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Drake Software User`s Manual Tax Year 2011 Supplement

1. EO e M eee TO ee ee ee ee eS E TA FTS Figure 1 Screens for accessing Form 5472 fields Changes for 2011 are described below e Parts I III IV V and VI are included under the 5472 menu option see Figure 1 On this screen are tabs for accessing the separate parts e Part Il is included on a separate screen screen 2X to allow multiple screens with the same multi form code e A multi form code field has been added for matching the Part I and Part II screens to each other e Itis no longer necessary to use the name and identifying number from Part III Related Party in order to tie the 5472 screens together Although the layout of the screens is different from 2010 the remaining data entry fields and form output has remained unchanged for 2011 8609 Screen The 8609 screen for Form 8609 Low Income Housing Credit Allocation and Certifi cation has been reorganized for easier data entry Among the changes e Fields required for both Form 8609 and Form 8609 A are now separated on the screen from the other information fields e Other fields for Form 8609 A are now located in the middle of the screen Tax Year 2011 3 Before You Start Drake Software User s Manual Supplement e Other fields for Form 8609 are now located in the bottom half of the screen e Screen 8586 has been removed from the program The program will generate Form 8586 Low Income Housing Credit depending on entries made to screens 8609 and KIP
2. Book Depreciation Schedules A book depreciation schedule will now be printed when the Carry book accumu lated depreciation amp amortization to Schedule L check box is marked on the L screen if a 4562 screen has also been completed Adjustment and Override Worksheets The Adjustment Worksheet and Override Worksheet are updated each year to help you understand what happens in the return when certain data is changed through the use of adjustment or override fields Figure 2 Book to tax depreciation adjustment Other Ar ETA i Book to tax amortization as stment Mhona aaan n pgrang ac ai EE Figure 2 Adjustment and override fields By default fields that allow overrides are preceded by an equal sign and display red text Data entered in these fields replaces or overrides program calculations Fields that allow adjustments are preceded by a plus minus sign and display blue text Data in these fields adjust program calculations by the amount entered A posi tive number increases the calculated amount a negative number decreases it The Adjustment and Override worksheets are available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window Before You Start Actions you might need to take before starting a 1120 return in Drake include e Updating a prior year return if you prepared the tax r
3. Overrides the cost entered on the 4562 detail screen as e Pe a determined by the code RD entered in the Investment credit Rehabilitation property Certified historic structures in the Gulf Opportunity Zone structures ode drop list 1h 1 c Energy Credit Basis of property using geothermal Overrides the cost entered on the 4562 detail screen as 2a energy placed in service during 2009 determined by the code EA entered in the Investment credit code drop list Energy Credit 11b Basis of property using Overrides the cost entered on the 4562 detail screen as 12b solar illumination or energy placed in service during determined by the code EB entered in the Investment credit 2009 code drop list ee Energy Credit iic Qualified fuekcall ileal ne ii aes ra anal ae m property Basis of property installed etermine by e code EC entered in the Investment credi code drop list l Energy Credit Qualified microturbine property Basis of ACOE OSEN OEG 4302 Octal Sereen a 12i i determined by the code ED entered in the Investment credit property installed code drop list C Form 6478 2 ACON i a poo Or EAEAN AROSA ROSO Overrides the default rate Refer to the form instructions greater in fuel mixtures Alcohol less than 190 proof but at least 150 proof and 3 alcohol less than 190 proof but at least 150 proof in Overrides the default rate Refer to the form instructions 4 fuel mixtures aa Sees Eeuticele DID Meh egueeranereyye mets
4. Making Changes on the Fly Use the PRNT screen to override most program defaults Suppressing Forcing Documents 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 Schedule E Schedules G 1120 C L M 1 and M 2 Form 4562 Next year depreciation listing Inactive returns PIN for the preparer s alternative electronic signature Schedule E is required if total receipts line 1b lines 4 through 10 are NOTE 500 000 or more Schedules 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 Tax Year 2011 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 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 2011 taxable income The WK 112
5. User s Manual Supplement B Drake Corporations 1120 Support DrakeSoftware com gt 828 524 8020 Drake Software User s Manual Tax Year 2011 Supplement Corporations 1120 Support DrakeSoftware com 828 524 8020 Copyright Trademarks Drake Software User s Manual Supplement Corporations The 2011 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 2011 Drake Enterprises LTD All rights reserved While every attempt has been made to produce an accurate and complete manual there is no warranty expressed or implied to that effect Drake Enterprises LTD assumes no liability for damages or claims resulting from the use of the information contained herein The Drake Software Logo and Drake Tax are registered trademarks of Drake Enterprises LTD Other product names mentioned in this manual may be trademarks or registered trademarks of their respe
6. s desktop or any where you can readily find it Many types of documents for instance documents created in Microsoft NOTE Word can be printed or saved as PDF 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 Go to the PDF screen in data entry Tax Year 2011 37 38 Binary Attachments Attaching Documents to the Return Drake Software User s Manual Supplement 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 1s attached the program generates an EF message page regarding the attachment when the return is calculated To attach a PDF file to a 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 17
7. 42 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information Following are instructions and guidelines for using the 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 and must be NOTE entered directly into the data entry fields within the program For more on these categories of data see Special Conditions on page 46 Most cells in the trial balance worksheet are view only In a new template editable Direct Entry debit and credit cells are indicated by a dollar amount 0 Detail Some cells require more detail than can be entered on a single line These cells are Worksheets indicated by buttons Buttons do not work if macros are disabled see Opening a Template on page 41 Form 1120 pie detail requireda detail requires k 3 line 7 0 does not carry A 0 JL LANNY atA Alaho AL S requires detail 4 0 Other Income requires deta i a Form 1120 Ste Figure 24 Example of cells that require worksheets Click a worksheet button to open a worksheet in a new tab Figure 25 on page 44 shows an example of the Other Income worksheet Tax Year 2011 43 Importing Trial Balance Inform
8. Form 1065 Schedule K 1 This screen works the same as it does for the other pack ages with amounts being carried automatically to the appropriate forms schedules and lines In addition 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 NEW FOR The link to screen 2 now appears under the States tab Or enter 2 in Alii 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 NOTE 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 or enter the two letter state code in the selector field and press ENTER Tax Yea
9. Part reorganization ll line 19a Qualifying advanced coal project credit Basis of Overrides the cost entered on the 4562 detail screen as investment in gasification for section 49A d 3 B i determined by the code CA entered in the Investment credit projects code drop list Tl orm 3468 Ql Qualifying advanced coal project credit Basis of Overrides the cost entered on the 4562 detail screen as investment in coal based generation for section determined by the code entered in the Investment credit code 49A d 3 B ii projects drop list Overrides the cost entered on the 4562 detail screen as determined by the code entered in the Investment credit code drop list Qualifying gasification project credit Basis of investment property not included in a above Overrides the cost entered on the 4562 detail screen as determined by the code RA entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as 11g Rehabilitation property Other pre 1936 buildings determined by the code RB entered in the Investment credit code drop list Rehabilitation property Pre 1936 buildings in the Gulf Opportunity Zone Form 3468 Overrides Worksheet Override Location Field Name 1120 Location of Information Being Overridden Overrides the cost entered on the 4562 detail screen as determined by the code RC entered in the Investment credit code drop list eae p
10. Program Defaults and Overrides By default the program indicates that the entire balance due line 34 Amount owed of Form 1120 is to be withdrawn on the return due date To indicate other wise complete the Requested payment date override fields see Figure 7 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 transmitted 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 is required if the program is to direct tax authorities to withdraw funds from the corporation s bank account Account 1 adera Account ane tate lif same as ifs 1 Withdrawal selection Federal selection State city selection Mame of financial institution Account number Type of account Checking Savings Checking r Daytime phone number Repeat Account Information Savings 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 required As with the DD screen the RTN Account number and Type of account data must be entered twice item 2 i
11. 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 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 owned by the officer e Time Enter the percentage of time the officer devotes to the corporation Enter percentage amounts in whole numbers For example enter 40 for 40 Tax Year 2011 Drake Software User s Manual Supplement Income and Deductions Salaries and Wages 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 The Salaries and wages amount should not include compensation of NOTE officers Enter officer compensation data on screen E or as Officer Compensation on line 12 of the DED screen Repairs and Maintenance Bad Debts Rents Enter repair and maintenance costs on the DED screen An amount entered here 1s combined with th
12. FR 12 Officer Compensation State income taxes 2 State franchise taxes orm 1125 A Cost of Goods Sold 5 chedule J Loss Carryback Tax Computation and Payments 12 Tl Overrides calculated amount for entries on 4562 detail screen Depreciation p directed to the COGS in the Form selection box 0g Prior year overpayment credited to current year Overrides entry made on ES screen Overrides the estimated tax payments for TY 2011 entered on the ES screen Overrides amount coming from Form 4466 to line 32c of Form Prior year s refund applied for on Form 4466 1120 Go to PRNT Print Options screen and select the option Calculate Form 4466 Overrides amount entered on screen 7004 Application for 6 Tax deposited with Form 7004 extension application Automatic Extension for Form 1120 Amount paid with extension 13 Estimated tax payments for current year nN chedule K Other Information 10 9 Tax exempt interest received or accrued during the tax Overrides the amount of tax exempt interest entered on the INC year screen chedule L Balance Sheet Assets 3 3b 2 Overrides entries from screen A Cost of Goods Sold line 1 Inventory at beginning of year Overrides entries from screen A Cost of Goods Sold line 7 Inventory at end of year Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calcula
13. Form 8881 Credit for Small Employer Pension Plan Star tup Costs 30 Form 8903 Domestic Production Activities Deduction 13 Form 8912 Credit to Holders of Tax Credit Bonds 30 Form 8932 Credit for Employer Differential Wage Pay ments 30 Form 8941 Credit for Small Employer Health Insurance Premiums 30 Form 8941 Credit for Small Employer Health Insurance Premiums 13 G gains and losses 9 gross receipts 7 H header information 5 importing trial balance 39 48 income and deductions 7 14 Vill Drake Software User s Manual Supplement Corporations instructions for filing 34 insurance proceeds income from 10 interest expense 12 income 9 10 inventory 8 L life insurance companies 29 limitations meals and entertainment 14 on NOL deductions 30 M 2 out of balance troubleshooting 28 maintenance costs 11 meals and entertainment 14 Multi State Apportionment 1 22 N net operating losses NOL 13 14 30 new features in Drake 1 next year depreciation listing 33 O officer compensation 10 ordinary gains and losses 9 Other Deductions 13 other income loss 9 out of balance M 2 troubleshooting 28 overrides 34 ownership foreign 20 of stock 19 21 percentages 10 P parent subsidiary group 19 29 PDF documents e filing 37 39 Pension and Profit Sharing 13 percentage stock and ownership 10 PIN electronic signatures 17 printing statements for Schedule L 25 suppressing forcing 33 pr
14. Info Overrides amount calculated by the software Overrides states return due date or date the return is filed Overrides phone number entered on screen 1 General Info Overrides amount calculated by the software Overrides state s return due date or date the return is filed Overrides phone number entered on screen 1 General Info Federal payment amount ederal Requested payment date ederal Daytime phone number ate payment amount ate Requested payment date ate Daytime phone number ate payment amount ate Requested payment date ate Daytime phone number ate payment amount ate Requested payment date tate Daytime phone number e t e oe 5 Federal Requested payment date Overrides federal return due date _ Federal Daytime phone number Overrides phone number entered on screen 1 General Info State paymentamount Overrides amount calculated by the software _ State Requested payment date Overridess state s return due date or date the return is filed State Daytime phone number Overrides phone number entered on screen 1 General Info State paymentamount Overrides amount calculated by the software _ State Requested payment date Overrides states return due date or date the return is filed State Daytime phone number Overrides phone number entered on screen 1 General Info State paymentamount Overrides amount calculated by the software _
15. Information If YES enter the total amount of cash distributions and Adjusts amounts entered on M 2 screen for lines 5a 5b and or 14 13 eee the book value of property distributions here 5c Schedule M 1 Reconciliation of Income Loss per Books With Income per Return Adjust amounts credit adjustments made from Forms 5884 Expenses recorded on books but not deducted on 5884A 6765 8820 8845 8846 8881 expense amounts Form 1120 Other subject to limitations and nondeductible expenses carry automatically to this line aA Oi POOKS DUE NONNE UCE OM TONM Adjusts amounts from K1P screen line 18 code B 8611 Recapture of Low Income Housing Credit 8 Recapture amount from pass through entity Adjusts amounts from K1P screen line 20 code F and G 4562 Part1 Carryover of disallowed deduction from prior year Adjusts amounts from the 4562 screen Form 1120 4 Form 4626 Alternative Minimum Tax Adjustments amp Preferences depreciation expense reported on Fed_Depr Form 8903 Domestic Production Activities Deduction eee 7 annog proauchon AUVES INCOME ION Pass Adjusts amounts from K1P screen line 13 code U through entities Form W 2 wages from pass through entities Adjusts amounts from K1P screen line 13 code V Client Bill Adjustments and Payments Adjusts amount to be printed on the client s bill corresponds to Adjustments Amount ne the description on the BILL screen Drake So
16. Overrides the default rate Refer to the form instructions Form 8609 Low Income Housing Credit Allocation Certification ai iets Me yee OMe pulee Overrides computed rate on Form 8609A Part Il line 2 Form 8827 Credit for Prior Year minimum Tax Overrides the amount calculated for Form 8827 line 8a if the Section 383 or Section 384 Amounts ae corporation has special items See Form 8827 instructions Schedule K 1 for 1065 Current Year 179 exp allowed Overrides the allowed amount calculated on the WK_S179L Overrides the allowed amount calculated on the WK_S179L Prior year 179 exp allowed Prior year QRP 179 exp allowed i S 4 Application for Employer Identification Number County amp state Overrides information entered on screen 1 Date business started acquired Overrides information entered on screen 1 W Form 1120W Corporation Estimated Tax Taxable income expected for the tax year a S Overrides amount coming from Form 1120 page 1 line 30 Alternative minimum tax Overrides amount flowing from the Form 4626 line 14 Ol Overrides amount calculated by the software for Form 1120 line o Olz Z O re S jz 9 2 3 318 ou os D wn O 2 O v O S D Cama D Q re 3 ro Cc gt 23a Tax shown on current year tax return Overrides amount calculated by the software for Form 1120W line 25 column a d Overrides amount calculated by the software for Form 1120W line 2
17. See Form 5472 for filing instruc tions 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 clients corporation or owns NOTE 50 or more of the corporation s stock entitled to vote see Schedule K Line 4 on page 19 Schedule K Line 13 20 On line 13 of screen K select Yes if the corporation s total receipts line 1b 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 is 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 Tax Year 2011 Drake Software User s Manual Supplement Schedule K 1 during the tax year An entry here overrides 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 NOTE plete Schedules L M 1 or M 2 To force the software to print these forms go to the PRNT screen and select Force Schedules G 1120 C L M 1 and M 2 to be printed Schedule K 1 New in 2011 the 1120 package includes a K1P screen for entering information from
18. State Requested payment date Overrides state s return due date or date the return is filed __ State Daytime phone number Overrides phone number entered on screen 1 General Info C Sea Overrides the option selected in Setup gt Options Optional Documents tab for the federal filing instructions Overrides the option selected in Setup gt Options Optional rint Options Print federal filing instructions Print state filing instructions ropes l Documents tab for the state filing instructions Overrides the option entered in Setup gt Options Optional Documents tab for the corporation envelope coversheet Overrides the option entered in Setup gt Options Optional Documents tab for the IRS envelope coversheet Overrides the option entered in Setup gt Options Optional Documents tab for the state envelope coversheet Overrides the option entered in Setup gt Options Optional Documents tab for the city envelope coversheet Overrides the default date on the Paid Preparer line at the Date to print on returns bottom of the 1120 page 1 the 1120 C the 1120 H the letter and the 8879 Overrides the default due date that is printed on letters and filing instructions Overrides the amount calculated by the software for Form 1120 page 1 line D Overrides the IRS Center address determined by the program IRS Service Center based on the corporation s location and amount of total assets at the end of the year Sa
19. Trial Balance Import n nananana nannan 40 Preparing Financial Data for Import 2 nnana aaaeeeaa nnne 4 Entering Financial Data ws 624 dsa da44e ed08e880b08 e080 b0de se Ce eens ddan ede ndendes de deadd 43 POV a ile guees a cas ow Abas oe G Ge eee e as Faee eames A see etee aacaw congue 45 Importing Data into a Return 0 nee e eee e eens 45 Special COMdINONS 4 2 4 4 8asde d EET hae oe hoe base ER SG a He ase SEs SESE eee Seb aes 46 Appendix A Trial Balance Import 0 0 0 0 ce es A 1 Appendix B Adjustment Worksheet 00 eee ees B 1 Appendix C Override Worksheet 00 0 cee eee C 1 INGEN sed eaae hee seen deg eaenweaes pe eken eye ba Soe ek eawareeen ange eeeaus vii Tax Year 2011 y vi Drake Software User s Manual Supplement Corporations This page intentionally left blank Tax Year 2011 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 2011 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 2011 program reflects all changes to credits and deductions including discontinua tions For details on the new regulations f
20. Types of Returns 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 Tax Year 2011 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 15 Mark the 52 53 week tax year box 35 Special Types of Returns Drake Software User s Manual Supplement lf not calendar year Fiscal year begins 03 25 2011 Fiscal year ends 09 26 2012 W 52 53 week tax year ELEC Figure 15 In this example the fiscal year begins 09 29 2011 and ends 09 26 2012 the Wednesday closest to the end of September giving the entity a 53 week year for 2011 An entity that has filed returns in the past must complete only steps 1 NOTE and 2 of this process An entity that has never filed a return before must continue with steps 3 through 6 3 Click the ELEC link to open the Election Options screen Figure 16 Election Options 54 53 Week Tax Year Election To Month in which new 52 53 week tax Year QMS ce ccccececcesceccscercescseeressersseerseesrsersaversesaversneeserseters 2 The day of the week on which the tax year
21. always QMS ec eececcceescscersercecrssserseesserseversersavereees Dy ie date thetarvearends n oer en at aaah Memmad A A E nee eran Other short year optionsfelections Figure 16 Elections for 52 53 week tax years 4 For line 1 select the month in which the 52 53 week year ends for the current fis cal year 01 January 02 February etc 5 For line 2 select the day of the week the tax year always ends 6 For line 3 enter the actual date that the tax year ends the same date entered in the Fiscal year ending field on screen 1 Once a 52 53 week year is selected the entity must use that account NOTE ing period every year To change accounting periods the entity must submit to the IRS Form 3115 Application for Change in Accounting Method In subsequent years only the 52 53 week tax year check box on screen 1 must be marked the program automatically updates the dates Inactive Returns Entities that are inactive but are 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 36 Tax Year 2011 Drake Software User s Manual Supplement Binary Attachments When the return is calculated the program displays the words Inactive Return on the main form of the return specifically on lines 1c and 2 Zeros are displayed where requ
22. 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 47 Importing Trial Balance Information Drake Software User s Manual Supplement 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 on the trial balance work sheet helps ensure that the balance sheet balances and provides a way to check that the amount on line 1 of Schedule M 1 is correct Compare NOTE the calculated line 1 at the bottom of the trial balance to the equivalent line on Schedule M 1 of the calculated return If the depreciation amounts match but the line 1 amounts differ an M 1 adjustment could be required 48 Tax Year 2011 Drake Software User s Manual Supplement Appendix A Trial Balance Import Tax Year 2011 The trial balance import allows data to be imported into a corporate tax return from a trial balance worksheet Drake s specially designed trial balance template and importing function has the fol lowing benefits e Eliminates the need to duplicate entries e Eliminates data entry errors by automatically importing data to the correct fields e Allows preparers to merge basic accounting functions with tax preparation See next page for a flow chart describing the use of the trial balance import PAPE EPH A EN HPE HEU DUETA EU BPE EPH HYEN H
23. 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 Tip sponding screen 20C or H for data entered To delete a screen open the screen to delete 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 name and address for Form 1120 For state pur poses only if the corporation has an alternate address such as a P O box you can Tax Year 2011 5 Header Information Drake Software User s Manual Supplement enter that address on screen 2 State General Information in the Address Line 2 field at the bottom of the screen NEW FOR The screen 2 State General Information link is now located on the Alii States tab of the Data Entry Menu Tax Year 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 Fiscal and Ifthe corpor
24. current year on screen J To enter mul tiple 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 Tax Refundable Credits and Payments Total Tax Screen J Loss Carryback Tax Computation and Payments has fields for completing the Tax and Payments section of Form 1120 Note that some fields are overrides Press F1 to view more information on a field 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 is 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 NOTE screen in Drake to complete Schedule O See Schedule O Controlled Group Information on page 29 Estimated Taxes and Applied Refunds Over payment Enter on screen ES the estimated corporate taxes paid If necessary use screen W to override 2011 estimated taxes paid and apply any overpayments from 2011 to 2012 NOTE Estimate vouchers are not used in federal corporation tax returns To apply the current year overpayment to next year the corporation s current year taxable income must be greater tha
25. 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 Tax Year 2011 29 Credits and Adjustments Drake Software User s Manual Supplement 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 Certain credits require an adjustment to either income or expenses Drake 2011 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 Cr
26. in Drake go to the DD screen accessible from the General tab When filling out the DD screen e Ifthe federal refund is to go to the account listed select Yes for the Federal Account selection 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 1 Federal Account and State if same as Federal pee ly State city selection MD Name of financial institution RTN Account number Type of account First Bank and Trust 123456789 9876543210 Mv Checking Savings l Checking M Savings Repeat Account Information 123456789 9876543210 Figure 6 Federal section of DD screen also 8050 screen Deposit selection Federal selection 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 Tax Year 2011 15 Filing an Extension Drake Software User s Manual Supplement
27. item D Total assets e IRS Service Center NEW FOR A default due date for filing is printed on all letters and filing instructions generated with a return You can now override the default by entering Ali 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 Available in the 1120 package are spreadsheets with information on overrides and adjustments in the business packages These spreadsheets allow preparers to see what data or calculations are being affected when an entry is made in an override or adjust ment field They can provide a better understanding of how overrides and adjustments work in the software To access the worksheets click FAQ from any Data Entry Menu and then click the Screen Help button at the top of the FAQ screen Next click the link for the desired worksheet and wait for the worksheet to be displayed as a PDF file An Internet connection and Adobe Reader are required in order to view the worksheets NOTE 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 View Help 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 34 Tax Year 2011 Drake S
28. opened Click Next 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 27 See Naming Convention on page 41 Import P 1 Import File Name F DRAKEOS TBTREE FIXR UPPER INCTB XLS Figure 27 Selected file to import 9 Select the Trial Balance Import Options See Additional Import Options fol lowing this procedure 6 Click Next and wait for the import to be completed 7 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 Tax Year 2011 45 Importing Trial Balance Information Drake Software User s Manual Supplement 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 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 w
29. 0W 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 is the only entry needed to generate the form Subchapter T Cooperative Select this box to have the return treated as a Sub chapter T cooperative When this box is selected Subchapter T Cooperative is printed above the corporation name on page 1 of the return but the return does not become an 1120 C return Turn off autobalance For more information on the autobalance feature in Drake see Autobalance on page 25 33 Electronic Filing Drake Software User s Manual Supplement e 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 NOTE 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 The following program defaults can be overridden from the PRNT screen e Filing instructions federal and state e Envelope coversheets corporation IRS state and city e Date to print on return e Due date to print on letter and filing instructions see note below e Amount on Form 1120 page 1
30. 17 state codes 21 tax refunds 10 stock ownership 19 21 subchapter T cooperatives 33 Tax Year 2011 Index tax alternative minimum AMT 29 and payments 14 exempt interest 9 on fuels credit for 10 to book difference 26 years fiscal vs calendar 6 taxes and licenses 11 trial balance import 8 24 25 39 48 troubleshooting the M 2 28 U underpayment of estimated tax 15 updating a prior year return 4 V Vista Windows operating system 40 vouchers 14 W wages 11 Drake Software User s Manual Tax Year 2011
31. 20X 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 Chapter 7 E filing in the Drake Software User s Manual Tax Year 2011 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 Be aware of the following guidelines from the IRS If the 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 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 The common parent must own directly stock that represents at least 80 of the total voting power and at least 80 of the total value of the stock of at least one of the other includible corporations 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 corporation
32. 3800CO printed for each current year credit carryover to 2012 includes the following information e The credits listed in order of allowed use from the Form 3800 instructions e Original amount of credit e Original credit allowed e Year and amount of credit carryback used e Carryforward amount Tax Year 2011 Drake Software User s Manual Supplement What s New in Drake for Corporations Cost of Goods Sold Form 1125 A In years past Schedule A Cost of Goods Sold was located on page 2 of Form 1120 Beginning with tax year 2011 entries on screen A produce a separate form Form 1125 A Cost of Goods Sold Officer Information Form 1125 E In years past Schedule E Compensation for Officers was located at the bottom of page 2 of Form 1120 Beginning with tax year 2011 entries on screen E produce a separate form Form 1125 E Compensation of Officers Form 5472 Screens The screens for filling out Form 5472 Information Return of a 25 Foreign Owned U S Corporation or a Foreign Corporation Engaged in a U S Trade or Business have been redesigned As shown in Figure 1 Form 5472 screens are accessible via the 25 Foreign Owned U S Corporation box under the an Other Forms tab of the Data Entry Menu General Assets Sales Recapture Credits Credits Other Forms Miscellaneous states Alternative Minimum Tax 4626 Adjustments amp Preferences AMT Miscellaneous amp Net Operating Losses wou MTS ACE Worksheet a
33. 5 columns a d 25 Required installment amounts 2 Overpayment applied aa Ti orm 1120X Amended U S Corporation Income Tax Return Overrides amount from original Form 1120 line 11 Overrides amount from original Form 1120 line 27 Overrides amount from original Form 1120 line 31 Overrides amount from original Form 1120 line 32a Overrides amount from original Form 1120 line 32b Overrides amount from original Form 1120 line 32c Overrides Worksheet Override Location Screen Line Field Name 1120 Overrides amount from original Form 1120 line 32d 5f Overrides amount from original Form 1120 line 32f 1 Overrides amount from original Form 1120 line 32f 2 Overrides amount from original Form 1120 line 34 Overrides amount from original Form 1120 line 35 139 Application for Tentative Refund for Current Year Loss Carryback Overrides the IRS Service Center determined by the program 2C based on the location and amount of total assets Location of Information Being Overridden O1 Ql Ko iq mod Service Center Ti orm 2220 Underpayment of Estimated Tax Screen 1 of 2 10 OVERRIDE installment amounts Overrides amount carried from ES screen orm 2553 Election by a Small Business Corporation Ti Officer title for signature section Overrides the entry made in Part I line H Title on screen 2553 orm 3115 Change in Accounting Method General Informa
34. An EF PDEF worksheet that lists all items entered on the PDF screen see item in Figure 17 An Attach PDF button on the toolbar item 2 in Figure 17 o es e Print Setup tw sigs F Attach PDF Data Entry Archive Email Refresh Basic Wie Select Forms to View Print Federal Worksheets Notes Messages Form 1 120 Deparment of the Treasury Internal Rewenue Service Colorada U S Corpo For calendar year 2010 or tax year beginnin Check if L 1120 PG2 L 1120 Pq3 i PESE A EE e To Name PATERSO a N AND is le Figure 17 The red MESSAGES file and the Attach PDF button Click MESSAGES file to view EF messages which provide information on how to attach the required documents to the return Click the Attach PDF button in the toolbar at the top of the window The EF PDF Attachments window displays the information entered on the PDF Attachments window in data entry A red X means the document has not yet been attached a green check mark indicates an attached document Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information Drake 2009 EF PDF Attachments x Required PDF Attachments The list below contains POF Attachments that are required for electronic filing Select an item from the list and click Browse to locate the associated PDF file Items with a green check mark already have the P
35. 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 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information imported correctly into the return Detail worksheets are indicated by red shading as shown in Figure 21 Income and Deductions Income Tate rossteceiD orsa ss meen egw eR Re E Te Oa E Rees i i Red pa ng ees g eee sh E cee ee ese rare E ernet ge aA ir ae er eae E eee eee oroS ordonus s aod Ae nas armen mate E t a tra eine Raw econ a Maem ney Oral never Wee a Aer mace Erase Figure 21 Example of an unnecessary detail worksheet Remove unnecessary detail worksheets prior to import See Detail Worksheets on page 43 for more information on using detail worksheets in the trial balance Preparing Financial Data for Import To prepare the financial data for importing into the return the data must be entered into Drake s specially designed trial balance template Once this information is entered and saved it can be imported into the return Opening a The first step in preparing financial data for importing is to open a trial balance tem Template pla
36. DF file teme with a red 3 are missing the required POF File Reference Description Required POF FileName 3115 41 Line 3 Profit Lass Statements SCHAPARTIPROFITLOSSSTATEMEN 3175 0 Form 970 for Form 3115 FORMS OFORFORM31 15 001 PDF Ji OMO ee eee E eo oe ts ie PEN in Pa gie it aaie Figure 18 The EF PDF Attachments window 4 Click the row ofa document to attach on 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 851 Affiliations Schedule is present in a corporate return message 0132 is generated when the return is calculated 0132 FORM 851 REQUIRED STATEMENTS Form 851 has required attachments that must be attached in PDF format Supporting statements are required for each corporation included in the consolidated return and the attached statement cannot be a Form 1120 The statement must include Items of gross income and deductions es eS Sepat ation pd f taxabl gincome s aahh daan yo ae E N ee Figure 19 EF message regarding Form 851 As shown in Figure 19 the EF messag
37. 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 NOTE Form 1120 to Schedule M 3 and Form 8916A in the program but all other M 3 data must be entered manually If a 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 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
38. OL Carry backs and Carryforwards 4 lt 00 e asse08 av deb adavedd G4 oes HGR OE SESE ROE RSE 14 Tax Refundable Credits and Payments 0 200 cece eee 14 Tax Year 2011 ill Drake Software User s Manual Supplement Corporations TO Wass os ee os ee ee aa ee ee a a 4 es ee 14 Estimated Taxes and Applied Refunds 0 0 0 0 0 0 0 eee nent eens 14 Direct Deposit of Refunds 0 0 0 cc ees 15 Electronic Funds Withdrawal Direct Debit 0 020002 eee 15 Program Defaults and Overrides 0 n n nannan naaa eee n eee eens 16 IReG Wicd iO GigaOM gu ws ne we oot ee a ae ne eh ee oe aia E bed Bye Rees Shee oe Eee en OR 16 Withdrawal from Multiple Accounts 0 0 0 0 006 ne eee eee e eee e eens 16 Filing an Extension 0 0c ce ee 16 Signing the REWINice222c2 26c4cchetcesatsenteeccsedcuneudecinntaxagace 17 Amending a Return 6656 a6 nodes sb hb SoG cd mks eee boas dhe HGS eee hes ebaws 18 BCHOOING a be he ewe A ee ke ee ee eee 19 Schedule IA LiH oan cdt on ns ehsoece et eee e4e eda oe GE ee ee aoe SHA poeme Hee Gene reson 19 Schedule Kk LING Ae lt x c ne are nir adn nbd eh poh ede Pe wees Rds Ba Saco amp BS RR oe Re Bice ae ee 19 Schedule k MOINS Jee rria duc ce ee eens amp 4 ares os Soe oe Ad eG ee ee Oe ee oe ed 20 Schedule Wns LiG Fn ogee hoe bm Ooo ba drs Sh ee EG aw Owe Oe Ao Ba bb eck Be ee eh ee eee 20 Sched le k Line 15 o aa dewe rrene tiar E te Sed ee ed abe ee Re ede oe oda A easke
39. PHP EYE HYH EPE BPE SPEV SVEN HPHP Ned Le het RA NG a et Nea SNe SPH HET HP EV EY HY Do eG E GPE SPH APEN HPE EE H HoH HEN GPE SE A EN HPE Ey EE go HE heey APEN HPE H EY eE He GPE aP HN Er APH te EE pea H ppa ae HE EN EEr Res eE He GpH ae Hoa Er Nes EE ge ae ppa ae H gpu ae E ea E ppa e g Er ate Reyne HEE Epe Er HEE Ns E e HEE 990 990 EZ or 990 PF return Prepare to use Trial Balance Import Enable Excel macros Disable autobalance Force Schedule L Delete unnecessary detail worksheets isu Populate Trial Balance Template Import gt 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 1120S amp 1065 in trial balance Go to data entry an enter individual rentals on 8825 or RENT screens as applicabl Delete imported 8825 and REN
40. SCH3 screen is similar to the SCH2 screen and is used to provide detailed infor mation for Schedule M 3 and Form 8916 A It can be used in place of the actual M3 21 Schedule M 2 Unappropriated Retained Earnings Drake Software User s Manual Supplement and 8916A screens For more information on using this type of screen see The SCH2 Screen on page 24 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 corporate income that has not been distributed to sharehold ers that 1s available for dividend distribution M 2 Troubleshooting 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 that the M 2 is out of balance Solv ing this problem can be challenging since it can have one of several causes e The beginning balance sheet entries are inaccurate e The Beginning of Year unappropria
41. Software User s Manual Tax Year 2011 for more information Worksheets outlining these and other adjustment and override fields NOTE are accessible through the FAQs Frequently Asked Questions screen For more information see Guide to Overrides and Adjust ments on page 34 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 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 NOTE See Importing Trial Balance Information on page 39 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 information 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 NOTE To access the SCH2 screen from screen L click an SCH2 Screen link or press CTRL and the number 2 P
42. T screens Process complete Drake Software User s Manual Supplement Appendix B Adjustment Worksheet Tax Year 2011 The Adjustment Worksheet is updated each year to help you understand what happens in the return when certain data is changed through the use of adjustment fields The following pages contain the 2011 Adjustments worksheet These worksheets are also available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window Adjustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted Form 1120 NC Income ia Goca arses Adjusts amounts from Schedule F line 11 if cash method is p used or line 45 if accrual method is used l Adjusts taxable interest income from Form 6252 when check 5 Interest income box is selected 7 Gross royalties Adjusts amounts from K1P screen line 7 DED Deductions l Adjusts the amount that flows from Schedule F line 17 to this Adjusts the amount that flows from Schedule F lines 23 a and aslo Adjusts the amount that flows from Schedule F lines 26 a and 8 26 See a WAGES Pale ONOn sHarencich Adjusts the amount that flows from Schedule F line 24 employees Form 1125 A Cost of Goods Sold Schedule C Dividends and Special Deductions Adjusts amounts coming from K1P screen line 6a Schedule K Other
43. as Overrides the system calculation for the Current depr column of the Depreciation Detail Listing Override regular depreciation AMT if different Bebe nea for the AMT Current column Override regular depreciation Book if different Overrides the calculated book amount Print corporation s envelope coversheet Print IRS envelope coversheet Print state envelope coversheet Print city envelope coversheet Due date to print on letter and filing instructions Total assets on Form 1120 page 1 line D 562 Detail Override regular depreciation Federal Overrides Worksheet Override Location Field Name Location of Information Being Overridden 1120 Overrides Form 4562 Part line 6 column c and the amount 179 expense elected this year Federal for the WK _C179L 79 exoanse dleciedthisvears Book i difictent eee calculated book amount and the amount for the Overrides Form 4562 line 12 If Method M is chosen there must be an entry made on line 179 expense elected this year or Method EXP must be used Overrides amount calculated for WK_C179L gt 179 expense ALLOWED this year Book if different re calculated book amount and the amount for the Force Placed in Service and Like Kind Exchange Info Overrides convention determined by the dates of assets placed in service during the year 179 expense ALLOWED this year Federal convention ene Overrides how the system calculates depreciation
44. ation Drake Software User s Manual Supplement statement Required Other Income Form 1120 page 1 line 10 Line Descptom moure ports Amount of credit for tax on fuels Form 4136 INC line 1 Interest income on receivables INC line 2 Ordinary income fram partnerships Partnershic Income Detail Lo F J 4 Recoveries of bad debts deducted in earlier years INC line 4 5 Section 401 adjustments INC line 5 b State tax refund cash basis INC line b hy Lee T fi I Taxable income fram insurance proceeds o Other Other Income Detail Total other income Click to motte to TB l 4 Lone Income To return to the previous worksheet click the Corp TB tab labeled 1 in Figure 25 or click the Return button above the worksheet tabs labeled 2 in Figure 25 Note that a detail tab the Other Income tab in Figure 25 might include one or more detail worksheets labeled 3 in Figure 25 Fis ta Figure 25 Trial balance worksheet for Other Income Do not create detail worksheets in data entry if the trial balance work NOTE sheet does not provide an equivalent detail worksheet Otherwise the trial balance will not be imported correctly Totals Totals are displayed at the bottom of each worksheet If credit and debit columns are out of balance the worksheet highlights the out of balance amount Figure 26 4 54r a or OUT OF sme Figure 26 Out of balance amou
45. ation uses a fiscal year where the year begins in the current calendar year Calendar and ends in the next specify the beginning and ending dates in the If not calendar Years year section in the lower left corner of screen 1 The program adjusts calculations for depreciation and for gains and NOTE 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 35 Short Year An entity may have a short year return if changing accounting periods with IRS Returns approval Form 3115 or if this is its first or last year in business and the tax year is 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 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 options elections 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 NOTE The program may not correctly calculate depreciation gains or losses for a short year return Depreciation for a short year return can be
46. ctive companies Tax Year 2011 Drake Software User s Manual Supplement Corporations Table of Contents What s New in Drake for Corporations 0 0 0 eee 1 ELEC SOIO I eee ee ee ee ee ee ee er eee ee ee oe ee eee ee eee ee ee ee ee ee ee ee eee l Income and Deduction Screens ssssrsrreriserterss ts eee eee e eee e ees 1 Multi State Apportionment s c25 2440 hao nn esd Gea edeoRde need ieee e ean dda ered ene readee l General Business Credit Form 3800 2 0 0 0 nee eee ees 2 Cost ot Goods Sold Form I125 A esrresreriies nir eir EAE E EEES E EE EE e eae Garwa 3 Officer Information Form 1125 E 2 0 0 erreren 3 Loong eA eS i E E ane EE E E E EE E EEEE ETTEN ETTET 3 SU eeraa a e E O S tem E A ne EO a a N O 3 Book Depreciation Schedules 0 0 eee een ee eee teens 4 Adjustment and Override Worksheets 0 0 00 eee nee eens 4 zite ae ES a a E A E E E eee 4 Updating a Prior Year Return in Drake nonn nnn eee eee eens 4 Converting from Another Return Type onn 000 0c ee eee cence eens 5 Filing Form 1120 C or 1120 H 2 cee eee eee nee teens 5 Header Information oi5c 086G4ees He wd eden nares ee eee ete ade es 5 Name and Address we ecaucew ee sane aadne pone gee gabe Bee Se Eee aS ROSE SEH Eee aed oee Rees 5 Wak Val 2955 hecwn eed obese bee eat ened ee eee ed pee wees eete eee een cen aee ae os 6 Boxes ADODO E o 6 n 46o6 2 rotira Ros ood eee wee eee EEEE Gees een teee Mean eee EEN 7 Income and Deduction
47. d on Form 1120 page 1 lines 13 through 26 that do not require a separate schedule or form Form 4562 J Includes loss carrybacks controlled group tax bracket amounts tax payment information and certain credits Enter gross receipts Form 1120 line 1b and returns and allowances Form 1120 line 1d on lines 1b and 1d of the INC screen Exclude any amounts that are to be reported on lines 4 through 10 of Form 1120 Line la Merchant card and third party network payments is new for N DTE Form 1120 in 2011 however because the IRS requires that a zero 0 be entered on this line for 2011 the field for line la on the INC screen is inactive grayed out Cost of Goods Sold Form 1125 A New for 2011 is Form 1125 A Cost of Good Sold This form replaces the Schedule A Tax Year 2011 Income and Deductions Drake Software User s Manual Supplement As in years past for cost of goods sold COGS complete 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 NOTE format of IRS Form 1125 A For more information on completing these fields press F1 or consult the IRS instructions Inventory Inventory amounts entered on lines 1 and 7 of screen A automatically flow to Sched ule L line 3 Inventories Lines 1 and 7 of screen A are adjustment fields Amounts entered in these fields adjust add to or subtract from any amount bein
48. e amount if any entered in the Repairs and maintenance field on screen F Use the Bad debts field on the DED screen to enter the total debts that became worth less in whole or in part during the year but only to the extent that such debts related to a trade or business activity Enter deductible non business bad debts as a short term capital loss on NOTE screen D Capital Gains and 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 NOTE The Rents field is an adjustment field An amount entered here is com bined with the amount if any entered in the Rent fields on screen F Taxes and Licenses Tax Year 2011 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 NOT ATT_CTL referred to on line 17 with an ATT CTL refere
49. e hoe ead 20 Schedule K 1 2 20 ee ee eee eee eee 21 State Specific Information 0 00 ee ees 21 Resident State 0 ce ee ene e nee e eee een e nee n ene ne een neeeenenenes 21 Other States 0 cc cc ee ec cet eee eee eee teen eee n eee e eee eeeeenenes 21 Contact Information 0 0 0 cece eee cence eee nee e ence ence ne neneneeenees 23 Other Information and OverrideS 00 nannan eee eee eee eee ees 23 Schedule L Balance Sheet per Books 2 0 00 cee ee 24 Flow of Information lt lt c26 046604 6444004 640444 54 08 ceded Oo awd ded eede beeen beh dbase hen asad 24 The SCH2 OClCCis s 2465 0 4 sa 5 5 ed bs wad 2b oddone Boe oe oe eS Fee Oe Ghd eee 24 Autobalance 0c cc cece ee ee ec eee ee eee cece eee eee eee e ne eenenenecnenenseces 25 Schedules M 1 and M 3 Reconciliation of Income per Books 26 Schedule M L rese 5 oe ek A BS ae bb ee en eh oe oe be es eae ees 26 Schedule M 3 cc a6 04 adem ours in bee hu s6bGa bb be aod bw bee hod ea oh046 0485645 0504445625548 ag Schedule M 2 Unappropriated Retained Earnings 0 000005 28 M 2 Troubleshooting nnana annann 28 Schedule O Controlled Group Information 0000 eee ee eee 29 AMT Adjustments and Other Items 0 nee e eens 29 Types of Controlled Groups 2204 6644208462660 2 ce Rade eOE TEA Swed REE DASE Ee ake ede 29 Line 5 Apportionment Plan Status 0 eee e eee e eens 29 Credit
50. e new name NOTE If saving a trial balance to a different location make a note of where youre storing it The program automatically looks in the default directory 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 46 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 23 see also Figure 26 on page 44 F Le vou ee T m _ ee aera OE ae a rl a m a Pe E En 7 Pe eT ne s Tha we a Salaris and wages shareholder employ es fr wt Waste removal i 0 1 r Income Loss Schedule M 1 line 1 100 600 gt 2 Gots st 549 050 LOUT OF BALANCE Pha Figure 23 Schedule M 1 amount 1 totals 2 and indication of balance 3
51. e states that attachments are required You would then need to obtain or complete the statements scan them into the computer save them as a PDF file and attach them 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 Tax Year 2011 39 Importing Trial Balance Information Drake Software User s Manual Supplement NOTE A flow chart of the trial balance importing process is available as an appendix at the end of this manual Preparing to Use Trial Balance Import 40 The trial balance import function can be used only on returns that were created in Drake 2008 or later If you haven t already create a client file in Drake or update an existing client file from the prior year Like several other functions of the tax software this new feature requires Microsoft Excel version 2000 or later In addition take these actions to ensure the trial balance import works properly e Activate Macros The trial balance import function uses macros in Microsoft Excel Check your Excel settings to ensure that macros are activated and that macro security
52. e 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 Tax Year 2011 Drake Software User s Manual Supplement Elections The deduction allowed under section 249 The domestic production activities deduction under section 199 Any net operating loss NOL carryback to the tax year under section 172 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 Elections 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 Return Elections IN a T Desoipiion Cost basis amount years Date or year ending ww Other cost basis or amount Other date or year ending Gc Reena eee aie Renee an ane pr ot ae eer eee eel ee ee eee gt Other information Explanation ee
53. edit e Form 8864 Biodiesel and Renewable Diesel Fuels Credit e Form 8912 Credit to Holders of Tax Credit Bonds interest income Adjustments are made to the appropriate deduction 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 e Form 8845 Indian Employment Credit e Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Cer tain Employee Tips e Form 8881 Credit for Small Employer Pension Plan Startup Costs e Form 8844 Empowerment Zone and Renewal Community Credit 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 30 Deduction 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 deduction in computing the taxable income of an intervening year would increase the NOL to a succeeding year Th
54. ee ee ee ee ae ee ae ae Figure 11 Return Elections portion of ELEC screen Making an Election in Drake To indicate that the corporation is making an election 1 Open the ELEC screen accessible from the Miscellaneous tab of the Data Entry Menu 2 Make a selection from the Election drop list See Figure 12 on page 32 Tax Year 2011 31 Elections Drake Software User s Manual Supplement Return Elections k O General Election Statement Capitalize and Amortize Circulation Costa over 3 Years 3 Capitalize and Amortize Research and Experimental Capitalize and Amortize Intangible Drilling and Development Capitalize and Amortize Mining Development Costs Capitalize and Amortize Mining Exploration Costs ee cee onl SAN Desci Cost basis amount years Date or year ending a Other cost basis or amount a aman staat en a ao r at l 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 cally should be entered for each of these elections Drake Software Data Entry Help Date or Year Ending direct entry Enter the date or year ending r
55. ems 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 T P Mm AA F te p nen pit PE toate Ars f Fa ii a et ee a nie or 2 me tem p e PM pet Oe gte A gulls aim whence weet te fee om b wes 2A oe bal y nfl nied RF ia Fa f T a ete se ie nt ant rr 9 n Phaseout of Accumulated AMT AMT Penalty for earnings exemption exemption failure to pay credit amount amount estimated tax Description Amount Other Apportionments o po 0 E mooo p K det nan e ame ees amp 2 Per oe epee Th otek ha ie any tyr BAAL Pee P i y w Te ee N O ii 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 reported controlled group for which Schedule O is reporting Controlled group types are briefly defined below See Schedule O instructions for more details 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 certain amount of voting power e Combined group Three or more corporations
56. ension 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 8903 to complete Form 8903 Domestic Production Activities Deduction DPAD The calculated total of screen 8903 flows to line 25 of Form 1120 NOTE 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 Tax Year 2011 13 Tax Refundable Credits and Payments Drake Software User s Manual Supplement Drake automatically calculates meals and entertainment limitations NOTE A detail CTRL W worksheet is required for the Other itemize 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
57. entered on screen 4562 and or screens 6 7 8 and 9 6 Tax Year 2011 Drake Software User s Manual Supplement Income and Deductions 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 NOTE entries on screen 851 Form 851 Affiliations Schedule Box 2 Per sonal holding company is automatically marked if there are entries on screen PH Schedule PH U S Personal Holding Company PHC Tax Income and Deductions The data entry screens for income and deductions have been revised for easier data entry Prior to tax year 2011 data entry was required on the following screens in order to calculate taxable income for a return 3 Income and Deductions 4 Payments and Credits INC Other Income TAX Taxes and Licenses DED Other Deductions J Schedule J Tax Computation Only three screens are now required Gross Receipts INC Includes all items of income reported on Form 1120 page 1 lines 1 through 10 that 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 DED Includes all deduction items reporte
58. epreciation amounts directly into the appropriate fields on the trial to SchA 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 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 8 Tax Year 2011 Drake Software User s Manual Supplement Income and Deductions 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 NOTE If the corporation is filing a consolidated return do not enter non included dividends here or anywhere else in the program Interest 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 This amount flows as applica ble to Schedule K line 9 and to Schedule M 1 line 7 Override
59. equired for the gelected election The description field is used on the following election statements for this package Use Date of Disaster Date of Contribution Date Paid or Incurred Date Payment Received Se rer Ee ie Al eee Me A ee em k Ay A me les li RE RRR oR in eel A oe eel MR RE Ble oT oo oi 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 NOTE 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 ELO1 The election statement includes the election title election wording and any additional information required for the election such a date or amount Entries for certain fields are sometimes included in the actual election statement other times they are included as separate lines Signature lines are printed as needed on some statements 32 Tax Year 2011 Drake Software User s Manual Supplement Making Changes on the Fly
60. errides calculated amount Th 3 3 oo Worksheet B Year end spot translation rate Overrides rate entered on 5471 screen Worksheet C U S shareholder s pro rata share of line l 4 Overrides calculated amount Worksheet C Average exchange translation rate Overrides rate entered on 5471 screen Worksheet D Pro rata share of line 1 Overrides calculated amount Worksheet D Average exchange translation rate Overrides rate entered on 5471 screen orm 5472 25 Foreign Owned U S Corporation 1j r 2 3 4 8b 4 17 5 2 7b Ti Overrides entry on screen 1 for foreign address if is entered in ST field Country of Incorporation orm 7004 Application for Automatic Extension for Form 1120 l l Overrides calculated amount on Form 1120 page 1 line 31 6 Tentative tax before credits Payments Credits Form 1120 C line 28 Form 1120 H line 22 7 Overrides calculated amount on Form 1120 page 1 line 32h Form 8027 Employer s Annual Information Return of Tip Income and Allocated Tips Form 1120 C line 29 Form 1120 H line 23g 7 Allocation of tips if using other than calendar year Overrides calculated amount for line 7 of form place x in line 6 to activate this override Total payments and credits Form 8082 Notice of Inconsistent Treatment or Administrative Adjustment Request AAR Corporation s tax year Overrides the dates entered on screen 1 Overrides Worksheet
61. eturn 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 A prior year return can be updated in three ways e With all other returns in the program using Last Year Data gt Update Clients 2010 to 2011 not recommended e Asa single return updated one at a time using Last Year Data gt Update Clients 2010 to 2011 recommended Tax Year 2011 Drake Software User s Manual Supplement Header Information e When you open a return for the first time in the 2011 program and are prompted to update it 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 Converting from Another Return Type If the corporation is electing to become an 1120 corporation after existing 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 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
62. fields are available on screens K and M1 if necessary to override the INC screen amount Rents and Royalties Enter gross rents and gross royalties using the direct entry fields on the INC screen Note that passive activity loss rules may be applied to rental activities held by a closely held corporation or a personal service corporation Capital Gains Use screen D Schedule D to enter capital gains and losses The net gain from screen 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 NOTE ture For more on using this feature see Schedule D Imports in Chap ter 5 of the Drake Software User s Manual Tax Year 2011 Ordinary Gains and Losses The amount generated on line 9 flows from screen 4797 Amounts can also flow from screen 4562 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 Tax Year 2011 9 Income and Deductions D
63. filiated groups 19 alternative minimum tax AMT 29 amended returns 18 amortization 13 24 apportionment plan status 29 attachments binary 37 39 PDF see PDF files auto balance 25 33 B bad debts 10 11 bankruptcy 34 Book Depreciation 4 book to tax difference Schedule M 1 26 brother sister group 29 C calendar years 6 capital gains and losses 9 carryover of NOLs 14 30 change of name or address 7 Changes on the fly 33 charitable contributions 12 30 codes error reject 35 miscellaneous screen 1 23 state 21 combined group 29 compensation of officers 10 consolidated returns 9 contact information for state returns 23 contributions charitable 12 30 controlled groups 14 29 converting to 1120 5 cost of goods sold see Schedule A Cost of Goods Sold coversheets 34 Tax Year 2011 Index credit for tax on fuels 10 credits and adjustments 30 Ctrl W detail worksheets 8 14 40 D data entry FAQ screen 34 trial balance import 43 debts bad 11 deductions and income 7 14 depletion 13 depreciation and auto balance errors 26 expense 12 for cost of goods sold Schedule A 8 on short year returns 6 trial balance business returns only 47 detail Ctrl W worksheets 8 14 40 direct debit of balance due 15 16 Domestic Production Activities 13 domestic production activities deduction 13 E e filing new features in Drake 34 PDF documents 37 39 electronic funds withdrawal direct debit 15 signa
64. for the Life MACRS Placed in Service and Like Kind Exchange Info h pie sedans tables and Method columns of the Depreciation Detail Listing 4562 Parti J o S O 1 Maximum amount if greater than 250000 Overrides the maximum of 179 expense for 2009 of 250 000 on line 1 of Form 4562 5 2 Total cost of sec 179 property placed in service in Overrides the software calculated amount of section 179 current year property placed in service during the tax year Total business income Federal Overrides line 5 on WK_C179L eee eee 1118 Foreign Tax Credit Schedule B Part Il Overrides calculated amount from Form 1118 Schedule B Part Total foreign taxes paid or accrued i ecianineon Overrides calculated amount for Form 1118 Schedule B Part I Total taxes deemed paid eames 3 Reduction of taxes paid accrued or deemed paid Overrides amount carried from Schedule G 5 Carryback or carryover of excess foreign taxes Overrides amount on Schedule K line 3 column XIV 7 Schedule J Part I line ii if Sch J is required ie laa on Schedule J Part I line 11 or Schedule A 3800 Parts amp Il Current Year Credits See Overrides amount calculated by the software for Form 3800 Part 13 25 of the excess if any of line 14 over 25 000 ll line 13 This field is used for allocation of the total amount for controlled groups If there has been an ownership change acquisition or Overrides amount calculated by the software for Form 3800
65. ftware User s Manual Supplement Appendix C Override Worksheet Tax Year 2011 The Override Worksheet is updated each year to help you understand what happens in the return when certain data is changed through the use of override fields The follow ing pages contain the 2011 Override worksheet These worksheets are also available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window C 1 Overrides Worksheet Override Location Field Name Screen Line Location of Information Being Overridden 1120 ol Corporation General Information screen Overrides the fee calculated by the software The fees are entered in Setup gt Pricing irm number Overrides the default selection 1 reparer number Overrides the default selection 1 go 99 O fa O my oO 14 gt Overrides the default setting the login name Overrides the selection made from the ERO SSN Indicator drop list at Setup gt Options EF tab 5 mM UTVU D Q O gt 10 c 2 2 lt 10 s 0 k 0 m S g Q O e gt Overrides amounts entered on screen E in Compensation of Officers field Overrides state income taxes calculated from information entered on ES screen using the code IN Overrides state franchise taxes calculated from information entered on ES screen using the code
66. g carried from the F screen Form 1040 Schedule F Profit or Loss from Farming NOTES to line 2 of Form 1120 The fields on screen L Schedule L Balance Sheet Assets for line 3 Inventories are override fields Anything entered in these fields over rides 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 4 5 lation 5 ae T Figure 3 Screen A Schedule A line 5 In the Depreciation field enter any depreciation that relates to the cost of goods sold unless the amount is flowing from the 4562 Detail screen with COGS selected from the For drop list Note that this field of screen A is an override field an entry here overrides calculations from the 4562 screen Amounts entered in this field automati cally adjust the total depreciation that is carried to page 1 of Form 1120 For Other costs excluding depreciation use a CTRL W worksheet The depreciation amount is included on the statement for other costs and should not be included in the Other Costs worksheet Importing Ifusing the trial balance import feature see Importing Trial Balance Information on Trial Balance page 39 enter d
67. ield Name Location of Information Being Overridden 1120 Schedule M 1 Reconciliation of Income Loss per Books With Income per Return Federal income tax Overrides the systems calculation based on taxable income 5 Expenses recorded on books but not deducted on Overrides the book to tax depreciation adjustment calculated by Form 1120 the system Deductions on form 1120 not charged against book Overrides the book to tax depreciation adjustment calculated by income the system Schedule M 3 Net Income Loss Reconciliation l Overrides default calendar year dates or fiscal year dates 2a Income statement period Beginning entered on screen 1 l Overrides default calendar year dates or fiscal year dates 2a Income statement period Ending entered on screen 1 f Sch M 3 with Taxable Reconciliation o 3 with Taxable Income for Mixed Gr c a Sch M 3 tax reconciliation amount from Pt Il line 30 Overrides amount calculated by the system for Part II line 30 column d column d MT Electronic Funds Withdrawal Information Form 8916 R a ie 7 o Overrides amount calculated by the software for line 34 of Form 1120 Amount Owed Overrides federal return due date Overrides phone number entered on screen 1 General Info Overrides amount calculated by the software Overrides state s return due date or date the return is filed Overrides phone number entered on screen 1 General
68. ior year returns updating 4 R receipts 7 Tax Year 2011 Drake Software User s Manual Supplement Corporations references to forms and worksheets 33 refunds direct deposit of 15 state tax 10 reject codes 35 rent paid on business property 11 rental amp royalty income 9 repair costs 11 Resident State 21 resident state 23 returns consolidated 9 converting from another type 5 fiscal and calendar year 6 tax exempt organizations 990 37 39 updating 4 S salaries 11 SCH2 screen for Schedule L 24 Schedule A Cost of Goods Sold 7 8 26 Schedule B Additional Information for M 3 Filers 27 Schedule C Dividends amp Special Deductions 8 Schedule E Compensation of Officers 33 Schedule G Information on Certain Persons Owning the Corporation s Voting Stock 33 Schedule G Schedule G Information on Certain Persons Owning the Corporation s Voting Stock 19 Schedule K 19 Schedule K line 13 20 Schedule K line 3 19 Schedule K line 4 19 Schedule K line 5 20 Schedule K line 7 20 Schedule K 1 21 Schedule L Balance Sheet per Books 24 26 33 Schedule M 1 Reconciliation of Books with Return 26 33 Schedule M 2 Unappropriated Returned Earnings 28 33 Schedule M 3 Reconciliation of Books with Return 27 Schedule O Consent Plan amp Apportionment Schedule for a Controlled Group 29 section 263A costs 8 481 10 short year return 6 signatures electronic PIN 17 signing the return
69. ired by the IRS in order for amounts to be properly included in the e file data All EF messages must be cleared in order to e file an inactive IMPORTANT ANEF For detailed instructions on e filing returns in Drake see Drake Software User s Man ual Tax Year 2011 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 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 Ip 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
70. 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 39 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 1 000 and liabilities and capital are 900 the program increases the unappropriated retained earnings by 100 25 Schedules M 1 and M 3 Reconciliation of Income per Books Drake Software User s Manual Supplement 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 is
71. is set to medium To do so go to Tools gt Options in Excel and select the Security tab Click Macro Security and select Medium and then click OK In Windows 7 and in Microsoft Vista click the Office button in the upper left and then click the Excel Options button at the bottom of the win NOTE dow Next select Trust Center from the list at left then click the Trust Center Settings button Select Macro Settings from the list on the left then choose Disable all macros with notification Click OK e 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 e 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 Items to Print Force Schedule E W Force Schedules G 1120 0 L M 1 and M 2 to be printed Print Form 4562 Print nextyear depreciation listing Print inactive return PIM for preparers alternative electronic signature Figure 20 Check box for forcing Schedule L e
72. ling 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 Click Screen Help on each tab for state specific information 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 Registered office e Principal place of business e Books in care of e General contact information Screen 2 also has fields 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 Tax Year 2011 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 select 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 23 Schedule L Balance Sheet per Books Drake Software User s Manual Supplement ERO on a Return and Miscellaneous Codes in Drake
73. manent or temporary and as favorable or unfa vorable Examples of both kind of differences are shown in Table 2 Table 2 Examples Book to Tax Differences for Schedule M 1 Permanent Book or tax items that will never be Meals amp entertainment limitations reported for book or tax purposes Penalties Tax exempt interest Temporary Items that will be reported for both Depreciation tax and book purposes but not dur Gains or losses on the sale of ing the same tax year depreciated assets 26 Tax Year 2011 Drake Software User s Manual Supplement Schedules M 1 and M 3 Reconciliation of Income per Schedule M 3 Parts I III Schedule B The SCH3 Screen Tax Year 2011 Table 2 Examples Book to Tax Differences for Schedule M 1 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 e M3 M31 M32 and M33 for Parts I II and Il of the Schedule M 3 e M3B for Schedule B Additional Information for M 3 filers e SCH3 for subsidiary schedules for Schedule M 3 and Form 8916 A e M3S for supplemental statements e 8916 for reconciling of M 3 with taxable income for mixed groups e 916A for supplemental attachments to the M 3
74. n 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 next year enter a positive amount on line 1 Taxable income expected for the tax year at the top of screen W Tax Year 2011 Drake Software User s Manual Supplement Direct Deposit of Refunds 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 Under Use screen 2220 to enter information for Form 2220 Underpayment of Estimated Tax rpay 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 as of IMPORTANT 12 31 of the calendar year If a corporation has a fiscal year end you must enter the effective rates manually State Enter 2011 estimates and 2012 overpayments for state returns on the ES screen For Estimates the federal return to override 2011 estimates and apply overpayments to 2012 use screen W 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
75. n 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 NOTE Neither the federal nor the state balance due can be paid from more than one account Filing an Extension Calendar year returns are due on March 15 2012 By filing Form 7004 a corporation can extend the deadline six months to September 15 Fiscal year returns are due on the 16 Tax Year 2011 Drake Software User s Manual Supplement Signing the Return 15th day of the third month after the end of the corporation s year The 7004 extends the deadline six months NOTE 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 Signing the Return Electronic PIN signatures are required for e filed return
76. n 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 eS a a Enter the line number from the X screen that corresponds with 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 Enter an explanation in the Explanation of Changes text box 8 Calculate and view the return Note the adjustments made on the Form 1120X 18 Tax Year 2011 Drake Software User s Manual Supplement Schedule K E filing an Return Schedule K To add Form 11
77. nce To keep the notification from appearing go to the PRNT screen and select Suppress printing form and attachment references 11 Income and Deductions Drake Software User s Manual Supplement Interest State tax amounts income tax and franchise tax entered on the ES Estimated Taxes screen are carried to the tax computation ATT TAX worksheet The state tax amount carried from the ES screen may differ depending on which method of accounting cash or accrual is used 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 Charitable Contributions Depreciation 12 The DED screen provides two fields for entering data for line 19 Charitable contribu tions we a OREN a e a pna r dw aaa a TE _ A ait aii ee Consulting E A ere ae ee SNE ee i Contribs Qualified conservation contributions Fe Credit and collection costs n Delivery i od ae O Tainan A he penn A T 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 year
78. nt is highlighted if columns are out of balance PIR IB In addition to credit and debit totals the main trial balance worksheet shows the net income loss to be calculated for line 1 of Schedule M 1 after all entries and adjust ments are made in the software NOTE The data cannot be imported if the worksheet is out of balance 44 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information 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 41 Importing Data into a Return Not all trial balance data can be imported directly into a return For NOTE information on program limitations see Special Conditions on page 46 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 return NOTE 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 iz 1 Open the return to which you will import the trial balance information 2 Click Import gt Trial Balance Import from the menu toolbar The preliminary Trial Balance Import dialog box is
79. oftware User s Manual Supplement Special Types of Returns Common Error Codes If one or more of the following IRS error reject codes is generated when e filing an 1120 return the preparer must contact the IRS for further information The IRS e Help Desk telephone number is 866 255 0654 Reject Code 307 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 Reject Code 900 The return type indicated in the return header must match the return type established with the IRS for the EIN Reject Code 905 Electronic Filing Identification Number EFIN in the return header must be listed in the e File database and in accepted status If you get this reject code you must update your e file application to include the 1120 return type 4 Check the individual and or business form types you will e file for lo4o O94 990 W 1040 L ETD i041 M 1065 C 1120 POL State Ack Figure 14 The 1120 box must be marked on Form 8633 in order to e file Form 1120 This can be done at the IRS website or by calling the IRS e file Help Desk at 866 255 0654 Reject Code 910 If Amended Return or Superseded for 1120 112085 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 Special
80. opened to the Sales tab Links at the top of this screen take you to the Payroll Property and Additional Property information tabs for each state selected These screens and their uses are listed in Table 1 Screen Sales Payroll Property Additional Property 22 Table 1 APPT Screens Information Select state enter sales returns and allowance and other income related information for each selected state Enter salary wage commission and labor amounts for each selected state Enter beginning and ending amounts of common apportion ment factors plus select additional apportionment factors from drop lists Select additional apportionment factors from drop lists Tax Year 2011 Drake Software User s Manual Supplement Other Information and Overrides The Ending amount entered on the Property and Addition Property N DTE screens in Drake11 will become the Beginning amount for property on the APPT screen when the client s return is updated next year in Drakel2 You may enter up to four states on one APPT screen If you need more than four states press PAGE DOWN for anew APPT screen The same state can be entered more than once when additional fields are needed Select OT Other Reconciliation from the State Selection drop list when using the reconciliation worksheet Not every item appearing on the federal return may be sub ject to multi state apportionment When you select OT the data entered becomes a reconci
81. or the 2011 tax year see the IRS instructions for Form 1120 ELEC Screen The ELEC screen has been revised for easier more efficient selection of various elec tions available to corporations For more information on choosing elections in Drake see Elections on page 31 Income and Deduction Screens The data entry screens for income and deductions have been revised for easier data entry Only three screens are now required e INC Income DED Deductions e J Loss Carryback Tax Computation and Payments Screens 3 4 and TAX have been eliminated from the 1120 package Multi State Apportionment Previously in order to prepare a multi state return in Drake for a company doing business in more than one state you had to go to each individual state s screens and Tax Year 2011 What s New in Drake for Corporations Drake Software User s Manual Supplement enter its sales payroll and property factors Drake would then calculate the apportion ment factor on that state s tax form With the new APPT screen you can enter the apportionment information for all states in one global location The link to the APPT screen can be found on the States tab or you enter APPT in the selector field and press ENTER General Business Credit Form 3800 GBC Screen Carryover Attachment Unused GBC Worksheet The screen used to fill out Form 3800 General Business Credit has been changed in Drake Software for ta
82. ork 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 28 go to Schedule L line 1 column d in the program and are shown on page 5 line 1 column d of the 1065 return 420 O50 ae r L line 1 cold 1065 page 5 line 1 cold J L line 2a col c 1065 page 5 line a col c eI a petite le a a ial oe wl ge mhie gle _ 3 an att ee of him a oS F Figure 28 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 Drake has provided an Other Information column in the trial balance worksheet to indicate special conditions and additional information regarding certain rows Table 5 describes the most common notes in this column Table 5 Other Information Column Notes Note Description not included in totals The amount is required for importing purposes only but is not included in the totals shown on the trial balance does not import Information cannot be imported and must be entered on the appropriate screen in Drake Screen is specified in column to the left of Other Information optional Amount is optional not required for import but could re
83. po Override Location o OS O 1120 Form 8716 Election to Have a Tax Year Other Than a Required Tax Year Form 8822B Change of Address AE 6 New mailing address Overrides information entered on screen 1 o 8 Daytime phone number Overrides information entered on screen 1 Form 8873 Extraterritorial Income Exclusion D 5a 5b Overrides calculated results for line 42 override and enter 45 amounts from lines 33 36 38 or 44 when using alternative computation Form 8903 Domestic Production Activities Deduction l Overrides program calculations for Form 8903 line 11 from 11 Form 1120 line 28 adds back 8903 DPAD amount from Form 1120 line 25 Form 8925 Report of Employer Owned Life Insurance Contracts OoOO Type of business Overrides entries made on K screen line 2 Business activity Client Bill Adjustments and Payments CE Billing option overrides what is set up in options Override the option selected in Setup gt Options Billing tab Custom paragraph option overrides what is setupin Override the option selected in Setup gt Options Billing tab options Date to be printed on bill Overrides current date Drake Software User s Manual Supplement This page intentionally left blank Tax Year 2011 Drake Software User s Manual Supplement Corporations Index A address change of 7 e mail 23 entering on Form 1120 5 adjustment fields 34 adjustments and credits 30 advertising expenses 13 af
84. quire direct entry in the software enter as negative number Some deficits must be entered as negative numbers import includes the calculated Used for total purchases when calculating cost of goods change in inventory sold COGS in the return the program takes the change in inventory into account for the Schedule A calculation 46 Tax Year 2011 Drake Software User s Manual Supplement Importing Trial Balance Information SCH2 Detail Table 5 Other Information Column Notes Note Description Form or Schedule may be Non financial information such as names of officers for a required 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 29 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 Account Title The 1120 Corporation Trial Balance 12 31 2010 ea Import to screen line Form Page Sch and or line Other Information EET a N T a Ee ee Ne I O en ee E E N a OE a E Oe vecant AONA a U S o UTE Tax exempt securities Other current assets Loans to shareholders Mortgage and real estate loans Other investments Buildings and other depreciable assets ka Aau roulateih iii a
85. r 2011 21 State Specific Information Drake Software User s Manual Supplement Multi State New for 2011 Enter sales payroll and property factors on the APPT Multi State Appor Apportionment screen This screen provides one central location for entering all state tionment apportionment information instead of having to open each needed state s screen In addition to making data input faster and easier the new feature provides two new worksheets a summary worksheet SA SUM that can be used for verifying input and a reconciliation worksheet SA REC that ties the total of the state amounts to the federal return figures These worksheets are available in View mode The individual state apportionment screens will continue to be available in Drake11 but will be used to override data entered on the APPT screen No state apportionment related screens will be updated from Drake10 to Drakel11 State Selection Sales Drake 2011 Data Entry 212121212 PATS PACKAGING Sales Payroll Property Additional Property State Apportionment Sales Factor Throwback nonta Returns and Allowa Outside to within Witi bo win Within to S Gow a bma mpna n taal te Reem Screen links Required field Outside state to inside state Within state to within state Within state to U S Government State drop lists Figure 8 New APPT screens APPT Screens The new APPT screen is
86. rake Software User s Manual Supplement 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 for the Ordinary income from partnerships worksheet should be NOTE entered on the K1P screen and must contain the partnership s name EIN and amount of income or loss all on one line Losses are included with Other Deductions entered on the DED screen Compensation of Officers Form 1125 E Entering Comp Data Screen E Check Boxes Ownership amp Participation New for 2011 Form 1125 E Compensation of Officers formerly Schedule E is not generated automatically with the return unless it is required in other words unless total receipts line 1b 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
87. ress 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 24 Tax Year 2011 Drake Software User s Manual Supplement Schedule L Balance Sheet per Books Line Number 6 Other current assets Y Beginning of Encl of Description year year Notes Receivable Oo Parts Inventory 26945 Loans Receivable 644601 Taxes Prepaid l ote 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 year NOTE and year end amounts are carried to the beginning of year column Statements SCH2 and Trial Balance Import Autobalance Tax Year 2011 when the returns are updated 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 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
88. s If e filing a return com plete all fields on the PIN screen A return cannot be e filed if the PIN screen fields including the title and signature name of the officer signing the return are not com pleted 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 If it is prepared by an employee or officer of the corporation select NONE in the Firm and Preparer drop lists on screen 1 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 Preparer s For more informa tion press F1 in this field NOTE Setup gt ERO must still be completed in Drake for e filing See
89. s except for the com mon parent must be owned directly by one or more of the other includible corpo rations For this purpose the term stock generally does not include any stock that a is nonvoting b is nonconvertible c is 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 Data Entry Menu Tax Year 2011 Schedule K Drake Software User s Manual Supplement If the stock is owned by any foreign or domestic corporation partnership or trust enter on screen G1 the name and EIN of the entity the type of entity corporation partnership or trust the country of the entity s organization and the percentage of stock the entity owns If the s
90. s 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 Contribution carryovers from prior years are entered on the LOSS screen 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 Tax Year 2011 Drake Software User s Manual Supplement Income and Deductions Form 4562 For Men z 1120 coGs F Use F3 to swi e o x 1120 Corporation Main Form or 1120H ae COGS Schedule 4 Coast of Goods Sold Pree Description F achedule F Profit or Loss From Farming Delivery Truck 01 01 2009 leva 100 E ce ee E T PEE E O tits nn a a A 4 atone state nan a AMT ee Figure 5 Selecting Form 1120 from the 4562 screen For drop list NOTE For more on the For drop list in Drake see Associating One Screen with Another in the Drake Software User s Manual Tax Year 2011 Depletion Enter depletion deductions on the DED screen See Form 1120 instructions and Pub 535 for more information on depletion Advertising Enter advertising expenses on the DED screen P
91. s 2 4424 c6c5een chews ceyeseceuteen nnn 7 CROSS RCCCIDUS 22 4o6u neta anee cheat pene yeu dee oeee eee ee eee eee eee se EEE oe 7 Cost of Goods Sold Form 1125 A 0 eee eee eee ees I Dividends Schedule C errre ose ese he EEEE eE EE SHO MEE eed EA 6 eee E 8 D a EE EE I EEE E EEEE 28 4 KOE ew ee EEES 9 Rents and Royalties ssesrirrecrreirkirt phe oie a aaa obe AT E E E R E E G 9 EIEE EE E E E E E T E EE E E E EEEN E eee 9 Ordinary Gains and Losses nnna anaana nenene 9 Other Income 08s ann 534 du o he Gao ora piepie on a a dee eed ee eeees 9 Compensation of Officers Form 1125 E 2 0 0 0 cece eens 10 Salares and WACCS 2 cen daa arnie Chae Ge TENANE Seca EEN ante ENARE ENARE TENE 11 Repairs and Maintenance nnan n nnan n anana a aa 11 BADE eee a EE EE EEEE EE N oreo 11 DECE E hoe hee N oe SEO E E EE E E E EE E ee eee ee 11 Taxes and LICENSES e mu e EE AE ERE EE EEEE ER ER 11 TAE E e E E eee EE R EE E E ad ead E eee es 12 Charitable Contributions 0 00 een eee eee e eee eens 12 DEDO tage nee EEE ee arses oe EEEE panes Bowden aE ve Sue ew ou ene ate 12 DEPICUON 2 4 rensade ndani EEA EEA SER ES Ss oka toh E hud Gan boys oen seen E 13 PROV CTMSIIG ora ae ioe eae e RR HS ee RE Oe ee eee a se eee bee awe eee ne 13 Pension and Profit Sharing 0 eee enn e tent eens 13 Domestic Production Activities 2 0 0 0 eee nent ee eee eens 13 Oiber Dedu hons 4 3 2 6545443 55 55 oes ee ee ake t ha eee ee bee ee eee oe eae eee eee 13 N
92. s and Adjustments 0 0 ccc eee 30 Adjusting Charitable Contributions NOL 0 00 ce ees 30 OCS na ase wa a oe wa eae a ee ke eee ee ee eee eke 31 Making an Election in Drake 0 nn eee e eee e eens 31 Election Statements 0 cece ec ccc ee eee eee eee nen n eee nen eeeeneneees 32 1V Tax Year 2011 Drake Software User s Manual Supplement Corporations Making Changes onthe Fly 0 0 cee es 33 Suppressiiie Forcine DoCuinents o 1442024ss410d s444529he6 5408S0 0G ACh gabe eee SR RSS 33 Calculation and Other Options 4 0 07 0400 od40o4u Gener eee s cen dwes Kee dees He ae eeu eee wees 33 Overriding Other Setup Options 0 0 0 n ee eens 34 Guide to Overrides and Adjustments 0 0 00 00 eee eee e eens 34 Electronic Filing cteeck nied ec Gh GRE SEES ee ee ON EEE Lee eee eee td CONES 34 Common Eror COES eses rearua ren eee eae e CEG swede od bd BEE ee hee 6 ee ge 35 Special Types of Returns 0 0 ce ees 35 Electing a 52 53 Week Year Initial Return 0 0 0 0 0 0 ee ee eee e eens 35 Macie ROUT 4 csv edad ana enencea see eee beh Ee E seed e ed bo eee meee ewes one get 36 Binary AACS 54 5628 caw W ON OOH eS EEE ee ees OEE SADE TEES 37 The PDF Attachment Process 2 0 ccc ee eee e eee eee e eee nnes 3I Printing Generated Doc ments iewnc ee adnee otadees tini EREN EEEE EAR oye REE RS 39 Importing Trial Balance Information 0 0 0 0 cee es 39 Preparing to Use
93. sues e An asset was deleted from 4562 screen Depreciation Detail 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 or changed from 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 NOTE If you are using trial balance import autobalance must be turned off prior to import See Preparing to Use Trial Balance Import on page 40 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 NOTE If the corporation is filing Schedule M 3 any entries on the M1 screen for Schedule M 1 should be deleted Schedule M 1 Schedule M 1 shows all items of income and expense that are not subject to tax plus those accounting items that are not income tax items When required the corporation must reconcile book income with the taxable income Use the M1 screen schedule to enter book to tax difference for Schedule M 1 Book to tax differences are classified as per
94. te for the return and enter the financial data To open a trial balance template for a return im 1 Open the return to the Data Entry Menu tet 2 Click Import gt Trial Balance Import in the menu toolbar The preliminary Trial Import 2 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 Windows 7 and Microsoft Vista you may see a Security Warning NOTE message with an Options button Click Options to open the Security Options dialog box then select Enable this content Click OK The trial balance template is 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 Drake10 soft ware The file name consists of the client name as entered in Drake plus TB for trial balance plus the xls extension assigned to all Excel files as shown in Figure 22 on page 42 Tax Year 2011 41 Importing Trial Balance Information Drake Software User s Manual Supplement Drakel1 TB Entit yName TB x1s File location Name of client TB indicates Excel file trial balance file extension Figure 22 Example of trial balance template file name To change the name of a file in Excel select File gt Save As and assign th
95. ted 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 25 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 an amount and the word Rounding as the description 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 28 Tax Year 2011 Drake Software User s Manual Supplement Schedule O Controlled Group 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 navigate from screen to screen N ITE Members of a controlled group are entitled to one 50 000 one 25 000 and one 9 925 000 taxable income bracket amount in that order AMT Adjustments and Other It
96. the IRS instructions for further details on signing requirements Tax Year 2011 17 Amending a Return Drake Software User s Manual Supplement 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 you CAUTI DN should archive the original to avoid losing previously submitted data For more information on archiving returns see Archive Manager in Chapter 6 Return Results of the Drake Software User s Manual Tax Year 2011 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 is the return as originally entered in Drake If the corporation s name and address information has changed enter the new information on screen X Make all other necessary changes to the regular data entry screens Open screen 2X or press PAGE DOWN while in screen X Enter the line number from 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 i
97. ti d m Depreciation Tax Year 2011 m a kai pii M a Tinim tte ihnen f L line 4 col d ERSS P iisu Airas iin tmar cl bza S E e n Cal I G pe Form 1120 Sch L line 4 col d L line 10a col c ee Pee Form 1120 Sch L line 10a col c optional Fadia e aa i ls eee a T e AT ia de Figure 29 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 the SCH2 drop list 3 Enter the applicable item descriptions and beginning and end of year totals To enter details for additional lines of the Schedule L press PAGE DOWN and repeat steps 2 and 3 Data is saved automatically upon entry When the return is produced the Schedule L of the return reflects both the amounts imported from the trial balance worksheet and the totals of the amounts entered on the SCH2 screen 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 1 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 is 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
98. tion Principal business activity code venides selection made onscreen K ine 2a Overrides default calendar year dates or fiscal year dates entered on screen 1 Overrides default calendar year dates or fiscal year dates entered on screen 1 Overrides entry made on screen 1 Tax year of change begins Tax year of change ends Z 3 o D E Contact person s telephone number he Net Section 481 a adjustments for the year of change Overrides amount flowing from Form 3115 section A line 1h Form 4626 Alternative Minimum Tax Overrides the calculated amount for line 8c for members of controlled groups See Form 4626 instructions 8c Member s reduced share orm 5471 SCHI Schedule I and Worksheets Subpart F income Overrides calculations from worksheets A D Earnings invested in US property Z Earnings invested in US property Overrides calculations from worksheets A D Previously excluded subpart F income withdrawn from Sienidescaleulnionednonimonencelie AD qualified investments Previously excluded export trade income withdrawn Ovemides caanoe A from investment in export trade assets Worksheet A Shareholder s pro rata share of line 30 Overrides calculated amount Worksheet A Average exchange transaction rate Overrides rate entered on 5471 screen Worksheet B U S shareholder s pro rata share of l Overrides calculated amount U S property held Worksheet B U S shareholder s pro rata share of line l Ov
99. tions from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet GCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet GCH2 screen Inventories 3 3 d Inventories 8a 10a a Depreciable assets 8a 10a c Depreciable assets 8b 10b a Accumulated depreciation 8b 10b c Accumulated depreciation 10 12 b 10 12 d 11a 13a a Ilntangible assets 11a 13a c Intangible assets m m pet pet jor jor 11b 13b a Accumulated amortization 11b 13b c Accumulated amortization Overrides Worksheet Override Location F
100. tock 1s 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 to access fields for entering this information 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 is 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 country of residence Generally a 25 foreign owned corporation with a reportable transac tion during the tax year must file Form 5472 Information Return of a NOTE 25 Foreign Owned U S Corporation or a Foreign Corporation Engaged in a U S Trade or Business
101. tures PIN 17 entertainment and meals 14 envelope coversheets 34 error codes 35 estimated tax worksheet 33 estimates 14 33 extensions 16 17 34 F filing instructions 34 final returns indicating in the program 7 updating 5 fiscal year returns 6 foreign ownership 20 Form 1099 K Merchant Card and Third Party Network Payments 7 Form 11125 E 3 vii Index Form 1120 C U S Income Tax Return for Cooperative Associations 5 Form 1120 H U S Income Tax Return for Homeowners Associations 5 Form 1125 A 3 Form 2220 Underpayment of Estimated Tax By Corpora tions 15 33 Form 3800 2 Form 4466 Corporation Application for Quick Refund of Overpayment of Estimated Tax 15 33 Form 4797 Sales of Business Property 9 Form 5472 3 Form 5884 Work Opportunity Credit 30 Form 6252 Installment Sale Income 9 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit 9 30 Form 6765 Credit for Increasing Research Activities 30 Form 7004 Application for Automatic Extension of Time to File 17 34 Form 8050 Direct Deposit of Corporate Tax Refund 15 Form 8609 3 Form 8820 Orphan Drug Credit 30 Form 8844 Empowerment Zone and Renewal Community Credit 30 Form 8845 Indian Employment Credit 30 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Employee Tips 11 30 Form 8864 Biodiesel and Renewable Diesel Fuels Credit 10 30 Form 8873 Extraterritorial Income Exclusion 13
102. x year 2011 due to the IRS s redesign of the form The 3800 screen now calculates amounts for Form 3800 Part III General Business Credits or Eligible Small Business Credits Enter on screen 3800 any passive activity credits allowed and any current year unused credits to carry back to prior years Part III was added to the form this year to reflect all the general busi NOTE ness credits reported on Form 3800 and to identify the type of credit being reported General Business Credits GBC or Eligible Small Busi ness Credits ESBC These changes have been added to all applicable packages in Drake New for 2011 the GBC screen is used for reporting the following types of informa tion e Data for current year credits that are reported on forms Drake does not support To enter data for a credit programmed into Drake use the credit s screen for example use the 8820 screen for Form 8820 Orphan Drug Credit e GBC and ESBC carryforwards and carrybacks A General Business Credit Carryover Attachment ATT 3800 printed for each credit carryover to 2011 includes the following IRS required information e Description of credit selected from drop list e Year the credit originated e Original amount of credit e Original credit allowed e Information on amount changed if needed e Year and amount of credit carryback used e Year and amount of credit carryforward used A Current Year Unused General Business Credit worksheet WK

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