing a return from another type of return to an 1120 if the corporation has made such a change in the last year Updating a Prior Year Return in Drake Tax Year 2013 A prior year return can be updated in three ways e Asa single return updated one at a time using Last Year Data gt Update Clients 2012 to 2013 recommended e When you open a return for the first time in the 2013 program and are prompted to update it e With all other returns in the program using Last Year Data gt Update Clients 2012 to 2013 not recommended When you update an 1120 return that was marked final the previous year the pro gram informs you that the return was marked final before prompting you to proceed Header Information Drake Software User s Manual Converting from Another Return Type If the corporation is electing to become an 1120 corporation after existi
32. page 50 1 Import File Name IF DRAKET3XTEAKDOL SYSTEMS IMCTB ALS Bal Figure 37 Selected file to import 5 Select the Trial Balance Additional Import Options See Additional Import Options following this procedure 6 Click Next and wait for the import to be completed T 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 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 Goodwill amp other intangible assets Land Accumulated amortization Cost of goods sold COGS depreciation Special Conditions Some trial balance items cannot be entered into the trial balance worksheet and must be typed directly into Drake data entry Other items should be entered into the work sheet for balance purposes but are not carried to data entry these must be entered sep arately and the calculated results compared to the trial balance worksheet Details for Most trial balance items go directly to the location indicated in the program and on the Preparers return For example the amounts shown in Figure 38 go to Schedule L line 1 column d in the progr
33. required As with the DD screen the RTN Account number and Type of account data must be entered twice item 2 in Figure 7 Finally the PMT screen must indicate the return to which the payment data applies item 3 in Figure 7 Mark the box of the applicable return type 1120 7004 or 1120X 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 N OTE 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 17 2014 By filing Form 7004 a corporation 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 the corporation s year The 7004 extends the deadline six months N OTE An 1120 return is due no later than eight and a half months after the close of the corporation s tax year Use one of the following options to file an extension for an 1120 1120 C or 1120 H e Go to the 7004 screen in Drake and select Generate an extension Complete any other applicable fields on the screen e Go to the PRNT screen and select Prepare Form 7004 extension based on screen 1 info Tax Year 2013 15 Signing the Return Drake Sof
34. 120 is to be withdrawn on the return due date To indicate other wise complete the Requested payment date override fields see Figure 7 on page 15 for the applicable payment 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 transmit ted after the due date the requested payment date cannot be later than the date the return is transmitted Required Information A Withdrawal selection item 1 in Figure 7 on page 15 is required if the program is to direct tax authorities to withdraw funds from the corporation s bank account 14 Tax Year 2013 Drake Software User s Manual Filing an Extension Account Information Account 1 Federal A 1 Withdrawal Name of financial institution RTN Account number Type of account P Us LDL LL Checking Savings Repeat Account Information Checking Savings Federal Federal payment amount Requested payment date Daytime phone number i E a a BS Res ae ount anc ate ame a selection Federal selection Y State city selection State State payment amount Requested payment date Daytime phone number Figure 7 Required fields on PMT screen withdrawal selection 1 account information 2 specified return 3 The name of the financial institution RTN account number and account type are
35. 2 0 0 0 0 rr 9 balartes dnd Maece se Pa ene ee woe es oe MEME at pen we ee eee ee wee eee NE ee RET 9 Repairs and Maimtenanee oes ot dE REEL RUE Res Sub CEA GU EEA Xo Rue SOR ae ROR oaa 10 lcuNPI 10 ion 3 ag0e bodes oot cada Ghee oh obs oe eee ot bee wee ee ead ee be eee eee 10 Taxes and MEO 44 cence se Heep aaues soy or ey obey Rent ebes o4446e Menme oy uanee oe deneeees 10 lunc Lv 10 Charitable ContriDUHORS s 53 42ccachhnce ee eandeesend oss heed ede d dnic RS Rn dedos ies ing droit Pg dtans 11 Deprea gar ay bet nt eas chews SAGAR es TT TITIO 11 DEDE Oa gaqiceonnee ere EE Cas eS BG eee ew hee ete eno Fae eae ene ee oe PSP 11 DUIVGEHSIIB 42572 tos 4 4 E 6 pag 6 APRES PIERII ERE ERI SORS ea eae ee TIERS FIRES 12 Pension aud PrositSBariilP 244s 2o2dea d 9 one onde was oda bale oe oa eases hy S ICD IUD oe EU EH dead 12 Domestic Production Activities 2 0 ne ee eee ee eee eee ens 12 Aher DEOUCHOHS serrer kierr E he ene a eee boa ees ee Geen He eee am qd Etapas 12 NOL Carrybacks and Carryforwards 0 0 teen ene teen ene eens 12 Tax Refundable Credits and Payments LLL 12 Total aXe ncot eee sees casera eee an epee ees ease E E EEE EEEE ER SPEETS 13 Estimated Taxes and Applied Refunds 0 0 0 0000 cnn teen eens 13 Direct Deposit of Refunds 0 0c ces 14 Electronic Funds Withdrawal Direct Debit
36. 5 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 28 Far STM 2 10 Part Il line 10 statement ONLY Hame S Pn ID number EIN Figure 28 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 generating and attaching PDF documents 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 of the Attach a PDF Document sec tion which instructs you to fill out the columns at the bottom of the PDF N OTES 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 Attach
37. 62 to Form 4797 making screen 4797 entries unnecessary but only if screen 4562 shows assets sold date and property type Other Income Loss Use the INC screen to enter amounts for the Other income line of the main form Specific INC screen entries are displayed on attached statements in View mode of the return For Form 1120 calculated amounts from the following screens also flow automati cally to the Other income line line 10 e Screen 6478 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit e Screen 8864 Form 8864 Biodiesel and Renewable Diesel Fuels Credit Additional fields for other income on the INC screen include e Amount of credit for tax on fuels e Interest income on receivables e Recoveries of bad debts e Section 481 adjustments e State tax refund e Taxable income from insurance proceeds e Other itemize Detail worksheet is required Data from Forms K 1 received from partnerships should be entered on the K1P screen located on the first Other Forms tab of the Data Entry N OTE Menu This information is reflected in an attached statement in View mode of the return Losses are included with Other Deductions entered on the DED screen 8 Tax Year 2013 Drake Software User s Manual Income and Deductions Compensation of Officers Form 1125 E Officer Information Screen E Check Boxes Ownership amp Participation NEW FOR 20 5 ber field of screen E To do so enter
38. 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 expenses for the credit amounts for the following credits e Form 5884 Work Opportunity Credit e Form 6765 Credit for Increasing Research Activities e Form 8820 Orphan Drug Credit Form 8845 Indian Employment Credit 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 Employment Credit Tax Year 2013 Drake Software User s Manual Adjusting Charitable Contributions NOL e Form 8932 Credit for Employer Differential Wage Payments e Form 8941 Credit for Small Employer Health Insurance Premiums Adjusting Charitable Contributions NOL Limitation on Deduction Elections Tax Year 2013 Corporations with a net operating loss NOL carryover from any taxable year must apply the special rule of IRC section 170 d 2 B for charitable contributions The rules are designed to prevent a double tax benefit through interaction of NOL and charitable contribution carryovers The excess charitable deduction can reduce taxable income only once Under these rules a corporation s charitable contributions carry over but not the NOL carryover must be reduced to the extent the charitable contri bution dedu
39. 8903 to complete Form 8903 Domestic Production Activities Deduction DPAD The calculated total of screen 8903 flows to line 25 of Form 1120 N OTE The DPAD is not allowed on returns with a net operating loss NOL for the current year It also cannot be used to create a current year loss Other Deductions Enter all other deductions on the DED screen The program calculates these amounts and incorporates the total into line 26 Other deductions of Form 1120 The follow ing deductions credits adjustments and exclusions also flow to line 26 e Amortization from Form 4562 e Credit 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 Drake automatically calculates meals and entertainment limitations A detail CTRL W worksheet is required for the Other itemize N OTES field The program automatically generates a worksheet if an entry is made here or in any other field where a worksheet is required by the IRS NOL Carrybacks and Carryforwards Enter NOL carrybacks from future years to the current year on screen J Loss Carry back Tax Computation Payments To enter multiple carryback amounts use a detail CTRL W worksheet Use the LOSS screen to enter NOL carryforwards capital losses and contribution carryforwards from prior years Use screen J to enter current year carrybacks to prior years
40. Estimated Tax by Corporations The program retains the rates as of 12 31 of the calendar year If a corporation has a fiscal year end the preparer must enter the effective rates manually Calculate WK 1120W based on 2013 taxable income The WK 1120W is an estimated tax worksheet based on the current tax year taxable income Calculate Form 4466 application for quick refund Form 4466 Corpora tion Application for Quick Refund of Overpayment of Estimated Tax A check mark in this box 1s the only entry needed to generate the form Turn off autobalance For more information on the autobalance feature in Drake see Autobalance on page 24 Prepare Form 7004 extension based on screen 1 info Select this box to pre pare a six month extension based on the information that has already been entered into the return Note that screen 1 must be completed to prepare an extension N OTE To prepare Form 7004 based on information other than or in addition to that provided on screen 1 use the 7004 or EXT screen Overriding Other Setup Options 32 The following program defaults can be overridden from the PRNT screen Filing instructions federal and state Envelope coversheets corporation IRS state and city Date to print on return Due date to print on letter and filing instructions see note below Amount on Form 1120 page 1 item D Total assets Tax Year 2013 Drake Software User s Manual Electronic Fi
41. TITTISTIL Throwback nontaxable jurisdiction Returns and Allowances Outside to within 7654 2222 W ahintowihin 1 1 11 Within to U S Govemmment Last akin annie a agp E ree LE Figure 8 State APPT screen Mark the Zero Apportionment check box Figure 8 to add a state but N OTE not include any apportionment data This will include the state on the apportionment summary worksheet SAC SUM available through View mode APPT Screens The APPT screen is opened to the Sales tab Links at the top of this screen open the Payroll Property and Additional Property information tabs for each state selected These screens and their uses are listed in Table 1 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 N OTE screens in Drake13 will become the Beginning amount for property on the APPT screen when the client s return is updated next year in Drakel14 You may enter up to four states on one APPT screen
42. V A B C D Ill D Ill Form 3115 Application for Change in Accounting Method Multi form code All applicants must complete Parts Il and IV Part ll Information for All Requests No 3 Did or will the applicant cease to engage in trade or business to which requested change relates 9l ey Beginning Date Ending Date vo AR ons amifederal retis inre hcm nd iae an tem suns PPP PPS PIS res m aca B ae eee Figure 22 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 2012 1 for more information For more on applicants who must apply for advance consent see the IRS Form N OTES 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 enter a check mark on line 23b and go to screen ATT2 to complete the attachment information for Part III line 23b located in the bottom half of the screen Include the necessary information or certification required by Rev Proc 2012 1 or its successor Specific statements must also be attached to the return if the applicant answers Yes for line 18 Is change request allowed under automatic change or No for line 22 All
43. ahi gp l mE 5 aussen cantate ae eae e mm Figure 25 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 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 e Multi form code for Sch E This box is 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 on page 46 If the return contains more than one Form 3115 and multiple instances of Schedule E both multi code fields should contain numbers Figure 26 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 Accountin
44. ain 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 most program defaults Suppressing Forcing Documents Tax Year 2013 To suppress or force the printing of certain documents go to the PRNT screen and select the desired options Many on the fly changes override the options established in Setup You can force the program to print the following 1120 items on a return e Form 1125 E e Schedules G 1120 C L M 1 and M 2 e Form 4562 3l Making Changes on the Fly Drake Software User s Manual Next year depreciation listing Inactive returns PIN for the preparer s alternative electronic signature Form 1125 E is required if total receipts line 1b lines 4 through 10 N OTE are 500 000 or more ochedules L M 1 and M 2 are not required if receipts and total assets Schedule K line 13 are less than 250 000 The PRNT screen can also be used to suppress printing of the following items on a return Form and attachment references References are printed by default Form 4626 Alternative Minimum Tax Corporations Calculation and Other Options The following calculation and other options are available Calculate Form 2220 penalty Select this box to have the program calculate the penalty for Form 2220 Underpayment of
45. am and are shown on page 5 line 1 column d of the 1120 return Form Page Sch and or line Form 1120 Sch L line 1 cal d L line 2a col c Form 1120 Sch L line 2a col c Figure 38 Indication of where an amount will go in Drake and on the return Not all figures can be imported directly however and some amounts are optional Use the Other Information column in the trial balance worksheet to indicate special con 54 Tax Year 2013 Drake Software User s Manual Importing Trial Balance Information ditions and additional information regarding certain rows Table 5 describes the most common notes in this column Table 5 Other Information Column Notes Note not included in totals does not import optional enter deficit as negative number import includes the calculated change in inventory Form or Schedule may be required Description The amount is required for importing purposes only but is not included in the totals shown on the trial balance Information cannot be imported and must be entered on the appropriate screen in Drake Screen is specified in Form Page Sch column to the left of Other Infor mation Amount is optional not required for import but could require direct entry in the software Some deficits must be entered as negative numbers Used for total purchases when calculating cost of goods sold COGS in the return the program takes the change in inventory
46. ch as a P O box you can enter that address on screen 2 State General Information in the Address Line 2 field at the bottom of the screen The screen 2 State General Information link is located on the States N OTE tab of the Data Entry Menu You can also type 2 into the selector field and press ENTER A Tax Year 2013 Drake Software User s Manual Income and Deductions Tax Year Fiscal and Calendar Years Short Year Returns The software uses the calendar year as the default tax period for all corporate returns no date entries are required on screen 1 for a December 31 tax year end If the 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 calendar year section in the lower left corner of screen 1 The program adjusts calculations for depreciation and for gains and N OTE 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 34 An entity may have a short year return if the entity is 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 If filing a short year return
47. country of residence Generally a 2596 foreign owned corporation with a reportable trans action during the tax year must file Form 5472 Information Return of N OTE a 25 Foreign Owned U S Corporation or a Foreign Corporation Engaged in a U S Trade or Business See Form 5472 for filing instructions and penalties for failure to file See section 6038A c 5 and the related regulations for the constructive ownership rules of section 318 that apply in determining if a corporation is foreign owned If another entity owns 20 or more of the client s corporation or N OTE owns 50 or more of the corporation s stock entitled to vote see Schedule K Line 4 on page 18 Schedule K Line 13 On line 13 of screen K select Yes if the corporation s total receipts line 1a lines 4 through 10 on page 1 of Form 1120 are less than 250 000 for the tax year and its total assets at the end of the tax year are less than 250 000 If the answer to line 13 1s Yes in the lower text box of line 13 enter the total amount of cash distributions and the book value of property distributions other than cash made during the tax year An entry here is added to the amount calculated from entries on line 5 Distributions on the M2 screen and reflected on page 4 line 13 of the 1120 return If the answer on line 13 is Yes the corporation is not required to com N OTE plete Schedules L M 1 or M 2 To force the software to print these forms
48. creen may differ depending on which method of accounting cash or accrual is used 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 screen F Tax Year 2013 Drake Software User s Manual Income and Deductions Charitable Contributions The DED screen provides two fields for entering data for line 19 Charitable contri butions ooo um D frm amu c 2M Jet ct e o er ee 19 Conmnbulions 19 Qualified conservation contributians Fe Credit and collection costs 2 t Deliv Ac RM RE RR E ee Le Ee mb lie or Figure 4 Charitable contribution lines on the DED screen e Contributions Enter the gross amount of contributions for the year that are subject to the 10 limit on deduction e Qualified conservation contributions Enter the gross amount of contribu tions for the year that are not subject to the 10 limit These contributions have a carryover period of 15 years see IRS instructions for details The program calculates the contributions allowed and determines carryover capability for amounts entered in both fields for line 19 and reflects the applicable amount on Form 1120 Refer to the contribution limitation carryover worksheet WK CNTRB for calculation of allowed amount Contributi
49. ction in computing the taxable income of an intervening year would increase the NOL to a succeeding year The total amount claimed cannot be more than 10 of taxable income line 30 com puted without regard to the following e Any deduction for contributions e The special deductions on line 29b e The deduction allowed under section 249 e The domestic production activities deduction under section 199 e Any net operating loss NOL carryback to the tax year under section 172 e Any capital loss carryback to the tax year under section 1212 a 1 To prevent the double benefit from the excess charitable contribution deduction when there is a charitable contribution on the return and an NOL carryover the program makes the IRC section 170 d 2 B adjustment In this situation the charitable contri bution carryover amount is reduced on column C of the Contribution Limitation Car ryover worksheet WK CNTRB in View mode and the NOL carryforward is increased on the ATT NOL worksheet 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 11 on page 30 29 Elections Drake Software User s Manual r Return Elections Desciplion Cost basis amount years Date or year ending Other cost basis or amount Other date or year ending LONNE en ec oor n 7
50. e A to da eS eae NL dte s MMC LS a ia eS TA ath deb Figure 18 EF message regarding Form 3115 As shown in Figure 18 the EF message states that attachments are required You would need to print the form have the proper corporation officer sign it then scan it into the computer save it as a PDF file and attach it to the return Form 3115 Application for Change in Accounting Method 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 For corporations changing their accounting method Form 3115 must be attached as a PDF file We have included an EF message that will automatically generate the PDF button on the View mode toolbar so that the preparer can attach the form as a PDF For instructions on attaching a PDF to a return see Binary Attachments on page 35 read the Screen Help or the instructions on any PDF screen or read the Attaching a PDF Document arti cle on the FAQ screen Drake customers can fill out and e file certain Forms 3115 and related schedules and attachments for corporation returns This section provides instructions for completing this form and related schedules and attachments in Drake In some cases Form 3115 must still be paper filed See Parts and Ill starting on page 40 for details Applicants filing Form 3115 must refer to the Internal Revenue Bul
51. e DD screen e Ifthe federal refund is to go to the account listed select Yes for the Federal selec tion drop list otherwise select No Default is Yes e Ifa 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 financial institution the routing number RTN the account number and the type of account Checking or Savings e Re enter the routing number account number and type of account to verify Figure 6 Account Information Account 1 Federal Account and State if same as Federal Deposit selection Federal selection Y B State city selection CA v Name of financial institution RTN Account number Type of account First Bank and Trust 123456789 9876543210 M Checking Saving Repeat Account information 123456789 9876543210 iv Checking Savings Figure 6 Federal section of DD screen also 8050 screen 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 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 line 34 Amount owed of Form 1
52. e Line Number drop list Tax Year 2013 55 Importing Trial Balance Information Drake Software User s Manual Depreciation 56 3 Enter the applicable item descriptions and beginning and end of year totals N OTE Alternately open screen L and click the SCH2 Screen link for the line your wish to enter 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 On an 1120 return total depreciation consists of COGS depreciation which is reported on Form 1125 A Cost of Goods Sold and any remaining depreciation which is reported on page of the return For trial balance purposes enter deprecia tion amounts directly into the appropriate fields on the trial balance worksheet When the trial balance 1s imported the COGS depreciation expense amount flows directly to the appropriate line of Form 1125 A on the return Because the remaining depreciation can comprise any number of assets the amount entered on the trial bal ance 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 Entering the remainder of the depreciation
53. e to a different location make a note of where N OTE you are storing it The program automatically looks in the default directory 50 Tax Year 2013 Drake Software User s Manual Importing Trial Balance Information 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 Form Page Sch and or line Location of the amount on the printed return Other information Additional details for preparers see Details for Pre parers on page 54 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 cell showing whether or not the balance sheet is out of balance and if applicable the out of balance amount Figure 33 see also Figure 36 on page 53 I Wages etait elo Le ii a a gu ELE VEE 1 Officer compensation 0 Salaries and wages 0 Waste removal P 0 1 Net Income Loss Schedule M 1 line 1 301 056 2 el 3 TEC OUT OF BALANCE Figure 33 Schedule M 1 amount 1 totals 2 and indication of balance 3 Following are instructions and guidelines for using the
54. ectronic 2 signatures electronic PIN 16 Tax Year 2013 Index signing the return 16 state codes 20 tax refunds 8 stock ownership 17 19 T tax alternative minimum AMT 27 and payments 12 exempt interest 7 on fuels credit for 8 to book difference 25 years fiscal vs calendar 5 taxes and licenses 10 trial balance import 7 23 24 48 56 troubleshooting the M 2 26 U underpayment of estimated tax 13 updating a prior year return 3 V vouchers 13 W wages 9 Drake Software User s Manual This page intentionally left blank Tax Year 2013
55. ed to indicate that a Ctrl W worksheet has been used N OTE 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 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 i1 See IRS Form 3115 instructions for more information on making these requests This section has two parts Tax Year 2013 Drake Software User s Manual Schedule D Parts and Il Schedule D Part Schedule D Part Il Schedule D Part Ill Section A Tax Year 2013 Form 3115 Application for Change in Accounting Method e Part I General LIFO Information This section is made up of attachment links 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 l
56. ed by the officer Time Enter the percentage of time the officer devotes to the corporation Enter percentage amounts in whole numbers For example enter 40 for 40 Neither FOREIGNUS nor APPLD FOR is acceptable in IMPORTANT _ the tp number field Returns with FOREIGNUS or APPLD FOR in this field are not eligible for e file Salaries and Wages Tax Year 2013 Use the DED screen to enter salaries and wages paid Note that the DED screen amount is reduced by the amount if any of credit from Form 5884 Also note that this is an adjustment field an amount entered here adjusts any amount entered on screen F Form 1040 Schedule F Profit and Loss from Farming in the Labor hired field The Salaries and wages amount should not include compensation of N OTE officers Enter officer compensation data on screen E or as Officer Compensation on line 12 of the DED screen Income and Deductions Drake Software User s Manual Repairs and Maintenance Bad Debts Rents Enter repair and maintenance costs on the DED screen An amount entered here 1s combined with the amount if any entered in the Repairs and maintenance field on screen F Use the Bad debts line on the DED screen to enter the total debts that became worthless 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 cap
57. edule D Parts I and IT Tax Year 2013 39 Form 3115 Application for Change in Accounting Method Drake Software User s Manual e D III Form 3115 Schedule D Part III As shown in Figure 20 you can access these 3115 screens by clicking a link at the top of any other 3115 screen Parts M Parisi V ABC D LUI D II Form 3115 Application for Change in Accounting Method General Information Principal business activity code number T Tax year of change begins ee h a mmm S m d bat L E EN s ilit t m 7 UU TC 0s PS mum Ah ns caa ag nhac ha sia an n rmn sisi andit Figure 20 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 Parts and Ill 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 N OTE Information should be entered in either the Part section or the Part Ill section but not both General Complete all applicable fields in the General Information section Note that the Information fields for business activity and tax year change are override fields Figure 21 Com plete these fields only if you want to override the equivalent information entered on screen 1 or scr
58. een K lt M Form 3115 Application for Change in Accounting Method General Information Tar year of AL LL EL sunl Tyo er oe eee M Name of applicant if different from filer e ID number of applicant if different from filer Mame SE UT nu LC VE MEL TNT EP ENARRARE PRAEERAT a tena MP d e me a apt Figure 21 Override fields in the General Information sections of the Parts I III screen Part Notall 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 Part Il In Part II Information for All Requests answer question 3 see Figure 22 on page 41 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 40 Tax Year 2013 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Part Ill Parts Il and IV Part ll Line 12 Tax Year 2013 e Section 4 02 8 of Rev Proc 2012 14 applies to the applicant s accounting method change request and the applicant is therefore not eligible for a change under automatic change request procedures See IRS Form 3115 instructions for details Parts Ill Parts I
59. elect the state in which the corporation does business from the Resi dent State drop list Drake Codes and Overrides Screen 1 includes fields for miscellaneous codes invoice numbers and several overrides See Listing a Different Firm Preparer or ERO on a Return in Chapter 2 and Miscellaneous Codes in Chapter 5 of Drake Software User 5 Manual Tax Year 2013 for more information Worksheets outlining these and other adjustment and override fields NI OTE are accessible through the FAQs Frequently Asked Questions screen For more information see Guide to Overrides and Adjust ments on page 33 Schedule L Balance Sheet per Books Schedule L is required if the corporation s total receipts for the tax year or its total assets at the end of the year are greater than 250 000 22 Tax Year 2013 Drake Software User s Manual Schedule L Balance Sheet per Books Flow of Information Many of the entries made elsewhere such as inventory information from Schedule A flow automatically to the generated Schedule L Depreciable asset information from the 4562 screen and intangible assets and amortization also flow to Schedule L Use the corporation s balance sheet to enter data directly onto Schedule L N OTE see Importing Trial Balance Information on page 48 for information on using the trial balance import to enter Schedule L data The SCH2 Screen The SCH2 screen see Figure 9 is used to provide detailed infor
60. ems Depending on the nature of the attachment you will attach statements to the form in one of two primary ways 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 on page 40 and Parts II and IV on page 41 sections for more information on completing the ATT2 screen for these items From View mode Used for PDF attachments There are two ways to access the ATT screen in Drake From the Data Entry Menu In the Change in Accounting Method section of the Other Forms tab click ATT See Figure 19 on page 39 From the line that requires an attachment As shown in Figure 27 some lines have attachment links Click an attachment link to open the ATT screen Schedule C Changes Within the LIFO Inventory Method Par C1 a thru C1 h attachments Changing within the LIFO Inventory Method E C1 2 attachment f any present method or submethod is not the same as indicated on Form s 970 C1 3 attachment Ifthe prop sed change is not requested for all the LIFO inventory C1 4 attachment Ifthe prop sed change is not requested for all the LIFO pools C1 5 attachment LIFO inventory valued on method other than cost C1 6 attachment If changing to the IPIC method an amp WH Part Il Figure 27 Attachment links from Schedule C screen A B C Not all lines that require
61. er s For more informa tion press F1 in this field Setup gt ERO must still be completed in Drake for e filing For infor N OTE mation on how to complete this setup window see Drake Software User s Manual Tax Year 2013 See the IRS instructions for further details on signature requirements Amending a Return The program can automatically fill the 1120X screen for Form 1120X Amended U S Corporation Income Tax Return When you amend a return in Drake the amended information replaces the original in the data file Before amending a return CAUTION you should archive the original to avoid losing previously sub mitted data For more information on archiving returns see Archive Manager in Chapter 6 Return Results of the Drake Software User s Manual Tax Year 2013 Returns From the Data Entry Menu of an 1120 return enter an X in the selector field and Previously press ENTER Screen X is also accessible from the first Other Forms tab At the Prepared in prompt select Yes to automatically fill the screen with data from the original return Drake that 1s the return as originally entered in Drake If the corporation s name or address 16 Tax Year 2013 Drake Software User s Manual Schedule K information has changed enter the new information on screen X Make all other nec essary changes to the regular data entry screens Open screen 2X or press PAGE DOWN while in screen X Enter the line number from
62. esent column and a Pro and C posed column Present refers to the current accounting method while proposed refers to the requested change in accounting methods You should address only the items necessary 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 24 e Select B If you select B the corresponding box on Form 3115 will be left blank and an attachment will be required explaining why the line was left blank EF messages will outline which statements are missing 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 pia sonal properly produced or property acire se an er Section 36544 Gr alla ened TG vnm cori cts ander Stti n 7 nen e 460 Mark N A in a box if those costs are not incurred by the applicant If a boxis not checked it is assumed that those costs are not fully included to the extent required Attach an explanation for boxes that are not checked mp Pte bs oc orion ees PE Apples to ma XN N A Tq om c NM SEDENT RMLE ee oltre mere tat Fm 4 0 GB m ee see sera ae ey ee INX NA 4 Officers compensation not including selling activities Requires LL
63. ext box 8 Calculate and view the return Note the adjustments made on the Form 1120X E filing an To add Form 1120X to the queue for e filing go to the EF screen for the return and Amended mark the 1120 X box For detailed instructions on e filing the returns in the queue see Return Chapter 8 e File in the Drake Software User s Manual Tax Year 2013 Schedule K Use screen K to enter data for Schedule K Other Information Screen K should also be used for Schedule K of Form 1120 C Detailed here are some specific areas that might need your attention Schedule K Line 3 On line 3 line 5 for 1120 C enter the EIN and name of the parent corporation if the corporation is a subsidiary in an affiliated group or a parent subsidiary controlled group Tax Year 2013 17 Schedule K Drake Software User s Manual Be aware of the following guidelines from the IRS e Ifthe corporation is an excluded member of a controlled group see section 1563 b 2 it is still considered a member of a controlled group for this purpose e An affiliated group is one or more chains of includible corporations section 1504 a connected through stock ownership with a common parent corporation The common parent must be an includible corporation and the following require ments must be met e The common parent must directly own stock that represents at least 80 of the total voting power and at least 80 of the total value of the st
64. f entity corporation partnership or trust the country of the entity s organization and the percentage of stock the entity owns If the stock is owned by an individual or estate enter on screen G2 the name and ID number of the individual or estate country of citizenship and percentage of stock owned Use the CTRL PAGE DOWN function to open additional blank G1 or G2 screens For more information on line 4 of Schedule K see the IRS instructions Schedule K Line 5 If the corporation owned stock in other corporations or partnerships or the beneficial interest in a trust enter the information on the K5A or K5B screen Click the K5A Screen or K5B Screen links on the K screen or from the General tab of the Data Entry Menu to access fields for entering this information Tax Year 2013 Drake Software User s Manual Schedule K 1 Use the CTRL PAGE DOWN function to open additional blank K5A or K5B screens For more information on line 5 of Schedule K see the IRS instructions Schedule K Line 7 Enter information on line 7 of screen K if a foreign person owned directly or indi rectly at least 25 of the total voting power of all classes of the corporation s stock entitled to vote or the total value of all classes of stock of the corporation If there 1s more than one 25 or more foreign owner complete the fields for the person with the highest percentage of ownership Enter the percentage that person owned and the owner s
65. five 0 s and then the last four dig Form 1125 E Compensation of Officers is not generated automatically with the return unless it is required in other words unless total receipts line 1a plus lines 4 through 10 on Form 1120 are 500 000 or more To force the software to print Form 1125 E from the PRNT screen select Force Form 1125 E Officer Compensation Use screen E to enter officer information and compensation amounts Press PAGE DOWN to enter additional officers Screen E totals are calculated and carried to line 12 of Form 1120 The total of officer compensation can be entered in the Officer Compensation over ride field on the DED screen generally used when Form 1125 E is not required An entry in that field overrides any calculations from screen E changing lines 12 and 27 of the 1120 but not Form 1125 E You may truncate the officers Social Security Number in the ID num its of the officer s SSN Screen E has two check boxes Signs return and Books in care of Mark the applica ble box on the screen that identifies the officer who either signs the federal or state paper returns or is the contact person for the books state return only The Ownership and Participation fields on screen E are required Fields are as fol lows Total Enter the officer s ownership percentage e Common Enter the percentage of common stock owned by the officer e Preferred Enter the percentage of preferred stock own
66. g Method Schedule E Change in Depreciation or Amortization Schedule E Line 4a Multi form code for 3115 Do E o sc Year property was placed in service Property s use in trade or business or income m Producing activity ssi di MORES S AS A ndm Rh Ann pamanna npa m Toe ste pom ate Figure 26 Example of third instance of a Schedule E to be associated with the second instance of a Form 3115 Multi form code for Sch E 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 Tax Year 2013 45 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Attachments ATT Screen Attachments Schedule E Change in Depreciation or Amortization This section covers all Schedule E items other than lines 4a and 7 Note that lines 5 and 6 are links to required attachments 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 e MQ Mid quarter e S L Straight line Attached statements are required for many Form 3115 it
67. g 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 20 Codes on page 40 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 311 E or ATT screens you can use those numbers to indicate which instance of Form 3115 the 311E or ATT screen should be associated with N OTE If only one Form 3115 is being submitted you do not need to enter any thing in the Multi form code box Form 3115 Screens When you open the 3115 screen from the Data Entry Menu the program displays the first of five 3115 screens These five screens are e Parts I III Form 3115 Parts I and IIT Parts II IV Form 3115 Parts II and IV e A B C Form 3115 Schedules A B and C D TI II Form 3115 Sch
68. inancial Data iis vies RT an oS R3 PCI ee ERO ERREUR ERR DE do aoa ERE 5 SONDA NOI 53 Importing Data into a Return s gt ura proe IHR oS 55 KE OSS HE EES ROO OER ARORA RS HERERO 53 SDECPIEC ondi ON ae sies arte ROT gt pases E PU pr eden dr bye EUER rS RUE eres sensu teen beeems lt 54 Appendix A Trial Balance Import llselelseress A 1 ip D rr mm vii Tax Year 2013 V vi Drake Software User s Manual Supplement Corporations This page intentionally left blank Tax Year 2013 Corporations 1120 The basics of data entry for a corporation 1120 1120 C 1120 H 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 program See the Drake Soft ware User s Manual Tax Year 2013 for the basics of using the program What s New in Drake for Corporations Drake programs its tax software according to the latest IRS rules and regulations The 2013 program reflects all changes to credits and deductions including discontinua tions For details on the new regulations for the 2013 tax year see the IRS instructions for Form 1120 Calculation Results Window Tax Year 2013 Several new indicators of e file eligibility are now available in the enhanced Calculation Results window in all Drake s tax software packages As always a g
69. ing a PDF to a return see The PDF Attachment Process on page 35 read the Screen Help or the instructions on any PDF screen or read the Attaching a PDF Docu ment article on the FAQ screen See Form 3115 Application for Change in Accounting Method on page 38 for details on changing accounting methods Additional foreign address fields have been added to screens Worksheet WK MIC explains the depreciation and amortization adjustments flowing to Forms M 1 and M 3 Tax Year 2013 Drake Software User s Manual Before You Start Screen D Contact information Required Fields Bank Secrecy Act Bonus Depreciation Lines have been changed to accommodate new Schedule D lines 1a and 8a for trans actions in which basis has been reported to the IRS and no adjustments are required New e mail cell phone number and fax number fields have been added to screen 1 These fields are for reporting purposes and are not included in the e file record but the e mail address entered here will be the default address assigned to any e mail you send to the client through Drake s e mail program Fields that are required to be completed before a return 1s eligible for e file are now highlighted in blue Due to new U S Treasury Department regulations all Bank Secrecy Act BSA forms must be completed online This includes the FBAR Report of Foreign Bank and Financial Accounts formerly known as Form 90 22 1 In Drake screen FBAR
70. ing the required PDF File Reference Description Required POF FilaM ame e From Instruction Title of House on Oak Street TITLEHOUSEQAEST POF 3 ss EID dE DRB453C PDF TT T CI ee Qaem V Ps apre eme de te i anos QA Figure 17 The EF PDF Attachments window 4 Click the row of a document to attach one with a red X n 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 the return to make sure all EF messages have been cleared If so the return is ready to be e filed Printing Generated Documents In some instances Drake generates a document that must be attached to the return For example if Form 3115 Application for Change in Accounting Method is present in a corporate return EF message 1514 is generated when the return is calculated Figure 18 on page 38 Tax Year 2013 37 Form 3115 Application for Change in Accounting Method Drake Software User s Manual 1514 PDF ONLY FORM Form 3115 can be filed only as PDF a document at this time To attach a PDF document to a return 1 Scan the completed 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 m ws ate O Mem Miete apti attain o
71. ink to access the ATT screen where you can complete 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 N OTE 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 is not completed in the tax year in which it 1s 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 970 line 5a the attach ment must include the following statement N OTE certify that to the be
72. int Options plum Status In Prag MN ARRA Figure 2 Searchable selector field You can still enter a screen code state abbreviation or form number in the selector field and press ENTER to open a particular screen but for those times when you can t remember the screen code or form number or on which tab of the Data Entry Menu the screen is located you can now search for the screen with keywords or phrases For details see Searchable Selector Field in Chapter 3 Basics of the Drake Software User s Manual Tax Year 2013 Drake s 2013 tax software supports electronic signature pads that allow taxpayers and tax preparers to digitally sign authorization forms and consent forms such as Form 8879 C IRS e file Signature Authorization the Account Transaction Summary DD SUMM in View mode and Form PMT the ACH Payment authorization The e Signing process takes place in Drake s View Print mode Go to our online store at http drake computimeonline com for details or to purchase a the Drake recommended e pad For details on e Signature see Electronic Signatures in Chapter 6 Return Results of the Drake Software User s Manual Tax Year 2013 For corporations changing their accounting method Form 3115 must be attached as a PDF file We have included an EF message that will automatically generate the PDF button on the View mode toolbar so that the preparer can attach the form as a PDF For instructions on attach
73. into account for the Schedule A cal culation Non financial information such as names of officers for a Schedule E must be completed in Drake in addition to the financial data entered in the worksheet All does not import notes are accompanied by further instructions in the column to the left of the Other Information column as shown in Figure 39 SCH2 Detail Typically a balance sheet subsidiary schedule SCH2 detail screen for Schedule L is required for an item marked does not import on the trial balance Figure 39 Kool Systems INC Trial Balance 12 13 2013 wn Une aiia RN nmm dog PM Tow mete DUM adsl wo eee y Fe ed Tu a ne al fe e Enditig inv ntofy 77 777 EVER RE Tine T 125 line7 7 777 77077777 U S government securities 0 L line 4 col d Form 1120 Sch L line 4 col d Tax exempt securities 0 L line 5 col d Form 1120 Sch L line 5 col d Other current assets 0 Loans to shareholders 0 L line 7 col d Mortgage and real estate loans 0 L line 8 col d Other investments 0 Buildings and other depreciable assets 0 L line 10a col c Vn nm tado fto nto nto mne tnl e MIRA tn te dia fe ml TE mto re atto lr mtn un Mn nati ncs ais apo A tae gp Bu vr A Figure 39 SCH2 screen required for does not import items To complete an SCH2 detail screen in data entry 1 Open the SCH2 screen for the return 2 Select the line number from th
74. ital loss on N OTE screen 8949 Capital Gains amp Losses Cash method corporations cannot take a bad debt as a deduction unless the amount was previously included in income 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 The Rents field is an adjustment field An amount entered here is com N OTE bined with the amount if any entered in the Rent fields on screen F lines 24A and 24b Taxes and Licenses Interest 10 Enter tax and license amounts in the Taxes and licenses section of the DED screen Amounts are combined and the sum generated on Form 1120 line 17 Taxes and licenses Note that credit from Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips adjusts the line 17 amount These amounts also appear on the Taxes and Licenses Attachment N OTE ATT CTL referred to on line 17 with an ATT CTL reference To keep the notification from appearing go to the PRNT screen and select Suppress printing 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 s
75. lections 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 34 Tax Year 2013 Drake Software User s Manual Binary Attachments 6 For line 3 enter the actual date that the tax year ends the same date entered in the Fiscal year ending field on screen 1 Once a 52 53 week year is selected the entity must use that account N OTE 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 Inactive Returns Entities that are inactive but still required to file returns may e file inactive returns in 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 in the box above line 1c Zeros are displayed where required by the IRS in order for amounts to be properly included in the e file data M PO RTANT All EF messages must be cleared in order to e file an inactive return For detailed instructions o
76. ling e IRS Service Center A default due date for filing is printed on all letters and filing instruc N OTE tions generated with a return You can override the default by enter ing an alternate due date in the Due date to print on letter and filing instructions field on the PRNT screen Guide to Overrides and Adjustments An Adjustment Worksheet and an Override Worksheet available through the FAQs allow preparers to see what data or calculations are being affected when an entry 1s made in an override or adjustment field These worksheets can provide a better under standing of how overrides and adjustments work in the software To access the worksheets click the Screen Help button at the top of the FAQ screen then click the link for the desired worksheet and wait for the worksheet to be dis played as a PDF file An Internet connection and Adobe Reader are required in order to view the worksheets Much of the information contained in the worksheets is also available from the field level helps within the program To access a field level help click inside a field and press F1 or right click in a field and select Help gt Help for this Field Electronic Filing Steps for e filing Form 1120 are the same as for e filing Form 1040 with the excep tion of bankruptcy returns which must be paper filed Common Error Codes Tax Year 2013 If one or more of the following IRS error reject codes is generated when e filing an 1120 ret
77. mation required by the IRS for certain lines on Schedule L The amounts are carried to Form 1120 and printed on an attached statement This screen can also be used in place of the actual L screen in Drake If you use this screen for all applicable lines on Schedule L you do not need to make any entries on screen L N OTE To access the SCH2 screen from screen L click an SCH2 Screen link Press ESC to return to screen L Entering To create a statement for a line using the SCH2 screen select the desired line from the Information Line Number drop list and enter descriptions and their corresponding amounts Line Number 6 Other current assets Beginning of End of Description year year Notes receivable g Farts inventory 54321 Loans receivable 10203 Taxes prepaid 12033 L um mtm n papa ENES _ gn Figure 9 SCH2 screen fields for line number description and amounts Once the information is entered or if additional descriptions are required for the line press PAGE DOWN to access a new screen All line selections and screen descriptions are carried to the next N OTE year and year end amounts are carried to the beginning of year col umn when the returns are updated 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 where needed with refer ences to the corresponding statements Tax Year
78. ments worksheet is produced See Figure 29 on page 48 This worksheet shows in table format the Reference section of Form 3115 the Description and the IRS required Filename of each required PDF document This worksheet is displayed as EF PDF in View mode 47 Importing Trial Balance Information Drake Software User s Manual KEEP FOR YOUR RECORDS EF Attachments Marre of corporatior j EssBecEsa d Reference Filename 3115 III Line 270 Proposed Change Documents ProposedChangeDocuments pdt 3115 II Line 4d Consents From Operation Div Dir Consents FromperatingDivisionDirector pdt alit Ne T eS M EU WO X RR oy ih ait OW WO nn uh p mc Figure 29 Example of an EF Attachments worksheet Notices of Inaddition to Form 3115 and related schedules and statements the program produces Missing EF messages as applicable when the return is calculated All forms schedules EF Attachments messages 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
79. n e filing returns in Drake see Drake Software User 5 Man ual Tax Year 2013 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 PDF must be available to be attached to the return in order to be e filed with the return Attach files through the PDF Attachments screen accessible from the Electronic Filing section on the General tab of the Data Entry Menu The PDF Attachment Process Three main steps are involved in the PDF attachment process in Drake 1 Creating a PDF file to be attached 2 Informing the program that a PDF file will be sent with the return 3 Attaching the PDF file for e filing Tax Year 2013 35 Binary Attachments Drake Software User s Manual These steps are described in the following sections Creating a To create a PDF file PDF File 1 Scan the document to be attached to the return as a PDF document I P 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
80. ng as another type of entity S corporation partnership etc it is necessary to indicate this in the program To change from another type of entity to an 1120 corporation in the program From the Home window select Tools gt File Maintenance gt Change File Type Enter the EIN of the entity and click Continue Select the new return type Click Continue to save the change Click OK eS Filing Form 1120 C or 1120 H No preliminary steps are required for Forms 1120 C or 1120 H Use the same screens you might for an 1120 return but include one of the following screens in addition e 20C For Form 1120 C U S Income Tax Return for Cooperative Associations e H For Form 1120 H U S Income Tax Return for Homeowners Associations If one of these screens contains data the program automatically produces the type of return indicated For example if a deduction is entered on screen 20C an 1120 C return will be produced Is Form 1120 C or 1120 H being produced in error Check the corre T D sponding screen 20C or H for data entered To delete a screen open the screen and press CTRL D Header Information Screen 1 contains fields for the general information that is printed in the top section of page 1 of Form 1120 or Form 1120 C or 1120 H as applicable Name and Address Use screen 1 to enter the corporation s name and address for Form 1120 For state pur poses only if the corporation has an alternate address su
81. nsion Plan Start up Costs 28 Form 8903 Domestic Production Activities Deduction 12 Form 8912 Credit to Holders of Tax Credit Bonds 28 Form 8932 Credit for Employer Differential Wage Pay ments 29 Form 8941 Credit for Small Employer Health Insurance Premiums 29 Form 8941 Credit for Small Employer Health Insurance Premiums 12 G gains and losses 8 gross receipts 6 H header information 4 Vill Drake Software User s Manual Supplement Corporations importing trial balance 48 56 inactive returns 35 income and deductions 5 12 instructions for filing 32 insurance proceeds income from 8 interest expense 10 income 7 8 inventory 6 L life insurance companies 28 limitations meals and entertainment 12 on NOL deductions 29 M 2 out of balance troubleshooting 26 maintenance costs 10 meals and entertainment 12 Multi State Apportionment 20 N net operating losses NOL 12 29 new features in Drake 1 next year depreciation listing 32 O officer compensation 9 ordinary gains and losses 8 Other Deductions 12 other income loss 8 out of balance M 2 troubleshooting 26 overrides 33 ownership foreign 19 of stock 17 19 percentages 9 P parent subsidiary group 17 28 PDF documents e filing 35 38 Pension and Profit Sharing 12 percentage stock and ownership 9 PIN electronic signatures 16 printing statements for Schedule L 23 suppressing forcing 31 prior year returns updating 3
82. o 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 0 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 Corporations Index A accounting method changing 38 48 address change of 5 e mail 22 entering on Form 1120 4 adjustment fields 33 adjustments and credits 28 advertising expenses 12 affiliated groups 17 alternative minimum tax AMT 27 amended returns 16 amortization 12 23 app
83. ock of at least one of the other includible corporations e Stock that represents at least 80 of the total voting power and at least 80 of the total value of the stock of each of the other corporations except for the com mon parent must be owned directly by one or more of the other includible corpo rations e For this purpose the term stock generally does not include any stock that a is nonvoting b is nonconvertible c 1s limited and preferred as to dividends and does not participate significantly in corporate growth and d has redemption and liquidation rights that do not exceed the issue price of the stock except for a rea sonable redemption or liquidation premium See section 1504 a 4 See section 1563 d 1 for the definition of stock for purposes of determining stock owner ship Schedule K Line 4 If a corporation partnership trust individual or estate owned directly or indirectly 20 percent or more or owned directly or indirectly 50 percent or more of the total voting power of all classes of the corporation s stock entitled to vote the applicable data appears on Schedule G In Drake Schedule G data is entered on screens G1 and G2 accessible through the G1 Screen and G2 Screen links on line 4 of screen K or from the General tab of the Data Entry Menu If the stock 1s owned by any foreign or domestic corporation partnership or trust enter on screen G1 the name and EIN of the entity the type o
84. on carryovers from prior years are entered on the LOSS screen Note that both fields of line 19 are adjustment fields entries here adjust amounts flow ing from screen K1P line 13 codes A and B Depreciation Enter depreciation on the 4562 screen Select a form from the For drop list Figure 5 to associate 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 Form 4562 T Use Multi form code Corporation Main Form Form 1120 C or 1120H Schedule A Cost of Goods Sold Schedule F Profit or Loss From Farming 25656 10 Federal tate J unt mu ra ET AME LLL es ehh Agit naut T d Description Figure 5 Selecting Form 1120 from the 4562 screen For drop list N OTE For more on the For drop list in Drake see Associating One Screen with Another in the Drake Software User s Manual Tax Year 2013 Depletion Enter depletion deductions on the DED screen See Form 1120 instructions and Pub 535 for more information on depletion Tax Year 2013 1 Tax Refundable Credits and Payments Drake Software User s Manual Advertising Enter advertising expenses on the DED screen Pension and Profit Sharing The software reduces this expense based on the credit amount calculated from Form 8881 Credit for Small Employer Pension Plan Startup Costs Domestic Production Activities Use screen
85. or line 3 Inventories are override fields Anything entered in these fields overrides replaces the data entered for inventory on screen A Line 5 Other Line 5 Other costs is designated for any applicable costs not entered on lines 2 Costs through 4 purchases cost of labor and additional section 263A costs In Drake two data entry fields are used to complete line 5 one for other costs excluding deprecia tion and one for depreciation Figure 3 Additional section 253A costs 4 Other costs excluding depreciation Depredalion 4 T Inventory at end of year gt Meth agmatine Tageeiihimo inp aeos aae id Figure 3 Screen A Schedule A line 5 6 Tax Year 2013 Drake Software User s Manual Income and Deductions Importing Trial Balance to SchA In the Depreciation field enter any depreciation that relates to the cost of goods sold unless the amount is flowing from the 4562 Depreciation Detail Items screen with COGS selected from the For drop list Note that this field of screen A is an override field an entry here overrides calculations from the 4562 screen Amounts entered in this field automatically adjust the total depreciation that is carried to page 1 of Form 1120 An entry in the Other costs excluding depreciation field opens a CTRL W worksheet The depreciation amount is included on the statement for other costs and should not
86. ortionment plan status 28 attachments binary 35 38 PDF see PDF files to Form 3115 38 43 auto balance 24 32 B bad debts 8 10 bankruptcy 33 book to tax difference Schedule M 1 25 brother sister group 28 C Calculations Results window 1 calendar years 5 capital gains and losses 8 carryover of NOLs 12 29 cash accounting method 42 change of name or address 5 Changes on the fly 31 charitable contributions 11 29 codes error reject 33 miscellaneous screen 1 22 multi form 39 45 46 state 20 combined group 28 compensation of officers 9 consolidated returns 7 contact information for state returns 22 Tax Year 2013 Index contributions charitable 11 29 controlled groups 13 27 converting to 1120 4 cost of goods sold see Schedule A Cost of Goods Sold coversheets 32 credit for tax on fuels 8 credits and adjustments 28 Ctrl W detail worksheets 7 12 42 49 D data entry trial balance import 51 debts bad 10 deductions and income 5 12 depletion 11 depreciation and auto balance errors 24 expense 11 for cost of goods sold Schedule A 7 on short year returns 5 trial balance business returns only 56 detail Ctrl W worksheets 7 12 42 49 direct debit of balance due 14 15 Domestic Production Activities 12 domestic production activities deduction 12 E EF status 1 e filing new features in Drake 33 PDF documents 35 38 electronic funds withdrawal direct debit 14 signature
87. re User s Manual Binary Attachments g n M 9 E OF Data Entry Print Setup Archive Retesh Basic Vier Help i Select Forms to View Print All Forms Sets EF Federal Worksheets Mates Messages Colorado Massachusetts Morth TION 1120 U S Corporation Income Taj For calendar year 2012 or tax year beginning 09 2 5 212 nay 2 Department of te Treasury Senie le information about Form 1120 and Its separate Instructions is Infernal Revenue ABC Corporation m la remm Type er reat aa roam or sate no fa PO ter see Instructions mansa PH L PRINT 123 Main Street eRe E nA LX at p oe dere O UV Figure 16 The red MESSAGES file and the Attach PDF button 2 Click the MESSAGES file to view the EF message which provides information on how to attach the required documents to the return 3 Click the Attach PDF button in the toolbar at the top of the window The EF PDF Attachments window Figure 17 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 2013 EF PDF Attachments Hequired PDF Attachments The list below contains PDF Attachments that are required for electronic filing Select an item from the list and click Brawse to locate the associated PDF file Items with a green check mark already have the PDF file Items with a red 7 are miss
88. reen check mark is displayed in the EF Status column of the Calculation Results window see Figure 1 when the default product Form 1120 is eligible for e file and a red X is displayed when the product has EF messages keeping it from being e file eligible New EF indicators have been added to the Calculation Results window to tell you if a return has already been accepted if it is being suppressed by an option you chose if it is not e file eligible because you did not select it for e file or if a type of return is not avail able for e file The status of extensions is displayed for all packages now a Drake 2013 Calculation Results 11 2011201 Seay s Trucking Summary Details EF Status Accepted Not Selected L 9 mb n ilie 24 47 me f e EST nsns anin diste TT T T ala 2m Figure 1 More indicators are now available in the EF Status column What s New in Drake for Corporations Drake Software User s Manual For details on the Calculation Results window see Chapter 6 Return Results of the Drake Software User 5 Manual Tax Year 2013 Searchable Selector Field Electronic Signatures e Sign Changing Accounting Method Foreign Addresses M 1 Worksheet The selector field located at the bottom of all Data Entry Menus Figure 2 can now search for screens by screen code name or keyword PUTEM W eCH2 Baratmceomett S bsrura crore aate FAQ Frequently Asked Questions PRNT Pr
89. s PIN 16 entertainment and meals 12 envelope coversheets 32 e pad signatures 2 error codes 33 estimated tax worksheet 32 estimates 13 32 extensions 15 32 F FBAR 3 filing instructions 32 final returns vii Index indicating in the program 5 updating 3 fiscal year returns 5 foreign ownership 19 FOREIGNUS 9 Form 1120 C U S Income Tax Return for Cooperative Associations 4 Form 1120 H U S Income Tax Return for Homeowners Associations 4 Form 2220 Underpayment of Estimated Tax By Corpora tions 13 32 Form 3115 Application for Change in Accounting Meth od 38 48 Form 4466 Corporation Application for Quick Refund of Overpayment of Estimated Tax 13 32 Form 4797 Sales of Business Property 8 Form 5884 Work Opportunity Credit 28 Form 6252 Installment Sale Income 7 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit 8 28 Form 6765 Credit for Increasing Research Activities 28 Form 7004 Application for Automatic Extension of Time to File 15 32 Form 8050 Direct Deposit of Corporate Tax Refund 14 Form 8820 Orphan Drug Credit 28 Form 8844 Empowerment Zone and Renewal Community Credit 28 Form 8845 Indian Employment Credit 28 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Employee Tips 10 28 Form 8864 Biodiesel and Renewable Diesel Fuels Credit 8 28 Form 8873 Extraterritorial Income Exclusion 12 Form 8881 Credit for Small Employer Pe
90. s amount flows as applica ble to Schedule K line 9 and to Schedule M 1 line 7 Override fields are available on screens K and M1 if necessary to override the INC screen amount Rents and Royalties Tax Year 2013 Enter gross rents and gross royalties using the direct entry fields on the INC screen Line 7 Gross royalties 1s an adjustment field Any amount entered here adjusts amounts flowing from line 7 of screen K1P Note that passive activity loss rules may be applied to rental activities held by a closely held corporation or a personal service corporation Income and Deductions Drake Software User s Manual Capital Gains Use screen 8949 to enter capital gains and losses Short term capital gains flow to Part I lines 1b 2 of Schedule D Long term capital gains flow to Part II lines 8b 9 of Schedule D New for 2013 Lines 1a and 8a have been changed to accommodate transactions in which basis has been reported to the IRS and no adjustments are required The net gain from Schedule D is carried to line 8 of Form 1120 Any net capital loss is carried to the ATT D attachment to offset future gains You can import data for Schedule D using the Schedule D Import fea N OTE ture For more on using this feature see Schedule D Imports in Chap ter 5 of the Drake Software User s Manual Tax Year 2013 Ordinary Gains and Losses The amount generated on line 9 flows from screen 4797 Amounts can also flow from screen 45
91. sheet is out of balance Saving a File To save a file click the Save icon or select File gt Save from the menu bar To re name a file when saving select File gt Save As For more information on file names in the trial balance program see Naming Convention on page 50 Importing Data into a Return Not all trial balance data can be imported directly into a return For N OTE information on program limitations see Special Conditions on page 54 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 If you are already in the Trial Balance Import tool for the selected N OTE 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 1 Open the return to which you will import the trial balance information e ie 2 Click Import gt Trial Balance Import from the menu toolbar The preliminary Trial Balance Import dialog box is opened 3 Click Next Tax Year 2013 53 Importing Trial Balance Information Drake Software User s Manual 4 Enter or select the trial balance file to be imported Use the Browse feature if nec essary By default each trial balance file is an Excel xls file showing the client name and ending in TB for trial balance as shown in the example in Figure 37 See Naming Convention on
92. st of my knowledge and belief name of applicant 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 Use the D III screen to complete Part III Method of Cost Allocation of Form 3115 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 Click the D3 1 Attachment link see Figure 23 on page 44 to attach a description of the present and proposed methods used to capitalize direct and indirect costs 43 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Form 3115 Schedule D Part Ill Method of Cost Allocation Section A Allocation and Capitalization Methods D3 1 attachment AWocation and capitalization methods detail Section B Direct and Indirect Costs Required To Be Allocated D 3 2 attachment Explanation for boxes that are not checked X Check B 1 Direct material Y N i alan meh hoe Ae ht BM etl em on i li e Ay p v Figure 23 Link to ATT screen for attaching statements Sections B Sections B and C consist of a series of drop lists under a Pr
93. statements include a link to the ATT screen N OTE Always check the field level help press F1 in a field to determine if a 46 statement is required The program produces an EF message if any required statements are missing Complete the following ATT fields as applicable for all ATT screen attachments Multi form codes Use these boxes to associate the attachment with an instance of Form 3115 if the return contains more than one a particular Sched Tax Year 2013 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Additional ATT Fields PDF Attachments Tax Year 2013 ule E property if the return contains more than one Schedule E or both See Multi form Codes on page 39 for more information on multi form codes e Schedule Select the line of the form or schedule with which the attachment 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 N OTE characters of the explanation are transmitted with an e filed Form 311
94. t year enter a positive amount on line 1 Taxable income expected for the tax year at the top of screen W Quick To file Form 4466 Corporation Application for Quick Refund of Overpayment of Refund Estimated Tax go to the PRNT screen and mark the Calculate Form 4466 box This is the only entry necessary to produce the form There is a link to the PRNT screen from the first Other Forms tab of the Data Entry Menu Click Application for Quick Refund Under Use screen 2220 to enter information for Form 2220 Underpayment of Estimated Tax payment by Corporations Note that the 2220 screen in Drake consists of two screens Press PAGE UP and PAGE DOWN to move from screen to screen The program retains the underpayment and penalty rates M PO RTANT as of 12 31 of the calendar year If a corporation has a fiscal year end you must enter the effective rates manu ally State Enter 2013 estimates and 2014 overpayments for state returns on the ES screen For Estimates the federal return to override 2013 estimates and apply overpayments to 2014 use screen W Tax Year 2013 13 Direct Deposit of Refunds Drake Software User s Manual 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 corporation s refund to be direct deposited To access this form in Drake go to the DD screen accessible from the General tab When filling out th
95. tain amount of voting power e Combined group Three or more corporations each of which is part of a par ent subsidiary group or a brother sister group and one of which is 1 a common parent corporation included in a group in a parent subsidiary group or 2 included in a group of corporations in a brother sister group e Life insurance companies only Two or more insurance companies subject to tax under section 801 that are members of one of the previously described groups are treated as a particular type of controlled group Line 5 Apportionment Plan Status The corporation is required to provide information about the status of the group s apportionment plan Select the applicable box on screen O to show the status of the controlled group s apportionment plan If adopting a plan or amending the current plan for a prior tax year at least one year must remain on the statute of limitations for each group member for assessing any resulting deficiency Credits and Adjustments 28 Certain credits require an adjustment to either income or expenses Drake13 carries the required adjustments to the appropriate line of the return and to Schedule M 1 or M 3 Manually reducing the expenses 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
96. te from screen to screen Members of a controlled group are entitled to one 50 000 one N OTE 25 000 and one 9 925 000 taxable income bracket amount in that order AMT Adjustments and Other Items Alternative Minimum Tax AMT adjustments are limited among the members of a controlled group These should be entered in the Other information fields of the OM screen Figure 10 di tA VM s t p Ze T r ee ee tide ants d De uti a PE a bas Ace a pw MM go LS V mm Aes na P vi Bustine i MO Other apportionments for the corporation listed on screen 1 Phaseout of AMT AMT Penalty for Accumulated exemption exemption failure to pay earnings credit amount amount estimated tax Figure 10 Other information fields for other AMT adjustments Types of Controlled Groups At the top of screen O mark the box indicating the type of controlled group for which Schedule O is reporting Controlled group types are briefly defined below See Sched ule O instructions for more details Tax Year 2013 27 Credits and Adjustments Drake Software User s Manual e Parent subsidiary group One or more chains of corporations that are con nected through stock ownership with a common parent corporation if certain con ditions apply Brother sister group Two or more corporations if the same five or fewer per sons who are individuals estates or trusts directly or indirectly own stock of each corporation with a cer
97. that says the M 2 1s out of balance Solving this problem can be challenging since it can have any of several causes e The beginning balance sheet entries are inaccurate Tax Year 2013 Drake Software User s Manual Schedule O Controlled Group Information e The Beginning of Year unappropriated retained earnings amount line 25 on screen L entered on the SCH2 screen for line 24 Retained earning Appropri ated is incorrect e Autobalance is not turned on See Autobalance on page 24 e The ending balance sheet entries are inaccurate e The net income per the tax return is inaccurate e The reconciling items on Schedule M 1 or M 3 need to be adjusted e The reconciling items on Schedule M 2 need to be adjusted If the items are off by a couple of dollars or less resolve the problem by entering a reconciling item on the M2 screen 1 Double click in a field on the M2 screen to open a detail CTRL W worksheet 2 Enter the word Rounding as the description and enter an amount 3 Press ESc The program returns to the M2 screen If the problem is not resolved it may be necessary to do a detailed comparison between the corporation s financial records and the completed return information Schedule O Controlled Group Information Use screens O and OM accessible from the first Other Forms tab to fill out Sched ule O Consent Plan and Apportionment Schedule for a Controlled Group Press PAGE UP and PAGE DOWN to naviga
98. the X screen that corresponds with the changes that were made in data entry For instance if you made a change in the tax on screen J enter 4 for Tax in the Line Number field of the 2X screen Enter an explanation in the Explanation of changes text box If more than one item was changed in data entry press PAGE DOWN to open another screen 2X Enter the line number from screen X that corresponds to this change and enter another explanation When you go to View mode the program calculates the amended return New Returns To amend a return not previously prepared in Drake create an 1120 return in Drake and open screen X Complete the applicable fields on this screen and then enter the amended data in the appropriate other screens as described in the example below Example An 1120 return was filed using a different tax software but gross rental income was not reported on line 6 To amend the return From the Data Entry Menu of an 1120 return open screen X Complete all applicable fields on screen X Close screen X and open the INC screen Enter the amount of unreported income on line 6 Close the INC screen and open screen 2X oS ae Enter the line number from the X screen that corresponds to the changes that were made in data entry For this instance if you made a change to income on the INC screen enter 1 for Total Income in the Line Number field of the 2X screen T Enter an explanation in the Explanation of changes t
99. trial balance template to assemble financial data for importing into data entry Entering Financial Data When a new trial balance file is opened for a return all debit and credit amounts are zero 0 All data must be entered manually into the template Some data cannot be imported from the trial balance worksheet and N OTE must be entered directly into the data entry fields within the program For more on these categories of data see Special Conditions on page 54 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 0 Tax Year 2013 51 Importing Trial Balance Information Drake Software User s Manual Detail Some cells require more detail than can be entered on a single line These cells are Worksheets indicated by buttons Figure 34 Buttons do not work if macros are disabled see Opening a Template on page 50 Form 1120 p l Form 1120 nag E Other Expenses Detail requires d Es DED Form 1120 p g E 5 M Hon deductible Expenses Deti requires deta Form 1120 p Figure 34 Example of cells that require worksheets Click a worksheet button to open a worksheet in a new tab Figure 35 shows an exam ple of the Other Income worksheet A B D G G J Statement Required Other Income Form 1120 page 1 line 11 INC line 10 INC line 10 INC line 10 5 Section 481 adjustments INC line 10
100. tware User s Manual Signing the Return Electronic PIN signatures are required for e filed returns If e filing a return complete all fields on the PIN screen A return cannot be e filed if the PIN screen fields includ ing the title and signature name of the officer signing the return are not completed An 1120 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 on the PIN screen If it is pre pared by an employee or officer of the corporation go to screen 1 and select NONE in the Firm and Preparer drop lists To have the preparer s name and address information displayed on the printed return e Ifthe 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 Prepar
101. urn the preparer must contact the IRS for further information The IRS e Help Desk telephone number is 866 255 0654 Reject Code F1120 307 01 Filer s TIN and Name Control in the return header must match data in the e file database unless Form 1120 Item E 3 check box Name Change is marked e Reject Code R0000 900 01 The return type indicated in the return header must match the return type established with the IRS for the EIN e Reject Code R0000 905 01 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 reyect code you must update your e file application to include the 1120 return type This should be done at the IRS website Review publication 3112 for details e Reject Code R0000 932 01 If Amended Return or Superseded for 1120 1120S check box is not selected then Taxpayer TIN in the return header must not be the same as a TIN of a previously accepted paper return for the return type and tax period indicated in the tax return 33 Special Types of Returns Drake Software User s Manual e Reject Code R0000 933 01 If Amended Return or Superseded for 1120 1120S check box is not selected then Taxpayer TIN in the return header must not be the same as a TIN of a previously accepted electronic return for the return type and tax period indicated in the tax return Special Types of Returns
102. xx a xa 0G Xen Gene quU d SA tab oh bse b Eee ques 32 Guide to Overrides and Adjustments nnna anaana 33 Electone FRA acus doe eee ceeded dee eee n REA OR CR E A 33 Common Lror C Od Sasso impr due Ed eO ERE qi weder d PES eee E San A de gd RR qq 33 Special Types of Returns lleleeeeeee nnn 34 1V Tax Year 2013 Drake Software User s Manual Supplement Corporations Electing a 52 53 Week Year Initial Return 0 0 0 0 0 0 eee teens 34 Ingctrye BOUES amp 6 5 4 ard 3 4086 are ee a d ogre a ee Gee a Pha eae ed rale qnd oe lcs our de pp are 35 Binary Atfacnmenis u uaa wax ROO WR dCi e E d RA EK eG 04 3E RC UP dc 35 The PDF Attachment ProGess sad 2446085664048 4460444 Ru XR EG 24495490 089 608 be RE bE EG 35 Printing Generated Documents ia ker ky b RS EnA T ER ELERE qd quid oye edad d qus 37 Form 3115 Application for Change in Accounting Method 38 Accessing Screens for Changing Accounting Method llllllllllee ees 38 POtm SATS SCRES os om m2 bu EEUU d Paus See Deer eed ad podes ddr due dedere dra 39 udi c 45 PAG IIMICMES coc ors 4a xeu OSE MEGS EOE Eee eae Oe EY EET REPRE SCREAM ES TESP DDU E 46 Importing Trial Balance Information es 48 Preparing to Use Trial Balance Import 0 0 0 0 0 es 48 Preparing Financial Data Tor Import x22 22 ERR EAR Krasna ENETEIA ede be See E 50 Entering F
103. y should be entered for each of these elections 30 Tax Year 2013 Drake Software User s Manual Making Changes on the Fly Drake Software Data Entry Help i mem Date or Year Ending direct entry Enter the date or year ending required for the selected election Ihe description field is used on the following election statements for this package SIM Use 8 Date of Disaster 09 Date of Contribution 11 Date Paid or Incurred 15 Date Payment Received iati ai dna iiio antille LX Ls MD diete T M NN LL ET _n aho ame cn t n al Figure 13 Help text for Date or year ending field on ELEC screen If the election option you selected is not listed in the help text for a field N OTE then that field should be left blank For example if you chose election 01 General Election Statement you would not need to enter anything into the Date or year ending field help text in Figure 13 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 STM ELOI The election statement includes the election title election wording and any additional information required for the election such a date or amount Entries for cert

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