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Schedule K-1 for 1065

1. l Overrides default calendar year dates or fiscal year dates 2 Income statement period Beginning entered on screen 1 l Overrides default calendar year dates or fiscal year dates 2 Income statement period Ending entered on screen 1 o rint Options Print Overrides o ooo An entry here overrides the selection on Setup Options Optional Documents tab for printing the federal return An entry here overrides the selection at Setup Options Optional Documents tab for printing the state return Print partnership s envelope coversheet An entry here overrides the option that was entered in Setup Options Optional Documents for the S corporation envelope coversheet Print IRS envelope coversheet An entry here overrides the option that was entered in Setup Options Optional Documents tab for the IRS envelope coversheet Print state envelope coversheet An entry here overrides the option that was entered in Setup Options Optional Documents tab for the state envelope coversheet Print city envelope coversheet An entry here overrides the option that was entered in Setup Options Optional Documents tab for the city envelope oversheet C Date to print on returns Overrides the default date on the Paid Preparer line at the bottom of the 1120 page 1 paleo LOCI sd toldidiss ls Overrides the calculated amount on Form 1065 page 1 line F Overrides the IRS Center address generat
2. Schedule K Partners Distributive Share Items Use the K screens to enter data for Schedule K Partners Distributive Share Items For your convenience the most common Schedule K items can be answered on the INC screen If you enter these amounts there do not re enter them on the K screens Note the screen K fields are primarily adjustment fields Click F1 in a NOTE field to see what amounts are adjusted from elsewhere in the program or see the adjustment and override worksheets accessible from the FAQ screen Two screens are used for Schedule K e Screen 1 of 2 Income Deductions Self Employment amp Credits e Screen 2 of 2 Foreign Transactions Alternative Minimum Tax AMT Items amp Other Information Press PAGE DOWN and PAGE UP to navigate from one K screen to another NOTE The K screens should not be confused with the K1 K1G or other related screens Schedule K 1 for 1065 Partner Information Use the K1 screen to enter data for Schedule K 1 Partner s Share of Income Credits Deductions etc In the Type of Partner section line G select the box to describe the partner as either a General or LLC member manager or a Limited or other LLC member default is General On line H select either Domestic partner or Foreign partner default is Domestic From the line I drop list Figure 8 choose the type of partner not the type of partner ship If this box is left blank the program uses the def
3. User s Manual Supplement Li Drake Partnersnips 1065 se EIE FI Support DrakeSoftware com gt 828 524 8020 Drake Software User s Manual Tax Year 2011 Supplement Partnerships 1065 Support DrakeSoftware com 828 524 8020 Copyright Trademarks Drake Software User s Manual Supplement Partnerships The 2011 Drake Software Manual Supplement Partnerships Drake Tax Software and any other related materials are copyrighted material All rights are reserved by Drake Enterprises LTD including all ownership rights This document associated software and related material are the property of Drake Enterprises LTD Drake Enterprises LTD hereby authorizes you to download display print and repro duce the material in this document in an unaltered form only for your personal non commercial use or for non commercial use within your organization Copyright trademark and other proprietary notices may not be removed O 2011 Drake Enterprises LTD All rights reserved While every attempt has been made to produce an accurate and complete manual there is no warranty expressed or implied to that effect Drake Enterprises LTD assumes no liability for damages or claims resulting from the use of the information contained herein The Drake Software Logo and Drake Tax are registered trademarks of Drake Enterprises LTD Other product names mentioned in this manual may be trademarks or registered trademarks of their
4. For information on filing with a 52 53 week year see Electing a 52 53 Week Year Initial Return on page 39 Fiscal and Ifthe partnership 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 a calendar Years year section of screen 1 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 These fields should not be used if the entity 1s filing a full calendar year return For more information on short year returns see IRS Pub 4163 NOTES The program may not correctly calculate depreciation gains or losses for a short year return Depreciation for a short year return can be man ually entered on screen 4562 or screens 6 7 8 and 9 Boxes A through J Enter most information for boxes A through J top of Form 1065 on screen 1 Note that boxes D Employer identification number F Total assets and J Schedule C and M 3 attached are completed automatically based on information entered else where in the program Other boxes are e Box A Principal business activity e Box B Principal product or service e Box C Business code
5. go to the PRNT screen and select the Force Schedules L M 1 M 2 amp K 1 Section L box Items to Print Ww Force Schedules L M 1 M 2 amp K 1 Section L Print Form 8883 Elect of Partnership Level Tax Treatment Print Form 4562 Print next year depreciation listing Printinactive return PIN for preparers alternative electronic signature Figure 30 Force Schedule L box for 1065 package e Check for Detail Worksheets The trial balance import allows only those detail worksheets required by the IRS Check updated returns for detail CTRL W worksheets that are not required For example the IRS does not require a detail worksheet for the Gross receipts field on the INC screen if a return has a detail worksheet for that field the trial balance will not import cor rectly into the return Detail worksheets are indicated by red shading as shown in Figure 31 on page 45 44 Tax Year 2011 Drake Software User s Manual Importing Trial Balance Information Form 1065 Income 1a Merchant card and third party paymenis 1b Gross receipts or sales not reported on line 1a 1d Returns and allowances plus any cash back included an line 1a 2 CAPE MN SIND see cue EL GE DELI E m RC e 1125 A 4 Income from other partnerships estates and trusts KIP Screen or KAF Screen Figure 31 Example of an unnecessary detail worksheet Remove unnecessary detail worksheets prior to import See Detail
6. lation and printing of the K 1s while working on Form 1065 This option which eases 20 Tax Year 2011 Drake Software User s Manual Schedule K 1 for 1065 Partner Information the process of reconciling the 1065 is available by going to the PRNT screen and marking the applicable box under K 1 Items to Suppress NOTE After completing the K 1 entries for all partners be sure to re activate the calculation and printing of the K 1 from the PRNT screen Partner Overrides To override calculated amounts for the partners you can either make changes on each K1 screen or go to the SA screen for partner special allocations and make all changes there For more information see Special Allocations on page 24 Foreign Addresses If the partner has a foreign address enter the Province or State Country and Postal Code information in the Foreign address line of the Partner Name and Address Information section along with the street address and city in the Address and City fields in section F Do not enter anything in the State or ZIP fields Con versely for a U S address do not enter anything into the foreign address fields K 1 Export Take the following steps to export a Schedule K 1 to a 1040 return 1 Ensure that K 1 data is entered in the 1065 and the 1040 return has been created The K1P screen in the 1040 does not have to be created beforehand 2 In the 1065 return go to View mode 3 Click K1 Export in the View mode
7. ple of the Other Income worksheet Statement Required Other Income Form 1065 page 1 line 7 INC line 7 INC line 7 INC line 7 10 5 State tax refund cash basis i INC line 7 11 6 Taxable income from insurance proceeds INC li 12 7 Other 460 Other income Dei oo nN Om 4 Co NP 17 Total other income 32 Menden PTR TB Dther Income Figure 35 Trial balance worksheet for Other Income To return to the previous worksheet click the TB tab labeled 1 in Figure 35 or click the Return button above the worksheet tabs labeled 2 in Figure 35 Note that a detail tab the Other Income tab in Figure 35 might include one or more detail worksheets labeled 3 in Figure 35 Do not create detail worksheets in data entry if the trial balance work NOTE sheet does not provide an equivalent detail worksheet Otherwise the trial balance will not import correctly Tax Year 2011 47 Importing Trial Balance Information Drake Software User s Manual Totals Totals are displayed at the bottom of each worksheet If credit and debit columns are out of balance the worksheet highlights the out of balance amount Figure 36 604 70 T4 547 3874 OUT OF mar PTR TB Figure 36 Out of balance amount is highlighted if columns are out of balance In addition to credit and debit totals the main trial balance worksheet shows the net income loss
8. see the IRS Form NOTES 3115 instructions Taxpayers filing under an automatic change request procedure do not pay a user fee If the applicant qualifies for a reduced user fee enter a check mark on line 23b and go to screen ATT2 to complete the attachment information for Part III line 23b located in the bottom half of the screen Include the necessary information or certification required by Rev Proc 2003 1 or its successor Specific statements must also be attached to the return if the applicant answers Yes for line 18 Is change request allowed under automatic change or No for line 22 All members of consolidated group use proposed method Press F1 in a specific field for more information on attachment requirements The method for attaching state ments in Drake is covered in Attachments starting on page 60 Use the Parts II IV screen to complete the following sections of Form 3115 e Part II Information For All Requests e Part IV Section 481 a Adjustment In addition to the Multi form code text box this screen consists of the Part II and Part IV sections All applicants must complete both sections of this screen For more information on each line including instructions for any required attachments press F1 in a specific field Note that there is no field on the Parts II IV screen for Part II line 12 Fields for line 12 which should be completed if the applicant is changing only the accounting
9. the difference between the sale price and the adjusted basis is the taxable gain or loss The Basis Wks screen is accessible by clicking the Basis Wks tab at the top of the K1 screen for a partner Access the K1 screen from the Data Entry Menu NOTE The Basis Worksheet is printed only when the option is selected on the PRNT screen Increases to basis can include cash contributed taxable income of partnership includ ing capital gains tax exempt income of partnership and partner s adjusted basis of property transferred to a partnership Decreases to basis can include distributions of cash or property to partners separately stated losses and deductions nondeductible business expenses and credit adjust ments When the program is updated to the next tax year the end of year basis and liability amounts are automatically updated to the beginning of the year Any loss or deduction carryover is updated to the beginning of the year and its character ordinary loss sec tion 179 expense charitable contributions etc maintained Use the tabs at the top of a partner s Basis Wks screen to access related screens for that partner e To access the K1 screen click the K1 or K1 cont d tab e To enter supplemental information that is specific to the individual partner click the Supplemental Info tab To enter supplemental information that applies to all partners use the K1G screen accessible from the Data Entry Menu 23 Sc
10. 179 exp allowed Overrides calculated amount SS 4 Application for Employer Identification Number County amp state Overrides the county and state entered on screen 1 Date business started acquired Overrides the date entered on screen 1 Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Part III Consent of Corporation to Adjustment of Basis RE EE EE of Property 115 Change in Accounting Method Ma ee Information Principal business activity code Overrides selection made on screen K line 2a Overrides entry made on screen 1 Name Address General Tax year of change begins Info Overrides entry made on screen 1 Name Address General Tax year of change ends Info m TE TE SH ad entry made on screen 1 Name Address General Parts Il IV Section Net Section 481 a adjustments for the year of change Form 8027 Employer s Annual Information Return of Tip Income and Allocated Tips Overrides calculated amount for line 7 of form place x in line 6 Allocation of tips if using other than calendar year o activate this override e of Inconsistent Treatment or Administrative Adju m 8082 Notic ent ees default calendar year dates or fiscal year dates Partnership tax year entered on screen 1 orm 8283 Noncash Charitable Contributions l Changes information on Form 8283 from section A to section B Restrictions Override section l or vise versa orm 8308 Report of a Sale or Exchange of Certain Partne
11. DoE ev prets T Net Fani Pro LOSS PCR TET TIT EST ASE EER BEE oss hae AR A aA Saks RA HE 7 IERE AAR EA OE OR OE NE OE OE EO EE EE OE ON 7 Other Income 1 088 ER Henn OE or EE 09 539 dC EE OE ead EE See ts I Compensation and Waees osse aa EERS dre Ree c pen Bed ER AER ed KA a e E GAE C REIK a 8 Guaranteed Payments and Partner Health Insurance SS SS SS SS SS SS SS eee ee 8 Repairs and Maintenance SES SS eee ee Se SS SS SS SS teen eens 9 PAD U eaae e OE EE RE TO STPPP dA NER EE EE EE OE OE OO EE ED 9 ou EE ET ES EE OE OE HOT EE OE TER OE EE OR DE TEE N IT 9 Tiro EE ese RARR OR SES OE HO NN EO EL OR end ON GEROER edu dd N ne 9 luus sissies se eee toe ro Ak bea ie ed ene oo See ines RE OP GE ME n ieee ee 9 Pie io AREA eee EE as EO OT EE EO EET NE ETOS eases 10 Ba 12 Rore men PIAS us saubere e OR EE N N N ON SN EE qd a Eam CE See NP PUT EE 12 Pimnlovee Bene batis cac v qure qe ndum den EE ET ar ritus dd EO Pd edu Rad 12 Other Deed TEN 2 64 8 rpg arua p acm Eon de ae dae een deen PREIS ent Udon at ndun duros nd RE DE 13 FINO AB EXIBIUSIOD aad xw wide dk qua ET EE EEESNG EST seu PM EK 13 Signing th sedig RO ONE GEE EE N ER EE EE SEE 13 Amending a Return ER DE ETE t LOO 1570524 OE ER eee ee ee ens 14 TEERA and Filing BEltblility ss ss soes 6404 4 RS 405520004 DR SR AR ERR REA BEE ee Ee N ede 14 Additional Di eg ie ld el MUTTER 15 eoleo Cr 15 Diae SDecrHo IMIOMNANON se esac 0 d 3o 9
12. Item L on Schedule K 1 Partner s capital account analysis Select the box Figure 22 to indicate the calculation method used for the partners capital account If Other indicate the method in the text box this item is reguired Item L on Schedule K 1 Partners capital account analysis Tax basis GAAP Sec 704 b book Other Item M on Schedule K 1 Did all partners contribute prop with a builtin gain or loss v Yes No Printers EE ie E tne SS waar 7 maal on Li UE Li Figure 22 Items L and M of PRNT screen e Item M on Schedule K 1 Select this box to answer item M of Schedule K 1 for all partners To answer it for each individual partner go to the partners K1 screens See Item M on page 22 for more information See field help F1 for more information on the options available Overriding Other Setup Options Filing instructions federal and state and envelope coversheets partnership IRS state and city can be either forced or suppressed from the PRNT screen to override the global setting in Setup In addition you can select Turn off autobalance to disable the autobalance feature see Autobalance on page 29 and select Prepare a Form 7004 extension if send ing an extension application See Filing an Extension on page 13 Electronic Filing Some partnerships with more than 100 partners are required to e file Form 1065 Schedules K 1 and other related forms an
13. Overrides the program default setting 1 JDataenryopf jOveridesthelognname O N ERO number Overrides the selection made from the ERO SSN Indicator drop list at Setup gt Options EF tab Entity Name Control Overrides the calculated name Income and common Schedule K Items Overrides the calculated tax on the total income from the active Fe Hede ME drie ap Es edge rx conduct of all trades and businesses by the partnership DED Deductions Form 1065 Page 1 Deductions ME mm Overrides the amounts entered on the other insurance lines on this screen N Overrides state income taxes calculated from information entered on ES screen using code IN EE Overrides state franchise taxes calculated from information entered on ES screen using code FR orm 1125 A Cost of Goods Sold o Overrides calculated amount for entries on 4562 detail screen 5 Other costs depreciation chedule B Other Information les evel DERE BEA NIES TeI Overrides the number of Forms 8805 generated by the program System prints first partner s info as Tax Matters Partner by TMP Partner default Enter a partner number here to select a different partner as the TMP Overrides the selected partner s info as Tax Matters Partner by SSN default TMP Name Overrides the selected partner s info as Tax Matters Partner by default o aaaress Overrides the selected partner s info as Tax Matters Partner by default Overrides the selected partne
14. Parts II and IV sections of this docu ment for more information on completing the ATT2 screen for these items e From View mode Used for PDF attachments ATT Screen There are two ways to access the ATT screen in Drake Attachments e From the Data Entry Menu In the Change in Accounting Method section of the Other Forms tab click ATT e From the line that requires an attachment As shown in Figure 48 some lines have attachment links Click an attachment link to open the ATT screen Schedule C Changes Within the LIFO Inventory Method Part C1 a thru C1 h attachments C 1 2 attachment If any present method or submethod is notthe same as indicated on Form s 970 hanging within the LIFO inventory method dl C1 3 attachment Ifthe proposed change is not requested for all the LIFO inventory C1 4 attachment Ifthe proposed change is nat requested for all the LIFO pools 1 5 attachment LIFO inventory valued on method other than cost C 1 86 attachment yd to the IPIC method ce tm amp to B ma Part Il N pe Tv pap WER ST M n POEM n Met Figure 48 Attachment links from Schedule C screen A B C Not all lines that require statements include a link to the ATT screen NOTE Always check the field level help click F1 in a field to determine if a statement is reguired The program produces an EF Message if any required statements are missing Complete the following ATT fields as applicable
15. See Multi State Apportion ment on page 17 Cost of Goods Sold Form 1125 A In years past Schedule A Cost of Goods Sold was located on page 2 of Form 1065 Beginning with tax year 2011 entries on screen A produce a separate form Form 1125 A Cost of Goods Sold See Cost of Goods Sold Form 1125 A on page 6 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 Fields required for both Form 8609 and Form 8609 A are now separated on the screen from the other information fields Other fields for Form 8609 A are now located in the middle of the screen Other fields for Form 8609 are now located in the bottom half of the screen Schedule K Screen Changes The screens for Schedule K Partners Distributive Share have been changed for more efficient data entry Changes include If a form is required for a particular line the corresponding field has been replaced with a link to the screen for the required form For example an entry on line 11 Other Income might require that Form 6781 Gains and Losses From Section 1256 Contracts and Straddles be completed Rather than include a field for this line on screen K the program now provides a link screen 6781 Ownership change dates originally located on a third K screen can now be found on new OWN screen For more information about the OWN screen see Owner
16. Worksheets on page 47 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 Openinga The first step in preparing financial data for importing is to open a trial balance tem Template plate for the return and enter the financial data To open a trial balance template for a return mu 1 Open the return to the Data Entry Menu EL 2 Click Import gt Trial Balance Import in the menu toolbar The preliminary Trial Balance Import dialog box is opened 3 Click Create New or Open Existing If opening an existing file click Open after selecting the correct file 4 Click Enable Macros in the Security Warning box that appears In Microsoft Vista and Windows 7 you will see a Security Warning NOTE message with an Options button Click Options to open the Security Options dialog box then select Enable this content Click OK The trial balance template 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 Drakel1 soft ware The file name consists of the client name as entered in Drake plus TB for tria
17. box on Sch K 1 TEFRA and Filing Eligibility A partnership subject to the TEFRA Tax Equity and Fiscal Responsibility Act of 1982 audit rules cannot file an amended Form 1065 to correct a partnership item reported on a previously filed return but according to these rules the tax matters part ner TMP must file a Form 8082 on the partnership s behalf and request the IRS treat Tax Year 2011 Drake Software User s Manual Additional Information the Form 8082 as a substituted return A partnership gualifying as a small partnership see Section 623 1 a 1 B with 10 or fewer partners at any one time during the year is exempt from the TEFRA audit rules and can file an amended Form 1065 and corrected K 1s to partners Additional Information Schedule B Ownership Line 6 Require ments Tax Year 2011 This section covers Schedule B Other Information state specific information and some program overrides The program has three screens for entering data for Schedule B Other Information e Screen B For all but lines 3 and 4 e Screen B1 For lines 3a and 3b e Screen B4 For lines 4a and 4b From screen B you can access screens B1 and B4 by clicking the applicable hyper links or by pressing PAGE DOWN once for screen B1 twice for screen B4 NOTE Which screens are required depends on the percentage owned See Form 1065 instructions for calculating the maximum percentage owned If any foreign or domes
18. method for a particular item or items are located in the top half of ATT2 screen Use these fields to enter information on 55 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Schedules A 56 B and C Schedule A Schedule B e The items being changed e The applicant s present and proposed methods for the items being changed e The applicant s present overall method of accounting cash accrual or hybrid Note that the bottom half of the ATT2 screen is for completing Part III line 23b Only the top half for Part II line 12 needs to be completed for Part II line 12 Use the A B C screen to complete the following sections of Form 3115 e Schedule A Change in Overall Method of Accounting screen covers Part 1 Change in Overall Method e Schedule B Change to the Deferral Method for Advance Payments e Schedule C Changes Within the LIFO Inventory Method screen covers both Part I General LIFO Information and Part II Change in Pooling Inventories schedule A Part II Change to the Cash Method for Advance Consent NOTE Request requires attachments and is not addressed on the A B C screen This section is required for all applicants filing to change their overall method of accounting It requires the entry of amounts as they were at the close of the tax year preceding the year of the requested change Leave blank any lines that aren t required for the entity s applicati
19. not prevent the return from being e filed Depreciation Use screen 4562 to enter depreciable assets for Form 1065 Form 1125 A Schedule F Form 8825 the RENT screen rental other than real estate and Section 754 To associate a depreciable asset with an activity make a selection in the For drop list at the top of the 4562 screen Using the As explained further in Line 16 Depreciation following the DED screen has two DED screen lines for direct entry of depreciation for Direct Entry Line 16a Depreciation e Line 16b Depreciation claimed elsewhere on return 10 Tax Year 2011 Drake Software User s Manual Income and Deductions Line 16 Depreciation Section 754 Section 179 Reclassify to Amortization Tax Year 2011 Any item entered in a depreciation field on the DED screen is added to the calcula tions from all 4562 screens DED screen amounts are reflected on page 1 of Form 1065 but are not shown on any generated Form 4562 M L RT ANT The depreciation fields on any screen should be used only if Form 4562 is not required For more information on depreciation and the 4562 screen in Drake see the Drake Software User Manual Tax Year 2011 Line 16 of Form 1065 Figure 5 is reserved for depreciation that 1 is from Form 4562 and 2 is not claimed elsewhere While the program pulls data from the 4562 screen for this line it also provides field 16b specifically for depreciation that 1s claimed elsew
20. open a new screen for additional ownership changes See Ownership Changes on page 20 Income and Deduction Screens The data entry screens for income and deductions have been revised for easier data entry Only two screens are now required in order to calculate ordinary business income for a return Tax Year 2011 1 What s New in Drake for Partnership Returns Drake Software User s Manual INC Includes all items of income reported on Form 1065 page 1 lines 1b through 7 that do not require a separate schedule Form 1125 A or additional information Income reported on Form 1065 Schedule K 1 also includes the Schedule K Most Common Items previously included on screen 3 DED Includes all deduction items reported on Form 1065 page 1 lines 9 through 20 that do not require a separate schedule or form Form 8846 Screens 3 and TAX have been eliminated from the 1065 package Multi State Apportionment Previously in order to prepare a multi state return in Drake for a company doing business in more than one state you had to go to each individual state s screens and enter its sales payroll and property factors Drake would then calculate the apportion ment factor on that state s tax form With the new APPT screen you can enter the apportionment information for all states in one global location The link to the APPT screen can be found on the States tab or you enter APPT in the selector field and press ENTER
21. respective companies Tax Year 2011 Drake Software User s Manual Supplement Partnerships Table of Contents Table of Contents What s New in Drake for Partnership Returns 1 ELEC oe de ou sued OR dee ON Oe ae OE EN oe ETE ae ees Ee l Ownership Changes AREA RE HE EE SROs OES ROUEN EEES SR d l Income and Deduction Sere ns iss D HERE DER coer Pay Sends ae Se hdd RAS HR ER Padus l Multi State Apportionment SS SS SS eee le 2 Cost ot Goods Sold Form 11259A o iai eroe y ba erter s EEES Oe BEES ORY ACE OS Re Gee 2 oe de iSe EE E E EE E N E AE ER E E E EE eo 2 ochedule K Scicen Chanees AA OE DA NE MOE ER EE E N A 2 Book Depreciation Schedules 22s nns se EE oo erre DAE boast SAUCE Me DERS RUN HE o9 3 Adjustment and Override Worksheets SS ES SS SS SE SS Se See SS SS SS SS Se Se ee 3 Updating a Prior Year Return in Drake sis 0 000 EE EE ss es 3 Header eg ii die AE 96 8 8 ER AR EN TR ET EET 3 N me and Address os sess Eb a ee ee p eal wee do ed Fae rv dua dE bo RS SE R TREES whee AE 4 ii dd I P L rrrr A Boxes A througli see 540445 cana bees 584 RE ode GES BESEER SR dE Sd ord E doe UR ene Ek 4 Income and Deductions is ier REKORDS EER ROER ROND BOKKE OER RE HEER 5 CLOSSUNCCEIDIS eoa voc e RA N EE ER OO EE NP EE OO OE OE EE SER ERE EUST 6 Cost of Goods Sold Form 1125 A EE EE EE EE EE nee ene eee ee s 6 Ordinary Income LOSS 2 0044 4mm ves BE wee eee peer EEG ERG RS
22. respective numbers Existing Forms List K1 Schedule K 1 Partner Information SGS IDMu Name R 40000 Amelia Carter 40000 wiliam Carter 21212 Pat s Packaging iw Mew R Partner number Figure 6 Schedule K 1 Partner Numbers State specific Information 16 Resident State Contact Information The program automatically generates a return for the partnership s resident state Use screen 2 to enter company information as it should appear on the state return Access screen 2 from the States tab or enter 2 in the selector field and press ENTER NOTE The company information fields on screen 2 apply to the resident state only 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 If certain contact information required for state purposes is different from that entered on screen 1 use screen 2 accessible from the States tab for the alternative data for Tax Year 2011 Drake Software User s Manual Additional Information registered office principal place of business Books in care of and general contact information Screen 2 also has fields for the name title e mail address ID number and telephone number of the partnership s contact person Other States Data for other states must be typed in state data entry To access
23. that macros are activated and that macro security is set to medium To do so go to Tools Options in Excel and Tax Year 2011 43 Importing Trial Balance Information Drake Software User s Manual select the Security tab Click Macro Security and select Medium then click OK In Windows 7 and 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 Other Return Options Turn off autobalance Prepare a Form 7004 extension Screen 1 must be completed for an extension Figure 29 Disable autobalance in Other Return Options section of PRNT screen 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 1s the case you need to override the default in order to have the amounts shown on Schedule L To force the Schedule L amounts to be printed
24. 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 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 In Windows 7 and Microsoft Vista click the Office button in the upper left and then click Save or Save As For more informa tion on file names in the trial balance program see Naming Convention on page 45 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 49 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 se 1 Open the return to which you will import the trial balance information a 2 Click Import gt Trial Balance Import from the menu toolbar The preliminary Trial Balance Import dialog box is 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 b
25. which it is entered into Answer the questions in Part I that apply to the entity s situation This section concerns changes in the identification and valuation methods of invento ries Note that some lines require attachments To access the ATT screen and complete a required statement click the desired attachment link The items on this part of the screen match the items on the actual Form 3115 Sched ule D For information on completing individual lines see the Form 3115 instructions If the entity is unable to furnish a copy of Form 970 line 5a the attach ment must include the following statement N ITE certify that to the best of my knowledge and belief name of applicant properly elected the LIFO inventory method by filing Form 970 with its return for the tax year s ended insert date s and otherwise complied with the provisions of section 472 d and Regulations section 1 472 3 Use the D III screen to complete Part III Method of Cost Allocation of Form 3115 Schedule D Part III is required for any entity submitting either Part I or Part II Screen D III consists of the following sections e Section A Allocation and Capitalization Methods e Section B Direct and Indirect Costs Required to be Allocated e Section C Other Costs Not Required to be Allocated 57 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Section A Click the D3 1 Attachment link see Figure 46 to atta
26. 1 through 11 Other 062 Part N EE EE EE EE ee Carryover of disallowed deduction from prior year Adjusts amounts from the 4562 screen orm 5884 Work Opportunity Credit 3 Work opportunity credit from pass through entities Adjusts amounts from K1P screen line 15 code J and K1F screen line 13 code F orm 6478 Alcohol and Cellulosic Biofuel Fuels Credit Adjusts amounts from K1P screen line 15 code I and K1F Pass through credit from other entities screen line 13 code H orm 6765 Credit for Increasing Research Activities l Adjusts amounts from K1P screen line 15 code M and K1F 37 Pass through research credits screen line 13 code I orm 8820 Orphan Drug Credit Orphan drug credit s from pass through entities Adjusts amounts from K1F screen line 13 code M orm 8826 Disabled Access Credit Disabled access credits from pass through entities Adjusts amounts from K1P screen line 15 code K orm 8844 Empowerment Zone Employment Credit 3 Form 8844 credits from pass through entities Adjusts amounts from K1P screen line 15 code L and K1F screen line 13 code K 845 Indian Employment Credit Form 8845 credits from pass through entities Adjusts amounts from K1F screen line 13 code L orm 8846 Credit for Employer SS and Medicare Taxes Paid on Certain Employee Tips Form 8846 credits from pass through entities Adjusts amounts from K1P screen line 15 code N orm 8864 Biodiesel Fuels Credit
27. 11 Drake Software User s Manual Filing an Extension month in which he or she is eligible to participate in any subsidized health plan main tained by the employer of the partner or the partner s spouse Other Deductions Enter all other deductions on the DED screen Drake calculates these amounts and incorporates the total into the Other deductions line of Form 1063 The following deductions credits adjustments and exclusions also flow to the Other deductions line e Amortization from Form 4562 Depreciation and Amortization e Credit adjustment from Form 6765 Credit for Increasing Research Activities e Credit adjustment from Form 8820 Orphan Drug Credit e Exclusion from Form 8873 Extraterritorial Income Exclusion e Credit from Form 8941 Credit for Small Employer Health Insurance Premiums Filing an Extension Calendar year returns are due on April 17 2012 By filing Form 7004 a partnership can extend the deadline five months to September 17 2012 Fiscal year returns are due on the fifteenth day of the fourth month after the end of the fiscal year To file a 1065 extension use one of the following options e Go to the 7004 screen in Drake and select Generate an extension Complete any other applicable fields on the screen e Go to the PRNT screen and select Prepare a Form 7004 extension Signing the Return PIN signatures are required for e filed returns If e filing a return complete all fields on the P
28. 16 on page 33 For rental properties with more than one other expense double click the text box on the Additional other expenses line to open a Detail Worksheet Enter a description in the Description field and an amount in the Amount field 32 Tax Year 2011 Drake Software User s Manual Rental Activities T d m3 A e 3 z o Eve ae ILLE Eua E M ae oa E eer m 2 tg inii 41 faxes i aS d 5i T vem nf ata Re ET aot Ji t N ET T Ts Fes 7 2 Af LEES OE MAL M DM E EE EE RM RR oo EE oe Eu EE M M a E 14 Dep m ENS 2 15 Other list Guaranteed payments ia EL EDE AI AA AA AA AS OE AE aoe Meals and entertainment subject to 50 lm Additional oher BIDeNSES OC The statements produced for line 15 Other list are e filed with the tax return Figure 16 Screen 8825 fields for line 15 Other expenses Totals from the worksheet flow to Form 8825 and a statement from each property is printed with the return and is transmitted to the IRS when the return in transmitted Enter rental income the partnership receives on a K 1 on the K1P screen This amount is carried to Form 8825 lines 20a and 20b No entry 1s required on the 8825 screen Viewing Rental Activity Information Tax Year 2011 Rental activity data is viewed on the 8825 forms and accompanying statements 8825 Forms The two page Form 8825 can contain information for up to eight rental a
29. 2 diie EL died ss or see ER id Ee BR RE TIT ED ER N EEEE EI DI WIE RA AO DEE ON ER EE E RR ee EO N 29 Schedules M 1 M 3 Reconciliation of Income ss EE EE 0c eee 29 pehedule Edd TR AE EE OE ED du TE N N OE ER OE GET AA 29 Schedule MES 30 Schedule M 2 Analysis of Partners Capital Accounts 31 KEMA Pale dbl s ds ura sr EE ET WADE REA EE ET EE ET EE ee ES 31 Line 14 IDC NCE CIANOM ss cin ae bose heen EE eRe oe EG AE DA oad RADE N AREA ER RE 32 Line 15 Otier Expenses Isl 2a sese dr EA SERE Ed eda Car E qup RE ENS DOOS OO SE DE EE 22 Viewing Rental Activity Information ss x acea qd ease SR N Xo Roe UR Re ESE aum d A 33 Self Employment IncOme score dot RR DE HEPSULEA QE Sora Rau dab KEG ey eee aed Rx eh ats 34 Credits and Adjustments 0 EE EE EE EE EE EE EE ER EE EE RE RE RE RE Re 34 c ed AR AE EE IE EDE EE EE OE T 35 Making an Election in Drake SS SS SS SS SS SS SS SS ee Se ee SS SS Se Se SS RR ls 35 PICCHOM Je me HS s session KERE RR eea BORS A A OE E NERO Bee Eee eee 36 Making Changes on the Fly sis ss ss EE EE EE EE EE ER ER sk ER Re 36 Suppressing Forcing Documents SS SS SS SS SS SS SS SS SS SS SS SS ee ee ee ee ee ee ee ee 37 Overriding Other Setup Options e anaana aaaeeeaeo 38 eise sed FUNG RE MEER Err EU RE RCR ROS DOE EE ET ANN 38 Additional Return Types s caseus d GEKEER DERDE SEE DES EE DE OOR
30. 3 Enter the applicable item descriptions and beginning and end of year totals To enter details for additional lines of Schedule L press PAGE DOWN and repeat steps 2 and 3 Data 1s saved automatically upon entry When the return is produced 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 Partnership 1065 returns can have up to four components of total depreciation Tax Year 2011 Drake Software User s Manual Importing Trial Balance Information Rental Expenses Tax Year 2011 e COGS e Real estate rental e Rental other than real estate e Any remaining depreciation For trial balance purposes enter depreciation amounts directly into the appropriate fields on the trial balance worksheet Note that rental expense detail worksheets are required for 8825 and RENT depreciation Enter 8825 and RENT depreciation amounts in the detail worksheets NOTE for importing purposes but be aware that the 8825 and RENT screens in the program will need to be edited if 4562 detail screens see Figure 40 are used When the trial balance is imported the COGS depreciation expense amount flows directly to the appropriate line of Schedule A on the return and the rental depreciation expense amounts flow directly to the appropriate lines of the 8825 and RENT screens as applicable Because the remaining depreciation can comprise any number of
31. 34 Form 6765 Credit for Increasing Research Activities 13 35 Form 7004 Application for Automatic Extension of Time to File 13 Form 8082 Notice of Inconsistent Treatment or Amended Return 14 Form 8820 Orphan Drug Credit 13 35 Form 8825 33 Form 8825 Rental Real Estate Income and Expenses of a Partnership or an S Corporation 31 34 Form 8844 Empowerment Zone and Renewal Community Credit 35 Form 8845 Indian Employment Credit 35 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Employee Tips 9 35 Form 8864 Biodiesel and Renewable Diesel Fuels Credit 7 34 Form 8873 Extraterritorial Income Exclusion 13 Form 8879 PE IRS e file Signature Authorization for Form 1065 14 Form 8881 Credit for Small Employer Pension Plan Star tup Costs 35 Form 8893 Election of Partnership Level Tax Treatment 37 vi Drake Software User s Manual Supplement Partnerships Form 8903 Domestic Production Activities Deduction 25 Form 8912 Credit to Holders of Tax Bonds 34 Form 8912 Credit to Holders of Tax Credit Bonds 35 Form 8916A Supplemental Attachment to Schedule M 3 31 Form 8941 Credit for Small Employer Health Insurance Premiums 35 Form 8941 Credit for Small Employer Health Insurance Premiums 13 Form T Forest Activities Schedules 12 G gains and losses 7 gross receipts 6 guaranteed payments 8 H header information 3 health insurance 12 health savings acco
32. 4684 Rev Proc 2009 20 REYPROCZ003 20 PDF Pub x Painting sculpture ARTwU RK PDF e Section abc Signature of Officers LEGALPAPERS PDF Browse Exit Figure 27 The EF PDF Attachments window 4 Click the row of a document to attach 5 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 and show a green check mark recalculate the return The return 1s ready to be e filed Printing Generated Documents In some instances Drake generates a document that must be printed signed and scanned back into the computer to be attached to the return For example if Form 42 Tax Year 2011 Drake Software User s Manual Importing Trial Balance Information 3115 Application for Change in Accounting Method is present in a partnership return message 1515 is generated when the return is calculated 1515 PDF ATTACHMENTS MISSING FOR FORM 3115 Attach applicable PDF forms from the following list for e filing Refer to EF PDF form in View mode to determine which forms must be attached Part II Form2848ForForm3115 NNN pdf IssuePendingExaminationInfo NNN pdf ConsentsFromOperatingDivisionDirector NNN pdf Part III ProposedChangeDocuments NNN pdf Schedule A Part E TE tadaa Ma Age T COPAS pum T mre n ap silio etie on APP te wt Ted A A
33. 9 teh ne eee seek ade es bh OASE DR ar EE DE RE RED den 16 Other Information and Overmides 2 is se or pese DEERE EER DRR xe RE EES ae ER EE rus 18 Tax Year 2011 i Table of Contents Drake Software User s Manual Supplement Partnerships Schedule K Partners Distributive Share Items 19 Schedule K 1 for 1065 Partner Information LL 19 OwncrshiD Canoes cou DEAR OE OER dex deque mere EE AE EE D ET OE OE EO dul 20 IE el OdES ss chee 9122723592 882 842 183 91 94555299 92 9 639 3 93723 ORDER ER DECR cannes 20 Retums with Numerous Pattnets used er RE ERE REROIUAPERESS T PES RC OE RE es AE BP FETU 20 Parte OVEMICCS RE woe aoe WERD DAE SR GR eal DR SR OR eee ee RS EE ER AR GE ee ER EE HORE 21 DOSE IST AAR OR eae C TTC RC ER OE OE OE OE ae HE EE N 21 e EE de V es oe EE hae ne EE OE 21 Supplemental Information EE EE SS SS SS SS SS SS ee See Se ee ee Se Se Se ee ee eens 22 AN AO ET EO EE DE EE N RE EE LEO MN RUPEE QU EE EN 22 Partner s Adjusted Basis Worksheet EES SS ccc eee ee een ene ee ee 23 Speed Hoes CREER TITEL TT TE TE EU COT EDO TOT QUU obo TT 24 Domestic Production Activities Deduction SS SS SS SS SS SS SS SS SS SS SS eee teens 25 SEA AF ASE OE ER EO OK TT EES ETER TEG HEDE 26 Schedule L Balance Sheets Per Books EE 27 Flow of Information lllleeeeee SS Se ee ee ee ee See ss
34. Adjusts amounts flowing from the K1P screen line 20 code S Adjusts amounts flowing from the K1P screen line 20 code T Adjusts amounts flowing from the K1P screen line 20 code U Unrelated business taxable income Adjusts amounts flowing from the K1P screen line 20 code V EE EIN RM chedule K 1 Partner s Share of Income Credits Deductions etc Guaranteed payments services Adjusts the amount flowing from K screen line 13M artner s Adjusted Basis Worksheet PERR Overrides the calculated amount from the WK_PBAS page 2 Nondeductible expenses and credit adjustments current year losses and deductions line 8a chedule M 1 Reconciliation of Income Loss per Books with Income Loss per return 5 Income recorded on Schedule K but not on books Adjust the amounts flowing from Forms 6478 and 8864 credit Other adjustments Adjust amounts credit adjustments made from Forms 5884 5884A 6765 8820 8844 8845 8846 8881 nondeductible expenses entered on the bottom of screen 3 for line 18c and amounts entered on K3 screen for line 18c for nondeductible expenses 2 2 2 2 2 2 OM ON 00 20P 0Q OR 20S 20T OU 20V o U dy Expenses recorded on books but not on Schedule K Other Adiustments Worksheet Adjustment Location Field Name Location of Information Being Adjusted 1065 Income recorded 2 books but not on Schedule K Adjusts amount flowing from Schedule K line 18B lines
35. Biodiesel and renewable diesel fuels credit from pass Adjusts amounts from K1F screen line 13 code O through entities 882 Credit for Employer Provided Childcare Facilities and Services Adjusts amounts from K1F screen line 13 code N orm 8907 Nonconventional Source Fuel Credit 12 MR RE EE EG Adjusts amounts from K1F screen line 13 code P corporations estates and trusts orm 8909 Energy Efficient Appliance Credit corporations estates trusts and cooperatives line 13 code S orm 8941 Credit for Small Employer Health Insurance Premiums 15 Credit from partnerships C corporations cooperatives Adjusts amounts from K1P screen line 15 code P and K1F estates and trusts screen line 13 code G chedule F Farm Income Informational Purposes Only Amount is carried from Form 4562 calculations RENT Rental Other than Real Estate Adjusts depreciation amounts calculated by the program from 15 Depreciation i entries on the 4562 screens orm 8825 Rental Real Estate Adjusts the depreciation calculated from the 4562 screens orm 8903 Domestic Production Activities Deduction 7 Qualified production activities income from pass Adjusts amounts from K1P screen line 13 code U and K1F through entities screen line 14 code C 17 Form W 2 wages from pass through entities Adjusts amounts from K1P screen line 13 code V and K1F screen line 14 code D orm 990T Part IV Tax and Payments 40b Other credits Adj
36. DE ES HOES EE DRS 38 Common d tror C O ereer ti ERA WR Hone BRODE wes pees HOOR Pater po ii we Rond EE 40 Binary eg Di Sito OE OE OT VEE Gene ees 40 The PDF Attachment PiBEEss ss sesse EERS E AE ESE Ru DERE HERE DES ER ER PR EG 40 Printing Generated Documents ses vua sege HEERS abu der pado hag due WO HERE eq apo us Pop addo 42 Importing Trial Balance Information LL 43 Preparing to Use Trial Balance Import SS SS SS SS ES SS Se SS SS SS Re 43 Preparing Financial Data for Import SS SE SS SS e 45 Savile ale 4st esac E OE EE cue eyes ET OO OE EE ONE SET EIE ET 48 li Tax Year 2011 Drake Software User s Manual Supplement Partnerships Table of Contents Importing Data into a Return SS SS SS SS SS ee Se ee SS SS s 48 Special C ONI OUS 25 0504 sb ES nok ae ee ee acl d get To Re HE IE BAD RA qb eens panne eee 49 Form 3115 Application for Change in Accounting Method 53 Accessing Screens for Changing Accounting Method EE EE EE ES SS eee ee ees 53 DOLI JTS SCLCCNS ie deem ex I PIRE EH Pan Pa a ema EN er ad e E eR id deos Eg ED Pied IE 53 wed old Ley cose oad TER ETT RTT 59 PRIA D ROHES s ores ae GUERRA RES ae OE EN es CU RETI EE OE EE Ed a 60 Appendix Trial Balance Import llerlelenr A 1 Appendix B Adjustment Worksheet eslelen B 1 Appendix C Override Worksheet EE EE EE EE ER ER EE RE EE RE Re C 1 Ji ie ae e
37. Deduction portfolio 2 floor Adjusts amounts flowing from the K1P screen line 13 code K 13d L Deduction Portfolio other Adjusts amounts flowing from the K1P screen line 13 code L 13d N Educational assistance benefits Adjusts amounts flowing from screen K1P line 13 code N 13d O Dependent care benefits Adjusts amounts flowing from screen K1P line 13 code O 13d P Preproductive period expenses Adjusts amounts flowing from the K1P screen line 13 code P 13d Q Commercial revitalization ded rental real estate Adjust amounts flowing from the K1P screen line 13 code Q 13d R Pensions and IRAs Adjusts amounts flowing from screen K1P line 13 code R Adiustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted 1065 13d S Reforestation expense deduction Adjust amounts flowing from the K1P screen line 13 code S Adjusts amounts being carried from screen K1P line 13 code awe EA W and K1F lines 10 and 11A 13dW Section 754 depreciation amortization Adjusts amounts flowing from Form 4562 15d Other rental real estate credits Adjusts amounts flowing from the K1P screen line 15 code F 15e Other rental credits Adjusts amounts flowing from the K1P screen line 15 code G 15f H Undistributed capital gains credit Adjusts amounts flowing from the K1P screen line 15 code H l Adjusts amounts being carried from screen K1P line 15 code 15f O Backup withholding O and K1F lin
38. Employee Pen sion SEP and SIMPLE IRA plans Report these amounts which are deducted by the partners on their own returns on screen K item 13d code R Employee Benefit Plans Use the DED screen line 19 to enter the partnership s contributions to employee ben efits programs such as insurance health and welfare programs that are not part of a pension or profit sharing plan included in line 18 Retirement plans etc Amounts The line 19 amount should not include amounts paid for insurance that constitutes Paid for medical care for a partner a partner s spouse or a partner s dependents For informa Medical Care ion on entering amounts paid for medical care see Guaranteed Payments and Part ner Health Insurance on page 8 Pub 541 IRS Pub 541 states that premiums for health insurance paid by a partnership on behalf of a partner for services as a partner are treated as guaranteed payments The partner ship can deduct these payments as a business expense and the partner must include them in gross income The partnership cannot deduct the premiums however if the partnership accounts for insurance paid as a reduction in distributions for that partner go to the K1 screen for the partner and mark the Health Insurance distribution reduction box A qualifying partner can deduct 100 of the health insurance as an adjustment to income The partner cannot deduct the premiums for any calendar month or part of a 12 Tax Year 20
39. General tab Tax Year 2011 39 Binary Attachments Drake Software User s Manual 2 Under Items to Print mark the Print inactive return box When the return is calculated the program displays the words Inactive Return on the main form of the return specifically to the right of lines 1a through Ic Zeros are displayed where required by the IRS in order for amounts to be properly included in the e file data NOTE All EF messages must be cleared in order to e file an inactive return Common Error Codes If one or more of the following IRS error reject codes is generated when you e file a 1065 return you must contact the IRS for further information The e file help desk number is 866 255 0654 e 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 1065 return type See Figure 25 This can be done at the IRS website or by calling the IRS e Help Desk at 866 255 0654 4 Check the individual and or business form types you will e file for 1940 Olay 900 1040 C ETD O 1041 1120 11120 POL State Ack Check the 1120 box for 1120 and 11205 Check the 990 box for 990 990 EZ and 8568 See instructions for addition
40. Gross real estate rental income Total real estate rental expenses Gross other rental income Total other rental expenses Gross royalties Capital gains or losses u 0 T a A poc rg uA LDWM CO ar A oc T WP wena L line 1 cal d Form 11205 Sch L line 1 cold L line 2a cal c Form 11203 Sch L line 2a cal c L line 2b cal c Form 11205 Sch L line 2a cal c ie dt A iion mk sns N F A I adu meats Deos PEE N 3 EE t uum M enar Oye line Hoe u e Bu k line 15a HE line 158 hi i ine 8825 line 2 Real Este Rental Exp Form 8825 line 2 E00 requires detail Rent Line 1 RENT line 1 0 Cther Rental Exp requires detail 600 K line 6 Schedule K line 6 TE N ET Figure 41 Rental expense rows on a trial balance worksheet When imported the rental expense data entered on the trial balance worksheet appears on either the 8825 screen if real estate rental or the RENT screen if rental other than real estate Because the trial balance worksheet has only one detail screen per rental type the importing function does not accommodate entities with multiple rental properties or expenses however the following procedure allows the trial balance to remain in bal ance if there are multiple rental properties or expenses To accommodate entities with multiple rental properties or expenses 1 2 e NOTE NOTE 52 Calculate the totals for both types of rental expenses Enter
41. IN screen A return cannot be e filed if the PIN screen is not completed including title and signature name of the general partner or LLC member manager 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 a partner or an employee of the partnership select NONE in the Firm and Preparer drop lists on screen 1 To have the preparer s signature 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 go to the PRNT screen and com plete the field labeled PIN for preparer s alternative electronic signature The Tax Year 2011 13 Amending a Return Drake Software User s Manual PIN entered should match the one entered for the preparer in Setup gt Pre parer s For more information press F1 in this field NOTE Setup gt ERO must still be completed in Drake for e filing See the IRS instructions for further details on signature requirements Missing PIN Ifyou receive an EF message stating Missing Information on the PIN screen check Information the Title and Signature name of the partner signing the return All applicable fields must be completed on
42. If the Check to include in self employment income box is selected at the top of the 8825 screen the amounts from the 8825 screen are included in the calculation for line 14a of Schedule K and flow to each K 1 Self employment calculations are shown on the WK SE worksheet generated with the return 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 the M 1 NOTE No adjustment is carried to the M 3 automatically for 2011 Manually reducing the expenses deductions or increasing the income for these credits causes the return to be out of balance Adjustments are made to other income for the credit amounts for the following cred its e Form 6478 Alcoholic and Cellulosic Biofuel Fuels Credit e Form 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 Tax Year 2011 Drake Software User s Manual Elections Elections 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 C
43. Items Listed below are the most common items used on the Schedule K For the complete list of Schedule K items see the K screens Amounts entered below do not need to be re entered on the K screens Sp a A gt e KO LT EUH poh Lt ery OG UN ce dede L LOY OE EA AD A EN PEER COP ees E E QUAM UNIONIS n ene a EE RE 13a Combos 10 Oy 1fc Hondeducibie expenses 0 0 0 0 0 a a rrt RR EE ee x e LL LIC oe 19a Distributions of cash and marketable securities Er E pU iii M EE Pe LEES EE uc UM Ef wee EE 22 Figure 2 Schedule K fields at the bottom of the INC screen Amounts entered in these fields should not be re entered on the K screens There is no Charitable Contributions line on page 1 of the 1065 return NOTE Charitable contributions belong instead on Schedule K Enter charitable contributions on either the INC screen or screen K but not both For information on the Schedule K items at the bottom of the INC screen see Sched ule K Partners Distributive Share Items on page 19 Tax Year 2011 5 Income and Deductions Drake Software User s Manual Gross Receipts Enter gross receipts or sales and returns and allowances on the INC screen The IRS does not require a detail CTRL W worksheet for gross NOTE receipts therefore if you are using the trial balance import feature do not include a detail worksheet for this line or for an
44. K 1 are not required and therefore not printed The four conditions that must be met in order to answer Yes to this question are 15 Additional Information Tax Matters Partner Drake Software User s Manual 1 The partnership s total receipts for the tax year were less than 250 000 2 The partnership s total assets at the end of the tax year were less than 1 00 000 3 Schedules K 1 are filed with the return and furnished to the partners on or before the due date including extensions for the partnership return 4 The partnership is not filing and is not required to file Schedule M 3 TIP You can force these schedules to be printed from the PRNT screen The designated Tax Matters Partner TMP is the partner who is available to discuss tax information with the IRS TMP information is printed at the bottom of page 3 of Form 1065 In Drake the default Tax Matters Partner is partner 1 the first partner entered on the K1 screen To designate a different partner go to screen B and complete the Partner field in the Tax Matters Partner section at the bottom of the screen Note that most fields in this section are overrides there is no need to enter additional information unless the part ner s information differs from what is provided on that partner s K1 screen If you don t know the partner number click K1 under the General tab of the Data Entry Menu An Existing Forms List see Figure 6 displays all partners with their
45. OE EE ENE Year property was placed in service N nle ande UU FE aa SF ale le Figure 47 Example of third instance of a Schedule E to be associated with the second instance of a Form 3115 Completing The 311E screen consists of four sections Schedule E e Schedule E Line da Enter information on the type of property the year it was placed in service and the property s use e Schedule E Change in Depreciation or Amortization This section covers all Schedule E items other than lines 4a and 7 Note that lines 5 and 6 are links to required attachments e Schedule E Line 7 Present Method and Schedule E Line 7 Proposed Method For the line 7 sections enter information on the Present Method and Proposed Method in the supplied text boxes and choose the applicable conven tion from the Applicable Convention drop list Options are as follows e HY Half Year e MM Mid month e MQ Mid guarter e S L Straight line Tax Year 2011 59 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Attachments Attached statements are required for many Form 3115 items Depending on the nature of the attachment you will attach statements to the form in one of two primary ways e From Data Entry The ATT screen is the most common screen for attaching statements to Form 3115 The ATT2 screen is used for Part II line 12 and Part III line 23b See the Parts I and III and
46. Prepare to use Trial Balance Import Enable Excel macros Disable autobalance Force Schedule L Delete unnecessary detail worksheets sd Populate Trial Balance Template Import Trial Balance Import direct entry data cells with 0 applicable detail worksheets totals for depreciation Schedule L rentals 1120S amp 1065 only Make corrections in TB worksheet Populate Data Entry Enter any trial balance data that cannot be imported via Trial Balance Import Screen SCH2 for Schedule L items Screen 4562 for individual assets depreciation Compare M 1 line 1 Does trial balance match Schedule M a line 1 Trial Balance Import General Process Is an M 1 adjustment necessary YES Make M 1 Adjust adjustment amounts elsewhere in data entry Were rental totals entered 11205 amp 1065 in trial balance Go to data entry an enter individual rentals on 8825 or RENT screens as applicabl Delete imported 8825 and RENT screens Process complete Drake Software User s Manual Supplement Partnership 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 w
47. Schedule K 1s Drake carries amounts entered in item L Analysis of Capital Account on the part ners K1 screen to the Form 1065 Schedule M 2 line 1 Balance at beginning of year Rental Activities Tax Year 2011 Income and expenses for rental real estate properties appear on Form 8825 Rental Real Estate Income and Expenses of a Partnership or an S Corporation To make entries in Drake use the 8825 screen If there are multiple 8825 properties press PAGE DOWN for a new 8825 screen Use one screen per rental property If a return has more than one 8825 screen the program 3l Rental Activities Drake Software User s Manual reports each property s information on a separate column of Form 8825 Data from all 8825 screens are transmitted to the IRS when the return is e filed NOTE Special steps are required if using the trial balance worksheet for multi ple rentals See Rental Expenses on page 51 for more information Line 14 Depreciation If the program is calculating depreciation entered on the 4562 screen for the property listed on the 8825 do not enter the depreciation on the 8825 screen Depreciation should be entered only if it is figured outside of the Drake program and then the net results should be entered on screen 8825 The amount entered on line 14 is added to the depreciation calculated from the 4562 screens NOTE For assets placed in service during the year Form 4562 is required Carrying To
48. This section has two parts e Part I General LIFO Information This section is made up of attachment links see Figure 48 on page 60 If any of the conditions on lines 1 6 match the entity s situation click the corresponding attachment link to access the ATT screen where you can complete the required statement Select the corresponding line code from the Schedule drop list on the ATT screen e Part II Change in Pooling Inventories Enter the descriptions of the contents and the base years of the present and proposed pools If any of the conditions on lines 2 4 match the entity s situation click the corresponding attachment link to access the ATT screen where you can complete the required statement Use the D I II screen to complete the following parts of Form 3115 Schedule D Change in the Treatment of Long Term Contracts Under Section 460 Inventories or Other Section 263A Assets e Part I Change in Reporting Income From Long Term Contracts e Part II Change in Valuing Inventories Including Cost Allocation Changes If an entity is currently using a LIFO inventory method or submethod NOTE and is changing to another LIFO inventory method or submethod Part ll of Schedule D is not applicable Use Schedule C Changes Within the LIFO Inventory Method instead A long term contract refers to any contract for the manufacture building installation or construction of property that is not completed in the tax year in
49. To best understand which attachments are still required compare the ATT screen and the EF PDF worksheet to the list on the EF message page All EF messages must be eliminated before the return is eligible for NOTE e file EF messages for Form 3115 attachments are eliminated when all required statements have been attached to the return Tax Year 2011 Drake Software User s Manual Supplement Partnership Appendix 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 ER HEU DUETA EU BPE EPH HYEN HPHP EER ER DE ER EE EE BE EE ER SE EE EE ED ER EE EE E GE SPEY HVEN EE EE GE HY ER EE EE EN SR BE DE ER HET Ie ER HE ER ER EE EE EE EE BE DE ER EE EE EE HE ER ER EE EE EE SE BE DE ER EE EE HE DR EE EE DE EE EE EE EE Nese BE EE EE BE BEER EE EE ER HE EER BE DEE BE DE ER EE EE EE EE EE EE EE EE BE EE ER EE ER EN EE EE EE ER EE EE RE N EE EE RE EE EE EE ER EE ER EE DE EE BE DE DEE EE EE ER EE ER ER EE EE DE 990 990 EZ or 990 PF return
50. al information on check boxes State Ack and ETD Figure 25 The 1065 box must be marked on Form 8633 in order to e file Form 1065 Binary Attachments Binary or PDF files can be attached to certain tax forms These attachments are gen erally signature or third party documents such as a copy of a signed lease or a signed appraisal statement In some instances the IRS requires that a document be attached to an e filed return in other instances a document can be attached voluntarily to sup port or explain an entry in the return In either case a document must be printed scanned into the computer and attached to the return in order to be e filed with the return You can attach PDF files to federal partnership 1065 returns for e filing The PDF Attachments screen is accessible from the Data Entry Menu The PDF Attachment Process 40 Three main steps are involved in the PDF attachment process in Drake Tax Year 2011 Drake Software User s Manual Binary Attachments 1 Creating a PDF document to be attached 2 Informing the program that a PDF document will be sent with the return 3 Attaching the PDF document for e filing These steps are described in the following sections Creating a To create a PDF file PDF File 1 Scan the document to be attached to the return TIP Its a good idea to use the DDM scanning feature for this step 2 Save the document to your client s DDM file your computer s desktop or any where yo
51. alance file is an Excel xls file showing the client name and ending in TB for trial balance as shown in the example in Figure 37 on page 49 See Naming Convention on page 45 48 Tax Year 2011 Drake Software User s Manual Importing Trial Balance Information 1 Import File Name C DRAKE11 TB4Partners in Grime CleaninaTB XLS Call Click to browse Figure 37 Selected file to import 5D Select the Trial Balance Additional Import Options See Additional Import Options following this procedure 6 Click Next and wait for the import to be completed T Click Finish The program returns to the Data Entry Menu for the open return Note that all selected data from the trial balance worksheet has been imported into the return This can be seen both in the data entry screens and on the generated return Additional By default the program imports the following additional information when importing Import the trial balance data Options Buildings amp other depreciable assets Accumulated depreciation Goodwill amp other intangible assets Land Rental real estate information 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 work sheet for balance purposes but are not carried to data entry these must be entered sep arately and the calculate
52. alert item 1 in Figure 26 on page 42 e An Attach PDF button on the toolbar item 2 in Figure 26 on page 42 Tax Year 2011 4 Binary Attachments Drake Software User s Manual ae ga Hi E OJO ST ed Data Entry Print Setup Archive Email Refresh Basic View KT Export Attach PDF 2 Select Forms to Views Print All Forms Sets EF Federal Worksheets Holes hdessages Arkansas California U S Return of Partne For calendar year 20 10 or tax year besinninc as rom 1065 Department of the Treasury Internal Revenue Service See separate Figure 26 The MESSAGES file 1 and the Attach PDF button 2 2 Click the MESSAGES file to view EF messages including information on how to attach the required documents to the return 3 Click the Attach PDF button The EF PDF Attachments window displays the information entered on the PDF Attachments window in data entry A red X means the document has not yet been attached a green check mark indicates an attached document Hequired PDF Attachments The list below cantains PDF Attachments that are required For electronic Filing Select an item from the list and click Brawse to locate the associated PDF file Item with a green check mark already have the PDF file Items with a red 77 are missing the required PDF File Reference Description Required PDF FileM ame e S175 Line 20 Proposed Change Documents PAOPOSEDCHANGEDOCUMENTS O0 Form
53. ari amp amp and wages shareholder employees TU Waste removal 0 1 ES o Income Loss Schedule M 1 line 1 100 600 gt 2 E Qes st 549 050 LOUT OF BALANCE 0 Figure 33 Schedule M 1 amount 1 totals 2 and indication of balance 3 Following are instructions and guidelines for using the trial balance template to assemble financial data for importing into data entry 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 oome 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 49 Direct Entry Most cells in the trial balance worksheet are view only In a new template editable debit and credit cells are indicated by a dollar amount 0 46 Tax Year 2011 Drake Software User s Manual Importing Trial Balance Information Detail Some cells require more detail than can be entered on a single line These cells are Worksheets indicated by buttons b 3 line 7 Form 1120 pip gt does not carry detail required detail require gi C B0 E A requires detail E requires deta 1 Form 1120 Ser Figure 34 Example of cells that require worksheets Click a worksheet button to open a worksheet in a new tab Figure 35 shows an exam
54. assets the amount entered on the trial balance does not flow to the return To ensure that each component of the total remaining depreciation is calculated into the return each asset must be entered on the applicable depreciation screens in data entry Figure 40 Depreciable Assets 4562 Depreciation Detail Item 4562 Part 1 4562 Parts 2 and 3 4562 Parts 4 5a and 6 4562 Parts 5b and 5c Additional Depreciation Elections Figure 40 Enter depreciable asset data on a 4562 detail screen or enter the total depreciation on the override screens 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 The following information applies only for partnerships with multiple rental proper ties The partnership trial balances include lines for rental income and expenses Both rental expense items require a trial balance detail worksheet 5 Importing Trial Balance Information Drake Software User s Manual Account Title Cash Trade and accounts receivable Allowance for bad debts ee Se c U Y D ER 7 tea T ere esa T Lett Tax exempt interest
55. ation and AMT depreciation totals on the Federal Depreciation Listing amounts flowing from K1P screen line 17 code A or the K1F screen line 12 code A or 17B TT Gr ieee Adjusts amounts flowing from K1P screen line 17 code B or 9 the K1F screen line 12 code C F l Adjusts amounts flowing from K1P screen line 17 code C or 17C Depletion other than oil and gas he KIF screen line 12code Hi 17D Oil gas geothermal gross income Adjusts amounts flowing from K1P screen line 17 code D 17E Oil gas geothermal deductions Adjusts amounts flowing from K1P screen line 17 code E Adjusts amounts being carried from screen K1P line 17 code ie Sern feuis F and screen K1F line 12 code B and J entries 18A EE EE Adjusts amounts flowing from K1P screen line 18 code A and p from the K1F screen line 14 code A 2 Q N o D O c 2 o oO D 2 O D O h O 3 N O D D 2 ool y 5 D O Q O Q D U 17A Post 1986 depreciation adjustment Adiustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted 1065 Giver EL Income Adjusts amounts flowing from the bottom of screen 3 line 18b p and from K1P screen line 18 code B Nondeductible expenses Adjusts amounts flowing from the bottom of screen 3 line 18c and_from K1P screen line 18 code C Penalties and fines Adjusts amounts flowing from the bottom of sc
56. ault selection of Individual Type of Partner G w General orLLC member manager Limited or other LLC member H M Domestic partner Foreign partner PARTNER type notthe partnership J Partners Before Change ies oe 3 CORPORATION ma PARTNERSHIP Capital DISREGARDED E ESTATE 1 EED n ilm ee TR he TE Ee aande VEE me Figure 8 K 1 Partner Type Tax Year 2011 19 Schedule K 1 for 1065 Partner Information Drake Software User s Manual Ownership Changes Entry of ownership changes is new for the 2011 program Previously ownership changes were entered on a third K screen Now all ownership change information is entered on the OWN screen which is accessible from the General tab of the Data Entry Menu To use the OWN screen e At the top of the screen enter the date the profit loss or capital interest in the partnership was exchanged by two or more partners If profit loss and capital are all involved in a transaction put the date in the Profit Loss Capital field only Override date fields are provided if the loss or capital dates are different e Inthe Change in Percentages section select the applicable partner from the drop list The drop list contains the names and ID numbers entered on each K1 screen e Enter the percentage changes in profit loss or capital as positive amounts for increases and negative amounts for decreases See field level help for more infor mation e To enter additional o
57. c ee ee EET TE PRE EET OT OES V Tax Year 2011 lii Table of Contents Drake Software User s Manual Supplement Partnerships Tax Year 2011 Partnerships 1065 The basics of data entry for a partnership 1065 return are the same as for the 1040 Field and screen level help shortcut keys and navigation throughout data entry all function as they do in the 1040 package See the Drake Software User Manual Tax Year 2011 for the basics of using the program What s New in Drake for Partnership Returns 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 new regulations for 2011 see the IRS instructions for Form 1065 ELEC Screen Changes The ELEC screen has been revised for easier more efficient selection of various elec tions available to corporations For more information on choosing elections in Drake see Elections on page 35 Ownership Changes New for 2011 ownership changes for partnerships should be entered on the OWN screen Enter the date of ownership change at the top of the screen From the Change in Percentages section select a partner from the Partner s ID Number and Name drop list Enter the partner s percentage of profit loss or capital received as a positive number or the percentage of profit loss or capital relinquished as a negative number Press PAGE DOWN to
58. ch a description of the present and proposed methods used to capitalize direct and indirect costs Sections B These sections consist of a series of drop lists under a Present column and a Proposed and C column Present refers to the current accounting method while proposed refers to the requested change in accounting methods You should address only the items neces sary do not make a selection for any item for which an answer is not required for the entity s situation For each item in sections B and C you can e Select X If you select X the corresponding box on Form 3115 will be marked with an X See Figure 45 e Select B If you select B the corresponding box on Form 3115 will be left blank and an attachment will be required explaining why the line was left blank Select nothing If you select neither of the above options N A will appear in the corresponding box on Form 3115 No attachment is necessary for a box marked N A ORAL TE BYE PETRU s a bom ec oh Sra uve da dT et ARTS GUNT dre nana AN meato tf Eu a ees ML AT required Attach an explanation for boxes that are nat checked Direct material n no nos mom nom ME ME ME ME ME 3 3 ME n a Direct labor s n mon omonom mon mon mon mon sonos o3 on ou hon 3 H N o3 os om a Indirect labor e e x x n non ME ME MA EE ME omo mon ono o mon on m mo w om m
59. chedule E Use screen 311E accessible from the Change in Accounting Method section of the Other Forms tab to complete Schedule E Change in Depreciation or Amortization If changing this method under the automatic change request proce NOTE dures see the List of Automatic Accounting Method Changes in the IRS Form 3115 instructions Screen 311E Unlike the other 3115 screens screen 311E contains two multi form code text boxes Multi form Codes Multi form code for 3115 This box is applicable if the return contains more than one Form 3115 Enter the code for the instance of the 3115 screen with which this 311E screen should be associated e Miulti form code for Sch E This box is applicable if the return contains more than one Schedule E A separate 311E screen should be used for each property Assign each property a separate code in its Multi form code for Sch E This code enables you to associate any attachments with the correct Schedule E property See Attachments starting on page 60 If the return contains more than one Form 3115 and multiple instances of Schedule E both multi code fields should contain numbers Figure 47 shows that the third instance of a Schedule E is to be associated with the second Form 3115 in the return Form 3115 Application for Change in Accounting Method i Schedule E Change in Depreciation or Amortization 1 Schedule E Line 4a Warehouse 2003 ESE NEER Ee EE
60. code A and the K1F screen line 5 Collectibles 28 gain loss 11A Other portfolio income loss 11B Involuntary conversions Adjusts amounts flowing from the K1P screen line 11 code B 11D Mining exploration costs recapture Adjusts amounts flowing from the K1P screen line 11 code D 11E Cancellation of debt Adjusts amounts being carried from screen K1P line 11 code Adjusts amounts being carried from screen K1P line 11 code F and K1F line 11 code D Overrides amounts flowing from screen 3 and from the K1P screen line 13 code A o 2 O Q D D 2 Oo O RV 2 o uh Tl D D 5 D N O 11 F Other income loss 13a A Cash 50 13a B Cash 30 Adjusts amounts flowing from the K1P screen line 13 code B Adjusts amounts flowing from the 8283 screen and from the 13a D Non cash 30 K1P screen line 13 code D 13aE Capital gain 5096 organization 3096 Adjusts amounts flowing from the K1P screen line 13 code E 13a F Capital gain property 2096 Adjusts amounts flowing from the K1P screen line 13 code F 13aG Contributions 10096 Adjusts amounts flowing from the K1P screen line 13 code G 13b H Investment interest expense Adjusts amounts flowing from the K1P screen line 13 code H 13c J Section 59 e 2 expenditures Adjusts amounts flowing from the K1P screen line 13 code J 13d Deductions royalty income Adjusts amounts flowing from the K1P screen line 13 code I 13d K
61. creen as i 121 determined by the code ED entered in the Investment credit property installed code drop list orm 6478 Alcohol and Cellulosic Biofuel Fuels Credit 2 oie 3 s prooi SN Ore Er ans aleopel TSO Pohl Overrides the default rates Refer to form instructions greater in fuel mixtures Alcohol less than 190 proof but at least 150 proof and alcohol less than 190 proof but at least 150 proof in Overrides the default rates Refer to form instructions fuel mixtures Oualified cellulosic biofuel produced after 2008 that is alcohol Form 8609 Low Income Housing Credit Allocation amp Certification 2 Schedule A Annual Statement Override of computed rate K1P Schedule K 1 for 1065 Ql 5 C1 oO Qualifying gasification project credit Basis of investment property not included in a above NN ELE O 8 EN EN EN 11h EN EN EN EN Rehabilitation property Certified historic structures in the Gulf Opportunity Zone TH 4 Overrides the default rates Refer to form instructions O lt o Q D n Q 3 oO md D Q o D Overrides Worksheet Override Location 9creen Line Field Name Location of Information Being Overridden 1065 MEN For section 179 Use Only 2009 179 exp allowed Overrides the calculated amount allowed on the WK P179L N For section 179 Use Only 2008 179 exp allowed Overrides the calculated amount allowed on the WK P179L Current year ORP
62. ctivities Each Form 8825 in View mode contains up to eight rental activities If more than eight rental activities are entered a second Form 8825 is created TY ses View data for rental ee ef 1065K_ activities 1 8 LL 1065K 1 x al Bag L Li 9879Pe STATMENT View data for rental HAS wx row activities starting at 9 AT wk PCD Figure 17 Multiple 8825 pages are created 1f more than eight rental activities Each Form 8825 in View mode consists of one or more pages depending on the number of rental activities listing up to four rental activities per page If more than four rental activities are entered scroll down to the second page of the form when viewing e 825 Statements Statements are titled STM 8X where X equals A to H for the first Form 8825 For example the statements for the first and second 8825 screens would be labeled STM 8A and STM 8B respectively As shown in Figure 18 on page 34 there are also 8825 attachments 8825 ATT for other reporting information 33 Credits and Adjustments Drake Software User s Manual Statements listed in View mode 8825 ATT OVERFLOW os Ek MI lz EE a ip E ee m L i 8825 ATT mg STATEMENT 8B Statements referenced STATEMENT 8C on 8825 ATT STATEMENT SD FILEINST II LO 14 J n dli mmt aum n alf catt Figure 18 8825 statements and attachments Self Employment Income
63. d results compared to the trial balance worksheet Details for Most trial balance items go directly to the location indicated in the program and on the Preparers return For example the amounts shown in Figure 38 go to Schedule L line 1 column d in the program and are shown on page 5 line 1 column d of the 1065 return p420 O50 EE L line 1 cold 1065 page 5 line 1 cold L line 2a cal c 1065 page 5 line 2a cal c e Bb afe aar Mea NM ag TE emer NF mien NE T 7 t tt e eei TV E F Figure 38 Indication of where an amount will go in Drake and on the return Not all figures can be imported directly however and some amounts are optional Drake has provided an Other Information column in the trial balance worksheet to Tax Year 2011 49 Importing Trial Balance Information Drake Software User s Manual SCH2 Detail 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 the Reported on column to the left of Other Information optional Amount is optional not required for import but could require direct ent
64. d schedules For other partnerships e filing is optional steps for e filing Form 1065 are the same as for e filing Form 1040 with the excep tion of Bankruptcy return which must be paper filed For detailed instructions on e filing returns in Drake see Drake Software User s Manual Tax Year 2011 Additional Return Types The following special types of business returns can be e filed using Drake e Returns for entities using a 52 53 week year e Short year returns nactive returns For information on how to indicate a short year return in Drake see Short Year Returns on page 4 38 Tax Year 2011 Drake Software User s Manual Electronic Filing Electing a To elect a 52 53 week year a new entity one that has never filed a return must enter 92 53 Week data on both screen 1 and the ELEC screen Year Initial Return To elect a 52 53 week year for any entity 1 In the If not calendar year section of screen 1 enter the Fiscal year beginning and Fiscal year ending dates Use MMDDY Y Y Y format as shown in the exam ple in Figure 23 2 Mark the 52 53 week tax year box If not a calendar year Fiscal year beginning 01 01 2011 Fiscal year ending NS 12 28 2011 W 52 53 week tax year ELEC Screen Figure 23 In this example the fiscal year begins 01 01 11 and ends 12 28 11 the Wednesday closest to the end of December giving the entity a 53 week year for 2011 An entity that has filed ret
65. d to learn if a field is reguired 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 11 13 15 and 21 and it explains what spe cifically 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 required for the gelected election The description field is used on the following election statements for this package Use Date of Disaster Date Paid or Incurred Agreement date Date Payment Received Signature Date N pai 25 dei Y a nn Ail N dare ar EI ar n JI Figure 21 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 21 To open a new ELEC screen for an additional election press PAGE DOWN Election Statements Once an election is made and the return is calculated the election information is pro duced on a statement referenced STM ELXX where XX is the number of the election For example election 01 General Election Statement is generated as STM ELOI The election stateme
66. e 13 code B l Adjust amounts flowing from various credit forms without Gi AE Cale specific K1 codes and the K1P screen line 15 code P K Alternative Minimum Tax AMT Items amp Other Information Screen 2 of 2 16b Gross income from all sources Adjust amounts flowing from the K1P screen line 16 code B 16d Adjusts amounts flowing from the K1P screen line 16 code D 16e Geem fadiusts amounts flowing from the K1P screen line 16 code E 16f Adjusts amounts flowing from the K1P screen line 16 code F 16g Interest expense Adjusts amounts flowing from the K1P screen line 16 code G 16h Adjusts amounts flowing from the K1P screen line 16 code H 16i Passve ust amounts flowing from the K1P screen line 16 code l 16 Adjusts amounts flowing from the K1P screen line 16 code J 16k other aust amounts flowing from the K1P screen line 16 code K i6 Total foreign taxes Adjusts amounts flowing from the K1P screen line 16 code L or code M and the K1F screen line 14 code B 16m N Reduction in taxes available for credit Adjusts amounts flowing from the K1P screen line 16 code N 16n O TE EE ci Adjusts amounts flowing from Form 8873 line 15 the K1P 9 99 P screen line 16 code O and the K1F screen line 14 code G EN EE and line 52 of Form 8873 if selected to carry to line 16n 16nQ Other foreign transactions Adjusts amounts flowing from the K1P screen line 16 code Q Adjusts the calculated difference between the current depreci
67. e 1a enter as a positive amount Overrides the loss that comes from Form 4797 Part II line 17 Overrides Worksheet Override Location LT ocreen Line Field Name Location of Information Being Overridden 1065 ek Partnership General Information screen C Number of Schedules K 1 attached Overrides the number of K 1 schedules that are generated Preparerfee JOveridesthesystem sfeecalculation __ po Firm Overrides the program default setting 1 dPreparer Overrides the program default setting 1 JDataenryopf jOveridesthelognname O N ERO number Overrides the selection made from the ERO SSN Indicator drop list at Setup gt Options EF tab Entity Name Control Overrides the calculated name Income and common Schedule K Items Overrides the calculated tax on the total income from the active Fe Hede ME drie ap Es edge rx conduct of all trades and businesses by the partnership DED Deductions Form 1065 Page 1 Deductions ME mm Overrides the amounts entered on the other insurance lines on this screen N Overrides state income taxes calculated from information entered on ES screen using code IN EE Overrides state franchise taxes calculated from information entered on ES screen using code FR orm 1125 A Cost of Goods Sold o Overrides calculated amount for entries on 4562 detail screen 5 Other costs depreciation chedule B Other In
68. e 55 If the answer is Yes you are stating that Tax Year 2011 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Part Ill Parts Il and IV Part Il Line 12 Tax Year 2011 e The entity would be required to take the entire amount of the section 481 a adjustment into account in computing taxable income for the year of change e Section 4 02 8 of Rev Proc 2002 9 applies to the applicant s accounting method change request and the applicant is therefore not eligible for a change under auto matic change request procedures See IRS Form 3115 instructions for details Parts Ill Parts ll IV ABC D Parts I il D Part ill Form 3115 Application for Change in Accounting Method Multiorm code All applicants must complete Parts Il and IV Part Il Information for All Requests E id ar will the applicant cease to engage in trade or business to which requested change relates wb T wc rc cc ccm Mt MS PERRA RETIRER LLL Figure 44 Automatic Change Request information If this section of the Parts I III screen is filled out Form 3115 cannot be e filed with the return It must instead be paper filed before submitting the return A user fee a check or money order payable to the IRS must be included with the paper filed form oee Appendix A of Rev Proc 2006 1 for more information For more on applicants who must apply for advance consent
69. e User s Manual Schedule L Balance Sheets Per Books 2 Select Open gt Partnership gt Partnership K 1 Cover to view the template of the partnership K 1 letter ad Make any desired changes to the template 4 Click Save For an amended return the K 1 letter automatically refers to the NOTE amended K 1 To edit the letter for an amended K 1 select Open gt Partnership gt Partnership K1 Amended and follow steps 3 and 4 of the previous procedure Schedule L Balance Sheets Per Books Schedule L is not required if e The partnership s total receipts for the tax year were less than 250 000 e The partnership s total assets at the end of the tax year were less than 1 million e Schedules K 1 are filed with the return and furnished to the partners on or before the due date including extensions for the partnership return e The partnership is not filing and is not required to file Schedule M 3 If the partnership meets a four of these conditions go to screen B and select Yes for line 6 Because Schedules L M 1 M 2 and Item L of Schedule K 1 are not required they will not be generated with the return To force these items to be printed go to the PRNT screen and in the Items to Print section select Force Schedules L M 1 M 2 amp K 1 Section L If any of the four conditions are not met select No for line 6 Schedules L M 1 M 2 and Item L of Schedule K 1 are required and will be printed with the return F
70. e allocated Dollar allocation MUST be used for guaranteed k payments and health insurance Do not combine Dollar allocation insurance amounts with guaranteed payment amounts W Percentage allocation HINT For amounts to flow properly ALL partners must be included Allocation even if receiving a zero allocation Percentage or Amount Partner s ID Humber and Name 400006666 Amelia Carter 400006665 William Carter 212121212 Pat s Packaging Figure 12 Entering partner allocation information on the SA screen The preferred allocation method is to use percentages This prevents K 1 statements from being produced for any partners not receiving a section 754 deduction It may sometimes be necessary to enter a zero 0 for these partners in order to get the expected results Domestic Production Activities Deduction A partnership does not take the deduction for Form 8903 Domestic Production Activ ities Deduction Instead the amounts pass through to the partners to report on their individual returns The partners use the information to calculate their eligibility for the deduction For more information see the IRS Form 8903 instructions If Print K1 8903 worksheet for each partner is not selected on screen 8903 the amounts flow to line 12 of Schedule K 1 codes Q and R If this box is selected the information flows to the K 1 8903 which is referenced on a statement Code P is printed on line 12 of Schedule K 1 to indicate domestic
71. e me enatis qm oap I ts el Mas diu Ark hay Ms mM Figure 28 EF message 1515 As shown in Figure 28 the EF message states that attachments are required You would then need to obtain or complete the statements scan them into the computer save them as PDF documents and attach them to the return Importing Trial Balance Information Drake trial balance import feature allows data to be imported into a 1065 return from a trial balance worksheet The trial balance template and importing function has the fol lowing benefits e Eliminates the need to duplicate entries e Reduces data entry errors by automatically importing data to the correct fields e Allows preparers to merge basic accounting functions with tax preparation NOTE A flow chart of the trial balance importing process is available as Appendix A Trial Balance Import pages A 1 to A 2 of this manual Preparing to Use Trial Balance Import The trial balance import function can be used only on returns that exist in the 2011 version of Drake Software If you haven t already create a client file in Drake 2011 or update an existing client file from the prior year Like several other functions of the tax software this new feature requires Microsoft Excel version 2000 or later In addition take these actions to ensure the trial balance import works properly e Enable Macros The trial balance import function uses macros in Microsoft Excel Check your Excel settings to ensure
72. ear you will need to update the return for the current year 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 e When you open the return for the first time in the 2011 program and are prompted to update it When you update a 1065 return that was marked as final the previous year the pro gram informs you that the return was marked final before prompting you to proceed Header Information Screen 1 contains fields for the general information that is printed in the top section of page 1 of Form 1065 Tax Year 2011 3 Header Information Drake Software User s Manual Name and Address Use screen 1 to complete the partnership name and address section of Form 1065 For state purposes only if the partnership has an alternate address such as a P O box you can enter it in the Address Line 2 field at the bottom of screen 2 Access screen 2 from the States tab or enter 2 in the selector field and press ENTER Tax Year The software uses the calendar year as the default period for all partnership returns No date entries are required on screen 1 for a December 31 tax year end The program adjusts calculations for depreciation and for gains and NOTE losses on sales of assets based on the entity s tax year
73. ed from the General IRS Center Information screen D2 Schedule D Gain Loss Carryovers and Other Entries E l Overrides the amounts coming from the K 1P screen Partnership share of net short term gain l i ANNOS p snare Orne hon ER capiat gari yess line 8 and the K 1F screen line 3 Overrides the amounts coming from the K 1P screen 11 Partnership share of net long term capital gain loss i oon p 9 sd Tess line 9a and the K 1F screen line 4a orm 4562 Detail EE eee eee ae eee Overrides the system calculation for the Current depr column of the Depreciation Detail Listing Override regular depreciation AMT if different Br see Eed ere for the AMT Current column Override regular depreciation Book if different Overrides the calculated book amount EE Tim vaar Federal Overrides Form 4562 Part line 6 column c and the amount p iia for the WK S179L 179 expense elected this year Book if different S calculated book amount and the amount for the Override regular depreciation Federal Overrides Worksheet Override Location EE EE eee eee Screen Line Field Name Location of Information Being Overridden 1065 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 W O K S179L n 179 expense ALLOWED this year Book if different m e calculated book am
74. eeded Select OT Other Reconciliation from the State Selection drop list when using the reconciliation worksheet Not every item appearing on the federal return may be sub ject to multi state apportionment When you select OT the data entered becomes a reconciling adjustment amount to aid in tying to the federal return Enter as much or as little detail as the states require If a state does not require any information to be entered no information will flow to that state s return Click Screen Help on each tab for state specific information Other Information and Overrides 18 Use screen 1 to enter the following additional information Resident State If the partnership has a mailing address in one state but does busi ness in another use the Resident State drop list to select the state in which the part nership does business Drake Codes and Overrides For information on miscellaneous codes invoice numbers and override fields see the following sections of the Drake Software User Manual Tax Year 2011 Listing a Different Firm Preparer or ERO on a Return in Chapter 2 Installation amp Setup Miscellaneous Codes in Chapter 5 Return Preparation NOTE Worksheets outlining these and other adjustment and override fields are accessible through the FAQ Frequently Asked Questions screen Tax Year 2011 Drake Software User s Manual Schedule K Partners Distributive Share Items
75. een K1P or screen K1F on line 4 Enter the farm profit or loss from other partnerships estates or trusts on line of screen K1P or line 6 of screen KIF For information on farming partnerships with a corporate partner see Pub 225 Farmer Tax Guide Net Gain Loss Any net gain or loss from the sale exchange or involuntary conversion of assets used in a trade or business activity line 6 of Form 1065 comes from information entered elsewhere in the software Other Income Loss Tax Year 2011 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 Amounts from the following screens also flow to line 7 e Screen 6478 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit e Screen 8864 Form 8864 Biodiesel and Renewable Diesel Fuels Credit Additional fields on the INC screen include e Interest income on receivables e Recoveries of bad debts deducted in earlier years e Section 481 adjustments e State tax refund cash basis e Taxable income from insurance proceeds e Other income itemize To enter additional sources of income not shown create a CTRL W worksheet for the Other income itemize field on the INC screen Income and Deductions Drake Software User s Manual To enter other income loss from a partnership estate or trust use the K1P or K1F screen click the links on line 4 o
76. elect Turn off autobalance Schedules M 1 M 3 Reconciliation of Income Schedule M 1 is required if the balance sheet s total assets at the end of the year are greater than 250 000 Schedule M 3 is required if the balance sheet s total assets at the end of the year equal or exceed 10 million 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 taxpayers must reconcile book income with the taxable income Use the M1 screen to enter book to tax difference for Schedule M 1 Book to tax dif ferences are classified as permanent or temporary and as favorable or unfavorable Table 2 Examples of Book to tax Difference for Schedule M 1 Permanent Book or tax items that will never be Meals amp entertainment limitations reported for book or tax purposes Penalties Tax exempt interest Temporary Items that will be reported for both Depreciation tax and book purposes but not dur Gains or losses on the sale of ing the same tax year depreciated assets Favorable Items that reduce taxable income Instances in which tax depreciation amount is greater than book depre ciation amount Unfavorable Items that increase taxable income Disallowed meals amp entertainment Depreciation The program may make an adjustment for book to tax depreciation differences The and calculation is done with the following steps T
77. en dered Include the use of any capital the partner provided if the payments or credits for that capital are not determined by the partnership s income and can be allocated to a trade or business activity These entries should not include any payments and credits that should be capitalized or any distributive shares of partnership profits Partner To report partner health insurance Health Insurance Enter the total deductible in the Partner s health insurance field on the DED screen line 10 e Use screen Kl line 13M of the Part III K 1 Direct Entries section to allocate deductible payments for insurance that constitutes medical care for a partner or a partner s spouse or dependents See Figure 4 8 Tax Year 2011 Drake Software User s Manual Income and Deductions These amounts flow to Schedule K 1 box 13 and are included in the amount in box 4 of the partner s Schedule K 1 For information on the partnership s contribution to a partner s Health Savings Account HSA see Notice 2005 8 2005 4 I R B 368 Repairs and Maintenance Bad Debts Rents Use the DED screen to enter the costs of repairs and maintenance See Form 1065 instructions for IRS requirements regarding costs that can be entered here Use the DED screen to enter the total of all bad debts that became worthless during the 2011 tax year but only if these debts related to a trade or business activity Deduct ible non business bad debts should be ent
78. eous screen 1 18 multi form 32 53 59 60 compensation of partners 8 contact information for state returns 16 contributions charitable 5 cost of goods sold see Schedule A Cost of Goods Sold cover letters K 1 26 coversheets 38 credits 7 13 34 Ctrl W detail worksheets 6 7 44 56 D data entry for state information 17 importing trial balance into 43 52 state tabs in 17 dates business start 4 tax year 4 decrease to basis 23 deductions 8 13 25 depletion 12 depreciation entering 10 12 for cost of goods sold Schedule A 6 of rentals 10 32 on short year returns 4 printing Form 4562 37 trial balance business returns only 50 detail Ctrl W worksheets 6 7 44 56 domestic production activities deduction 25 due dates 13 E e filing 38 Index Form 8879 PE 14 PDF attachments 40 statements 28 electronic signatures PIN 13 employee benefit plans 12 envelope coversheets 38 error codes 40 expenses 8 13 exporting K 1 data 21 extensions 13 38 F farm profit or loss 7 filing instructions 38 final return 5 fiscal year returns 4 foreign addresses for partners 21 ownership 15 transactions 19 Form 1099 K Merchant Card and Third Party Network Payments 6 Form 1125 A 2 Form 3115 Application for Change in Accounting Meth od 39 42 53 62 Form 4562 Depreciation and Amortization 32 37 Form 5884 Work Opportunity Credit 35 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit 7
79. ered as short term capital losses on screen D Schedule D Capital Gains and Losses NOTE Cash method partnerships 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 partnership rented or leased a vehicle enter the total annual rent or lease expense incurred in the trade or business activity of the partnership and then complete Part V of the 4562 screens 8 and 9 Taxes and Licenses Interest Tax Year 2011 Use the DED screen to enter tax and license payment data Amounts entered here flow to the Taxes and licenses line of Form 1065 Data is also generated on the ATT PTL worksheet in View mode of the return Credit from Form 8846 Credit for Employer Social Security and Medi NOTE care Taxes Paid on Certain Employee Tips automatically adjusts the amount of taxes and licenses on Form 1065 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 and which tax type is selected The Interest line of Form 1065 refers only to the interest incurred by the partnership in a trade or business activity that is not claimed elsewhere in the return Use the DED screen
80. erlinks on lines 6 8 or 13 or press CTRL 2 Statements The total amounts entered on the SCH2 screen do not appear on the actual L screen in the program They are however printed on the return as applicable with references to the corresponding statements The type of statement produced by the program depends on the selected line and the IRS requirements If a line is required a statement labeled STATEMENT is pro duced and is e filed with the return If a line is not required a statement sheet STMT is produced and is not e filed with the return Note that an e fileable STATEMENT is referenced in the return Figure 13 Select line number from drop list Cash Trade Notes and Accounts Receivable Allowance for Bad Debts Inventories U S Government Obligations 6 STATEMENT 7a Loans to Partners 7b Mortgage and Kea state Loans 8 Other Investments STATEMENT 9a Buildings and Other Depreciable Assets 9b Accumulated Depreciation 10a Depletable Assets 10b Accumulated Depletion Jil Lan Actio ome s atitem oth ih eo P io itm ann pa ar am aie Ah ps dum atu rte d Wweriovies 2222222222 2222 4 US government obligations ss ees ess sees 5 Tax exempt securities ee ees eseesesesseee Other current assets attach statement 7a Loans to partners or persons related to partners b Mortgage and real estate loans 8 Other investments attach statement gt 9a Bui
81. es that the attached statement in addi tion to providing an explanation include the taxpayer s name and ID number Enter the name and ID number and indicate if the ID number is an EIN in the applicable fields at the bottom of the ATT screen Figure 49 For STM 2 10 Part ll line 10 statement ONLY Name MEEN Dnumber EIN Figure 49 Special section for entering taxpayer name and ID number for Part II line 10 located at bottom of the ATT screen Once attachments have been filled out accessing the ATT screen will NOTE display Existing Forms List of all attachments created Select the attachment or click the blue New line to create a new attachment and then click Open Some Form 3115 items require the attachment of documents that cannot be created in Drake Software for example line 4d of Part II requires written consent from a direc tor You can however attach such a document to the form as a PDF Directions for generating and attaching PDF documents can be found on the PDF screen in Drake Software Directions for converting other types of documents into PDF are available by clicking the Screen Help button at the top right corner of the PDF screen Copy or print these instructions as desired Do not enter data on the PDF screen itself If using the directions pro vided on that screen skip Step 2 which instructs you to fill out the col NOTES umns at the bottom of the PDF screen A PDF document may be at
82. f the INC screen Compensation and Wages Use line 9 of the DED screen to enter wages and salaries paid Do not include guaran teed payments to partners or salaries or wages reported elsewhere in the return such as the amounts included in COGS elective contributions to a section 401 k cash or deferred arrangement or amounts contributed under a salary reduction SEP agree ment Drake automatically adjusts salary and wages for employment credits Guaranteed Payments and Partner Health Insurance Use the DED and K1 screens to report guaranteed payments and partner health insur ance Note that guaranteed payments and health insurance are entered as separate amounts If the DED screen amounts do not equal the respective totals from the NOTE K1 screens the program generates a Guaranteed Payment Mismatch message The return cannot be e filed until this message is cleared Guaranteed To report guaranteed payments to partners Payments e Enter total guaranteed payments on the DED screen line 10 e Enter the guaranteed payments for each partner on line 4 of the Part III K 1 Direct Entries section of the partner s K1 screen Figure 4 Part lll K 1 Direct Entries 4 Guaranteed payments seem Guaranteed payments other 13M Health insurance Health insurance distribution reduction E Figure 4 Part HI section of screen K1 These entries should include any payments or credits to a partner for services r
83. for all ATT screen attachments e Multi form codes Use these boxes to associate the attachment with an instance of Form 3115 if the return contains more than one a particular Sched ule E property if the return contains more than one Schedule E or both See Multi form Codes on page 53 for more information on multi form codes e Schedule Select the line of the form or schedule with which the attachment is to be associated If an item begins with a number it refers to the part of Form 3115 for example 2 4e refers to Part II line 4e If it begins with a letter it refers to a particular Form 3115 schedule for example C2 b refers to Schedule C line 2b C2 5 refers to Schedule C Part 2 line 5 Explanation Enter the statement explanation If the explanation requires more than 900 characters press PAGE DOWN for a second screen If the explanation requires more than seven screens only the first 6 500 NOTE characters of the explanation are transmitted with an e filed Form 3115 There is no character limit for paper filed returns 60 Tax Year 2011 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Additional ATT Fields PDF Attachments Tax Year 2011 The ATT screen has a separate section to be used only for Part IL line 10 Does the applicant have pending any request for a private letter ruling change in accounting method or technical advice The IRS requir
84. formation les evel DERE BEA NIES TeI Overrides the number of Forms 8805 generated by the program System prints first partner s info as Tax Matters Partner by TMP Partner default Enter a partner number here to select a different partner as the TMP Overrides the selected partner s info as Tax Matters Partner by SSN default TMP Name Overrides the selected partner s info as Tax Matters Partner by default o aaaress Overrides the selected partner s info as Tax Matters Partner by default Overrides the selected partner s info as Tax Matters Partner by City default _ State ZIP Overrides the selected partner s info as Tax Matters Partner by default I N ime PostalCode oe the selected partner s info as Tax Matters Partner by TH o lo AY ck 2 D 7 2R lo Schedule K Partners Distributive Share Screen 1 of 2 EE EE N CREER 13d M Amount paid for medical insurance Overrides amounts being carried from screen 3 line 10 Net earnings from self employment Overrides the calculated on WK_SE Adjusts amu from K1P screen line 14 code B K1F screen 14b Gross farming fishi Overrides the calculated amount as follows Form 1065 line 8 chedule K Alternative Minimum Tax screen 2 of 2 l Overrides amount calculated by the program based on the 2 Ai EDE OF par EL EDE EER ele selection made in the Type of Partner section of the K1 screens Overrides amount calculated by the program based on the 2b K Anal
85. he 4562 detail screen as Rehabilitati Pre 1 ildi in th If b ie bee Pep ie pu Mias determined by the code RA entered in the Investment credit pportunity Zone code drop list Overrides the cost entered on the 4562 detail screen as 11g Rehabilitation property Other pre 1936 buildings determined by the code RB entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as determined by the code RC entered in the Investment credit code drop list Rehabilitation property Other certified historic Overrides the cost entered on the 4562 detail screen as determined by the code RD entered in the Investment credit structures code drop list Energy Credit Basis of property using geothermal Overrides the cost entered on the 4562 detail screen as 12a energy placed in service during 2009 determined by the code EA entered in the Investment credit code drop list Energy Credit Basis of property using solar illumination Overrides the cost entered on the 4562 detail screen as 12b or energy placed in service during 2009 determined by the code EB entered in the Investment credit code drop list Energy Credit Qualified fuel cell property Basis of Overrides the cost entered on the 4562 detail screen as 12c determined by the code EC entered in the Investment credit property installed code drop list Energy Credit Qualified microturbine property Basis of Overrides the cost entered on the 4562 detail s
86. hedule K 1 for 1065 Partner Information Drake Software User s Manual e To enter data for item M of Form 8805 Foreign Partner s Information Statement of Section 1446 Withholding Tax click the 8805 Item M tab NOTE If a K1 screen is marked as final none of the related screens for that partner is updated for the next year Special Allocations 24 Section 754 Allocations Use the SA screen see Figure 12 on page 25 for partner special allocations to allo cate liability capital and K 1 Part III Income Deductions Credits and Other Items amounts to individual partners without having to enter the information into each K 1 separately Amounts can be entered as dollar amounts or percentages Calculations from the SA screen flow to the appropriate fields of each individual K 1 To enter partner special allocations 1 Open the SA screen accessible from the General tab of the Data Entry Menu 2 Make a selection from the Allocation type drop list at the top of the screen 3 Select an allocation method percentage or dollar If no allocation method is cho sen the program will not include the allocations when calculating the return 4 Select a partner from the Partner s ID Number and Name drop list and enter the allocation figure in the Allocation Percentage or Amount field to the right of it Repeat these steps for all involved partners To enter data for more than one allocation type press PAGE DOWN to access a blank SA
87. here PEL TT af T2 d md 2 AM RM UM m T un EF me i a EE ad EA GEE eN 16a Depreciation Form 4562 16b Depreciation claimed elsewhere on return 17 Depletion do not deduct oil and qas depletion Discunis sai tta ail Abe HI ies aile nate er ci in Figure 5 Depreciation line 16 fields from DED screen Both lines 16a and 16b on the DED screen are adjustment fields and add to or subtract from software calculations that are based on entries elsewhere in the program Enter only the depreciation claimed on assets used in a trade or business activity e Line 16a An entry here is added to the depreciation from the 4562 screens The amount on line 16a is not reflected on Form 4562 See field level help for further instructions and information on how this field ties in to the 4562 e Line 16b Drake recommends using screen A rather than the DED screen to enter depreciation claimed on Form 1125 A An entry on screen A adjusts any entry on line 16b of the DED screen and is calculated into the total deductions on Form 1065 If there is an entry on line 16b but not screen A only the line 16b amount is calculated into total deductions Use screen 4562 to enter section 754 depreciation To associate the depreciable asset with section 754 select 754 from the For drop list at the top of the screen For information on allocating Section 754 depreciation to specific partners see Sec tion 754 All
88. his procedure refers to depreciation Amortization throughout but it applies for either depreciation or amortization Adjustments Tax Year 2011 29 Schedules M 1 M 3 Reconciliation of Income Drake Software User s Manual 1 The amount reported on the Schedule L Beginning of Year accumulated depre ciation line 10b column a is subtracted from the End of Year accumulated depreciation line 10b column c This is the book depreciation amount 2 This book depreciation amount is compared to the tax depreciation amount The tax depreciation amount is the depreciation amount reported on the return including any section 179 amounts 3 The differences between the book and tax depreciation amounts are carried to the appropriate form and line e Ifthe book depreciation amount is greater than the tax depreciation amount the difference is carried to either Schedule M 1 line 4a Schedule M 3 Part III line 25 as a negative amount Form 8916 A line 2 L as a negative amount for assets selected on the 4562 detail screen for COGS e Ifthe tax depreciation amount is greater than the book depreciation amount the difference is carried to either Schedule M 1 line 7a Schedule M 3 Part III line 25 as a positive amount Form 8916 A line 2 L as a positive amount for assets selected on the 4562 detail screen for COGS Sched
89. indicate that the information should be carried to Form 8825 select 8825 from the Information For drop list on screen 4562 Figure 15 If there are multiple 8825 screens use the to Form 8825 Multi form code box For information on using the Multi form code box see the Drake Software User s Manual Tax Year 2011 Form 4562 EE 825 1065 COGS F 8825 RENT 754 Multi form code 1 999 1 is assumed if left blank Date Description Acquired Cost Basis ii CE N vi j a os WE n Ain lal lla dile i E sn T ne a a pope Figure 15 In this example the program carries the 4562 information to the third 8825 screen created Any depreciation information entered on the 4562 screen is carried to the correct Form 8825 based on the form and multi form code selections at the top of the 4562 detail screens When selecting a multi form code note that the code should refer to an 8825 screen not the 8825 form For example data from the third 8825 screen will be generated on the first Form 8825 To MPORTANT associate an asset with that information you would enter a 3 for the screen not a 1 for the form in the Multi form code box For more information on Form 8825 see Viewing Rental Activity Information below Line 15 Other Expenses list For rental properties with an other expense line 15 enter the amount of Guaran teed payments or meals and entertainment in the appropriate fields see Figure
90. ks on 3115 screen The next few sections of this document provide instructions for completing the vari ous screens for Form 3115 including Schedules A through D Use the Parts I HI screen to complete the following sections of Form 3115 e General Information e Part I Information For Automatic Change Request e Part III Information For Advance Consent Request NOTE Information should be entered in either the Part section or the Part Ill section but not both Complete all applicable fields in the General Information section Note that the fields for business activity and tax year change are override fields Figure 43 Com plete these fields only if you want to override the equivalent information entered on screen 1 or screen K General Information Principal business activity code number ef Tax year of change begins 0 0 LL Tax year of change ends Name of applicant if different from filer ID number of applicant if different from filer Name of contact person a l vansi nason gjaanhoge gymhar EET T meme mentes Figure 43 Override fields in the General Information sections of the Parts I III screen Not all applicants are eligible to use the automatic change request procedures After answering la 1b and 2 in Part I Information for Automatic Change Request click the blue Parts II IV tab at the top of the screen In Part II Information for All Requests answer question 3 see Figure 44 on pag
91. l balance plus the xls suffix assigned to all Excel files as shown in Figure 32 IDrakell1 TBNEntityNamelTB xls File location Name of client TB indicates Excel file trial balance file extension Figure 32 Example of trial balance template file name To change the name of a file in Excel select File Save As and assign the new name Tax Year 2011 45 Importing Trial Balance Information Drake Software User s Manual Template The trial balance template consists of three title rows and six columns The Entity Structure Name and Year End title rows can be edited double click a row to change the title Columns are described in Table 4 Table 4 Trial Balance Template Columns Column Description Account Title Title of account Debit Credit Debit and credit amounts Import to Screen and line in Drake to which the debit or credit amount is imported Reported On form page Location of the amount on the printed return schedule and or line Other Information Additional details for preparers see Details for Pre parers on page 49 Displayed at the bottom of the trial balance worksheet are the calculated amount for Schedule M 1 line 1 the credit and debit totals and a cell showing whether or not the balance sheet is out of balance and if applicable the out of balance amount Figure 33 see also Figure 36 on page 48 Y Tr 3 id TT P H Du Vor A7 z ue v Mc E ad AL Ton dT LIS VT Sal
92. ldings and other depreciable assets b Less accumulated depreciation esse eesesseses N 17 EE i Kee eS b Less accumulated depletion es es see ees eee A wt de te mad er DO Figure 13 Data entered on the Other current assets line will be attached as an e fileable statement and referenced on the applicable line of the return SCH2 and Typically one or more SCH2 detail screens are needed for Schedule L items If using Trial Balance Drake s trial balance import feature be aware that SCH2 data cannot be entered directly into the trial balance worksheet as they cannot be imported into the data entry SCH2 detail screens must be created apart from the trial balance worksheet 28 Tax Year 2011 Drake Software User s Manual Schedules M 1 M 3 Reconciliation of Income When the return is produced Schedule L reflects the amounts imported from the trial balance worksheets where direct entry was allowed For more information see SCH2 Detail on page 50 Autobalance Autobalance forces Schedule L to balance for both the beginning and end of year amounts The program adjusts the capital account on Schedule L by the difference between the total assets and the total liabilities and capital before the adjustment Example If Assets 1 000 and Liabilities and Capital 900 the program increases the partners capital accounts by 100 To deactivate this feature for a specific return go to the PRNT screen and s
93. low of Information Many entries made elsewhere on the return for example inventory information on screen A flow to the generated Schedule L Depreciable asset information intangible assets and amortization from the 4562 screen also flow to Schedule L Direct entries on screen L include beginning and end of year Cash Trade notes and accounts received and U S government securities Schedule L data would come from the partnerships income statement balance sheet and equity and capital accounts The SCH2 Screen Tax Year 2011 The SCH2 screen is used to provide detailed information required by the IRS for cer tain lines on Schedule L This screen can be used in place of the actual L screen in Drake In other words if you use this screen for all applicable lines on Schedule L you do not need to make any entries on the L screen To create a statement for a line select the line from the drop list see Figure 13 and enter descriptions and their corresponding amounts Once the information is entered 21 Schedule L Balance Sheets Per Books Drake Software User s Manual or if additional descriptions are required for the line press PAGE DOWN to access a new screen All line selections are carried to the next year program when the returns are updated Screen descriptions are updated with the year end NOTES amounts carried to the beginning of year column To access the SCH2 screen from the L screen click the SCH2 Screen hyp
94. luding Schedule M 3 Additional information could be required on the 8916 and SCH3 screens The SCHS3 screen is used to provide detailed information required by the IRS for cer tain lines on Schedule M 3 or Form 8916A This screen can be used in place of the actual M3 screen in Drake In other words 1f you use this screen for all applicable lines on Schedule M 3 or Form 8916A you do not need to make any entries on the M3 and 8916 screens The total amounts entered on the SCH3 screen do not show up on the actual M3 and 8916 screens in the program They are however printed on the return as applicable with references to the corresponding statements To create a statement for a line select the desired line from the drop list then enter descriptions and their corresponding amounts Once the information is entered or if additional descriptions are required for the line press PAGE DOWN to access a new screen N ITE All line selections are carried to the next year program when the returns are updated As with the SCH2 screen the type of statement produced by the program depends on the selected line and the IRS requirements See The SCH2 Screen on page 27 for more information Schedule M 2 Analysis of Partners Capital Accounts Schedule M 2 is used to show what caused changes during the year in the partners capital accounts The amounts on Schedule M 2 should equal the total amounts reported in item L of all the partners
95. n Two types of supplemental information can be added to Schedules K 1 e Supplemental data for all K 1s in a return e Supplemental data for a single K 1 in a return To add supplemental information globally to all K 1s enter the information in the Supplemental Information block of screen K1G To add supplemental information to an individual K 1 open a partner s K1 screen and click the Supplemental Info link at the top of the screen In the Supplemental Infor mation pane Figure 11 enter information pertinent to the partner Drake 2011 Data Entry 414141414 Partners in Grime Cleaning K4 K1 cont d Basis Wks Supplemental Info 8805 Item M K15 Supplemental Information for Schedule K 1 400006666 Amelia Carter Use the K1G screen to enter global supplemental information for all K 15 Enter specific information for a single K 1 here Information entered here is added to global supplemental information entered on K1G screen Supplemental Information Se hy T0 505 AA ma T Figure 11 In this example the information entered on the K1S screen appears only the individual s Schedule K 1 Item M If the answer to Schedule K 1 item M Did the partner contribute property with a built in gain or loss is Yes for all partners e Select Yes in the Item M on Schedule K 1 section of the PRNT screen 22 Tax Year 2011 Drake Software User s Manual Schedule K 1 for 1065 Partne
96. n the PIN screen an entry here overrides the Tax Matters Partner information on screen B e By going to the KIL screen and entering the name and title of person signing the letter an entry here overrides both screen B and the PIN screen NOTE If nothing is entered in any of the fields referenced above the signature block will contain name of the partner on the first K 1 Producing Ifno default has been set in Setup gt Options gt Optional Documents to produce K 1 Letters fora cover letters with all returns you can take the following steps to generate letters for a Single single return Return 1 Open the return and go to screen KIL 2 Atthe bottom of the screen enter the name and title of the person who will be signing the K 1 cover letter Once the required signing information has been entered a K 1 cover letter will be generated for each person receiving a K 1 Editing the As with other letters provided by the program you can edit the text to suit your office K 1 Letter needs and style Review the following sections of the Drake Software User s Manual TIP Tax Year 2011 before making changes to letter templates Introduction to Letters in Drake in Chapter 2 Installation amp Setup The Letter Keywords section of Appendix C Keywords To edit the text of the K 1 letter 1 From the Home window select Setup gt Letters The Client Communications Editor is displayed 26 Tax Year 2011 Drake Softwar
97. nd attachments for partnership returns This section provides instructions for completing this form and related schedules and attachments in Drake In some cases Form 3115 must still be paper filed See Parts and Ill starting on page 54 for details Applicants filing Form 3115 must refer to the Internal Revenue Bulletins NOTES available at www irs gov to determine if the IRS has published an accounting method revenue procedure revenue ruling notice regula tion or other guidance relating to the specific method to be changed See Pub 538 Accounting Periods and Methods Accessing Screens for Changing Accounting Method Several screens may be required to complete Form 3115 These screens are accessible from the Change in Accounting Method box located under the first Other Forms tab of the Data Entry Menu The screens accessible from the Change in Accounting Method section include e Screen 3115 Change in Accounting Method Used to access fields for Form 3115 including Schedules A through D e Screen 311E Schedule E Used to request a change in depreciation or amorti zation methods e Screen ATT Explanations and Attachments Used to create and view cer tain attachments to be generated by the software e Screen ATT2 Pt II Ln 12 amp Pt III Ln 23b Attachment Used to complete certain parts of Form 3115 that require specific attachments Multi form All 3115 and related screens contain a Multi form code te
98. nt includes the election title election wording and any additional information required for the election such a date amount or location Entries for certain fields are sometimes included in the actual election statement other times they are included as separate lines Signature lines are printed as needed on some statements Making Changes on the Fly Use the PRNT screen to override program defaults 36 Tax Year 2011 Drake Software User s Manual Making Changes on the Fly Suppressing Forcing Documents 1065 Items K 1 Items Tax Year 2011 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 options that are set up globally in Setup The following Form 1065 items can be forced or suppressed from the PRNT screen Force Schedules L M 1 M 2 amp K 1 Section L Schedules L M 1 M 2 and K 1 Section L are not printed unless required To have these schedules printed with the return select Force Schedules L M 1 M 2 amp K 1 Section L Print Form 8893 Election of Partnership Level Tax Treatment Select this box to generate Form 8893 with the return There is no equivalent 8893 screen but the form is produced All information for the form is available from other data entry screens Print Form 4562 Form 4562 Depreciation and Amortization is not generated unless applicable Select this box to force the Form 4562 to be
99. nta Returns and Allowz State drop lists Outside to within LUE W hintowilhin 1 Within to US Gov MIN Whee eee ee N mun a re ot aie eh Lm Figure 7 New APPT screen APPT Screens The new APPT screen is 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 Figure 7 These screens and their uses are listed in Table 1 Table 1 APPT Screens Screen Information Sales Select state enter sales returns and allowance and other income related information for each selected state Tax Year 2011 17 Additional Information Drake Software User s Manual Table 1 APPT Screens Screen Information Payroll Enter salary wage commission and labor amounts for each selected state Property Enter beginning and ending amounts of common apportion ment factors plus select additional apportionment factors from drop lists Additional Property Select additional apportionment factors from drop lists The Ending amount entered on the Property and Addition Property N DTE screens in Drakell will become the Beginning amount for property on the APPT screen when the client s return is updated next year in Drake12 You may enter up to four states on one APPT screen If you need more than four states press PAGE DOWN for a new APPT screen The same state can be entered more than once when additional fields are n
100. number Press CTRL SHIFT S to search activity codes e Box E Date business started 4 Tax Year 2011 Drake Software User s Manual Income and Deductions e Item G Initial final or amended return address or name change technical ter mination A technical termination occurs when there has been a sale or exchange N TE of 5096 or more of the interests in partnership capital and profits within a 12 month period On screen 1 in Drake mark the Technical termina tion box and either Initial Return or Final Return as applicable e tem H Accounting method Select Cash Accrual or Other if Other enter a description of the method used e Item I Number of K 1 forms attached Completed automatically based on the number of K1 screens filled out Use screen 1 to override this number Income and Deductions Enter income and deductions on the INC Income and DED Deductions screens INC screen amounts flow to Form 1065 page 1 lines 1b to 7 Also see Other Income Loss on page 7 DED screen amounts flow to Form 1065 page 1 lines 9 through 20 Other income and Other deductions data is shown on attached state ment STM worksheets in View mode of the return Schedule K Commonly used fields from Schedule K including fields for income dividends char Items itable contributions and distributions are provided at the bottom of the INC screen pur ee EE ON T ee S ae Farm 1065 Schedule K Most Common
101. o ow n Officer compensation nat including selling activities s ecc ER ER AR ER ME Pension and other related coste s s Ma e n on om on on on mon on mon mom mon mom om o o o MM a eo d Figure 45 X was selected for column 1 line 1 B was selected for column 1 line 2 nothing has yet been selected for any other line See also Figure 46 To attach a statement for section B or C click the D3 2 Attachment link at the top of Section B See Figure 46 A single statement may contain all necessary explanations for sections B and C Parts I ll Parts Il IV A B C D Parts 1 Il D Part Ill Form 3115 Schedule D Part Ill Method of Cost Allocation Multiform code Section A Allocation and Capitalization Methods D3 1 Attachment Allocation and capitalization methods detail Section B Direct and Indirect Costs Required To Be Allocated D3 2 Attachment Explanation for boxes that are not checked X Check B Blank No Selection N A Present Proposed TEOREEM ee E a cae og E M I I Ve x z 2 burn kan coro o EI d Mum ET E TIe ea D a e ee Im CM EE ON gt AES 4 E UO SE n n SAG E elling eS rere TUNES EL EE a N gt T Figure 46 If any box is marked B click the D3 2 Attachment link to open the ATT screen and complete the fields for an attached statement 58 Tax Year 2011 Drake Software User s Manual Form 3115 Application for Change in Accounting Method S
102. ocations on page 24 Section 179 expense is not included on Form 4562 line 22 nor is it carried to line 16a of Form 1065 It is instead reflected on line 12 of Schedule K and distributed to each partner on Schedule K 1 To reclassify an asset from depreciation to amortization 1 Open screen 4562 for the asset 2 From the Method drop list select AMT Amortization Income and Deductions Drake Software User s Manual 3 Complete the applicable fields in the Amortization Information section located near the bottom left corner of screen 4562 Depletion Enter depletion amounts on the DED screen Omit timber use Form T Forest Activi ties Schedules and oil and gas properties Depletion should be figured for each part ner Retirement Plans Use the DED screen to enter amounts for line 18 Retirement plans etc See the IRS instructions for guidance on what costs are acceptable for this line The software reduces the expense based on the credit amount calcu NOTE lated from Form 8881 Credit for Small Employer Pension Plan Startup Costs IRA for If the partnership contributes to an IRA for employees include the contributions in Employees salaries and wages on either the DED screen Salaries and wages line or screen A Cost of labor line Payments to Do not use line 18 of the DED screen to deduct payments for partners to retirement or Partners deferred compensation plans IRAs qualified plans and Simplified
103. on In NOTE addition exclude amounts not attributable to the change in method of accounting for example amounts that correct a math or posting error or that correct errors in calculating tax liability The IRS requires a worksheet for lines 1a 1c 1d le and 1f of Schedule A When you enter an amount on any of these lines in Drake a Ctrl W worksheet is automatically opened allowing you to begin entering the descriptions and amounts of multiple items for the worksheet When you close a Ctrl W worksheet the program returns to the original screen and displays the total in the field The field is shaded default is red to indicate that a Ctrl W worksheet has been used NOTE If nothing is entered in a Schedule A field the program automatically displays the word NONE in the field on the generated form This section has just two lines both referring to the request for deferral for advance payments e Line 1 Request change to the deferral method for advance payments from sec tion 5 02 of Rev Proc 2004 34 e Line 2 Request change to the deferral method for advance payments from sec tion 1 451 5 b 1 i1 See IRS Form 3115 instructions for more information on making these requests Tax Year 2011 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Schedule C Schedule D Parts and Il Schedule D Part Schedule D Part Il Schedule D Part Ill Tax Year 2011
104. on overrides what is setup in Overrides the Custom Paragraph option selected in Setup gt options Options gt Billing Date to be printed on bill Overrides the default date the present date Drake Software User s Manual Supplement Partnerships Index Numerics 52 53 week year returns 39 A accounting method changing 39 53 entering on 1065 5 accrual accounting method 5 address change of 5 e mail 17 entering on Form 1065 4 foreign 21 on K 1 letter heading 26 out of state 18 adjusted basis worksheet 22 23 24 37 adjustment fields guide to 19 adjustments depreciation 29 to income and expenses 34 allocations section 754 24 special screen SA 21 24 alternative minimum tax AMT 19 amending a 1065 return 5 14 and TEFRA audit rules 14 K 1 letters 27 amortization 11 13 27 analysis of capital accounts Schedule M 2 31 asterisks on K 1 codes 20 attachments binary 40 43 Form 8825 33 to Form 3115 53 57 59 auto balance 29 38 44 B bad debts 7 9 bankruptcy returns e filing not allowed for 38 basis 23 24 see also adjusted basis worksheet book to tax differences Schedule M 1 29 30 business activity codes 4 Tax Year 2011 Index C calendar year returns 4 13 cash accounting method 5 9 56 change of name or address 5 charitable contributions 5 Client Communications Editor for letters 26 codes business activity 4 error reject 40 K 1 20 37 miscellan
105. orksheets 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 Adiustments Worksheet Screen Line Field Name Location of Information Being Adjusted 1065 NC Income and Common Schedule K Items Interest income Adjust amounts flowing from Form 6252 U e D a D Q O c o o UO m UO UO D Q c O o zi T T1 o 3 b e Oi 3 Depreciation Adjusts the amounts coming from Form 4562 Adjusts amounts coming from Sch A and Form 4562 for forms Depreciation claimed elsewhere on return other than the 1065 16a 16b o chedule K Income Deductions amp Self Employment Screen 1 of 2 Adjusts amounts that flow from screen 3 line 10 and K1P screen line 4 Adjusts amounts being carried from screen K1P line 5 K1F line 1 screen 3 line 5 and interest entered on 6252 screens Adjusts ordinary dividends flowing from screen 3 line 6a K1P A Guaranteed payments Interest income Ordinary dividends screen line 6a and K1F screen line 2a Adjusts ordinary dividends flowing from screen 3 line 6b K1P Qualified dividends line 6b screen N Royalties Adjusts amounts entered on K1P screen line 7 Adjusts amounts flowing from the K1P screen line 9b and the K1F screen line 4b Adjusts amounts flowing from the K1P screen line 11
106. osts e Form 8844 Empowerment Zone and Renewal Community Credit e Form 8912 Credit to Holders of Tax Credit Bonds e Form 8941 Credit for Small Employer Health Insurance Premiums The ability to make certain tax elections is included in the business packages Elec tions are selected from the Return Elections section of the ELEC screen Figure 19 Return Elections Election s Desaiptiom ssnsns nc Cost basis amount years Date or year ending Other cost basis or amount Other date or year ending ET o nen E ee eee ones Other information Explanation e Figure 19 Return Elections portion of ELEC screen Making an Election in Drake Tax Year 2011 To indicate that the partnership 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 Return Elections El e een 01 General Election Statement 02 Capitalize and Amortize Circulation Costs over 3 Years Cost basis amount years 03 Capitalize and Amortize Research and Experimental Desciplion 1 04 Capitalize and Amortize Intangible Drilling and Development ES nd gae Rd of EE nn Figure 20 Election drop list 35 Making Changes on the Fly Drake Software User s Manual 3 Complete all other fields as applicable Press F1 in any fiel
107. ount and the amount for the Force Placed in Service and Like Kind Exchange Info Overrides convention determined by the dates of assets placed convention in service during the year Do not use l h Overrides how the system calculates depreciation for the Life end N EE EE SANG and Method columns of the Depreciation Detail Listing DE 4562 Part 1 1 1 Maximum amount if greater than 250000 Overrides the maximum of 179 expense for 2009 of 250 000 on line 1 of Form 4562 2 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 18 Total business income Federal Overrides calculated amount on WK P179L line 4 i O orm 3468 179 expense ALLOWED this year Federal 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 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 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 Overrides the cost entered on t
108. ounts entered in this field automatically adjust the total depreciation that is carried to page 1 For Other costs excluding depreciation use a CTRL W worksheet The depreciation amount is included on the statement for other costs NOTE Line 16b on the DED screen is an adjustment field for depreciation from Form 4562 not entered on screen A Importing Ifusing the trial balance import feature see Importing Trial Balance Information on Trial Balance page 43 enter depreciation amounts directly into the appropriate fields on the trial to SchA balance worksheet not in data entry When the trial balance is imported the COGS depreciation expense amount flows directly to the appropriate line of Form 1125 A 6 Tax Year 2011 Drake Software User s Manual Income and Deductions and is calculated accordingly For more on depreciation and trial balance import see Depreciation on page 50 Ordinary Income Loss Ordinary income or loss from other partnerships estates and trusts line 4 of Form 1065 flows from either screen K1P Schedule K 1 from another partnership or screen K1F Schedule K 1 from a fiduciary Net Farm Profit Loss The partnership s net farm profit or loss line 5 of Form 1065 flows from information entered on screen F Farm Income and Expense Farm profit or loss from other partnerships estates or trusts appears on line 4 of the return To enter this informa tion from the INC screen click the links to scr
109. printed To force Form 4562 for all returns go to Setup gt Options gt Form amp Schedule Options and clear the check box labeled Print Form 4562 only when required Print next year depreciation listing Select this box to print the next year s depreciation schedule if the option is not already selected in Setup gt Options gt Form amp Schedule Options Print inactive return By default the program does not generate a return for a partnership that is inactive Select this option to override the default for an inac tive return PIN To have the preparer s signature appear on the printed copy of return enter the preparer s PIN here Items to Suppress Select the boxes corresponding to any worksheets forms or functions to be suppressed in the return ATT PTL Taxes and Licenses Attachment or the ATT PSW reference on page Estimated Tax Payment Summary Printing of WK M2 Partners Capital Reconciliation Worksheet Described below are Schedule K 1 items that can be forced or suppressed from the PRNT screen Select to print The partner s adjusted basis worksheet Page 2 of Schedule K 1 codes Select to Suppress Schedule K 1 K 1 letter K 1 ATT or WK PBAS Schedule K K 1 Comparison Worksheet for the Capital Account Reconcilia tion Kl 179 for each partner Marking of Amended K 1 box on printed Schedule K 1 37 Electronic Filing Drake Software User s Manual
110. production activities informa tion NOTES Tax Year 2011 Line 11 Income limitation of the Form 8903 is not applicable for the partnership because the income limitation is calculated at the partner level Form W 2 wages on the 8903 screen refers to the partnership s W 2 wages paid that are applicable to the Domestic Production Activities Deduction 25 Schedule K 1 for 1065 Partner Information Drake Software User s Manual K 1 Cover Letters K 1 cover letters can be produced to accompany each Schedule K 1 in a return You can set up the global option to produce K 1 cover letters for all returns containing K 1 schedules or you can choose the option on a per return basis To prevent the partnership s name and address from being generated in the header of the letter go to the K1L screen and mark the Do not TIP print entity information box You must first select the Use Firm Info on Letters box at Setup gt Letters gt Setup gt Letterheads and Mar gins for any entity info to appear as a header Producing To have the K 1 cover letters produced automatically with all applicable returns go to Letters for Setup gt Options gt Optional Documents and mark the box labeled Include K 1 let All Returns ter with returns The signature on the return can be indicated in one of three ways e By completing the Tax Matters Partner fields at the bottom of on screen B Schedule B e By completing the partner information o
111. r Information e On screen KIG select KIM Built in Gain Loss Statement from the drop list and type any supplemental information needed in the text box below If the answer is Yes for some partners but not others use the individual partners Item M screens to report the supplemental information The Item M screen is accessed by clicking the 8805 Item M tab at the top of any partner s K1 screen The supplemental information should list each property the partner contributed the date the property was contributed and the amount of the property s built in gain or loss Partner s Adjusted Basis Worksheet Increases and Decreases to Basis Annual Update of Partner Information Entering Other Partner Data Tax Year 2011 Basis information for individual partners should be entered in the 1040 NOTE package in Drake this information cannot be exported from the 1065 package to a 1040 return Such an import would override limitations and carryovers calculated in the 1040 program Use the Partner s Adjusted Basis Worksheet Basis Wks screen to calculate a part ner s new basis after increases or decreases are made to basis during the current year A partner s adjusted outside basis refers to the partner s investment in a partnership The basis is determined without considering any amount shown in the partnership books as capital equity or similar account When a partner disposes of an interest in a partnership
112. r returns updating 3 R real estate 51 receipts 6 Tax Year 2011 Index refunds state 7 reject codes 40 rent paid on business property 9 rental activities 31 34 repair costs 9 resident state 16 18 retirement plans 12 returns 52 53 week year 39 bankruptcy 38 extensions for 13 fiscal and calendar year 4 inactive 39 short year 4 signing 13 tax exempt organizations 990 40 43 updating prior year 3 S scanning attachments for e filing 40 Schedule A Cost of Goods Sold 6 7 Schedule B Other Information 15 Schedule D Capital Gains Losses Built In Gains 9 Schedule D Form 3115 57 Schedule E Change in Depreciation or Amortization Form 3115 59 Schedule E Form 3115 59 Schedule K Partners Distributive Share Items 5 19 Schedule K 1 Partner Information 19 23 Schedule L Balance Sheet per Books 27 29 37 Schedule M 1 Reconciliation of Books With Return 37 Schedule M 1 Reconciliation of Books 29 Schedule M 2 Analysis of Capital Accounts 31 Schedule M 3 Net Income Loss Reconciliation 30 section 179 11 23 481 7 754 11 24 self employment income 34 SEP or SIMPLE plans 12 short year returns 4 signatures electronic 13 special allocations screen SA 21 24 state overriding information related to 18 resident 16 tabs in data entry 17 tax refunds 7 state specific information 16 T tax vii Index returns see returns years fiscal vs calendar 4 Tax Equity and Fiscal Responsibilit
113. r s info as Tax Matters Partner by City default _ State ZIP Overrides the selected partner s info as Tax Matters Partner by default I N ime PostalCode oe the selected partner s info as Tax Matters Partner by TH o lo AY ck 2 D 7 2R lo Schedule K Partners Distributive Share Screen 1 of 2 EE EE N CREER 13d M Amount paid for medical insurance Overrides amounts being carried from screen 3 line 10 Net earnings from self employment Overrides the calculated on WK_SE Adjusts amu from K1P screen line 14 code B K1F screen 14b Gross farming fishi Overrides the calculated amount as follows Form 1065 line 8 chedule K Alternative Minimum Tax screen 2 of 2 l Overrides amount calculated by the program based on the 2 Ai EDE OF par EL EDE EER ele selection made in the Type of Partner section of the K1 screens Overrides amount calculated by the program based on the 2b K Analysis by type of partner Limited Partners selection made in the Type of Partner section of the K1 screens elf Employment Earnings Loss Worksheet o o Overrides amounts on Schedule K line 2 Form 8825 which flows to worksheet for figuring Net Earnings Loss From Self Employment line 1b when selected on the 8825 screen Net income loss from certain rental real estate activities if different from the amount on Sch K line 2 id Ne loss from Form 4797 Part Il line 17 included on oid N
114. reen 3 line 16c 19A EA EE mana EE Adjusts amounts flowing from the bottom of screen 3 line 19A and from the K1P screen line 19 code A 19B Distributions subject to section 737 Adjusts amounts flowing from K1P line 19 code B 1 1 1 19C Distributions of other property ram amounts being carried from screen K1P line 19 code Adjusts amounts being carried from screen K1P line 20 code A and K1F line 14 code E Adjusts amounts being carried from screen K1P line 20 code Investment expenses B Adjusts amounts being carried from screen K1P line 20 code Fuel tax credit C Recapture of other credits Adjusts amounts flowing from the K1P screen line 20 code I Adjusts the amounts flowing from the WK 179 net gain or loss 8 8 8 0 0 2 2 20 B C C A B C Ol 2 20L Dispositions of prop with sec 179 deduction on sale of an asset subject to section 179 and the K1P screen line 20 code L Adjusts amounts flowing from Form 4797 line 35 and screen Recapture of section 179 deduction KAP line 20 code M Interest expense for corporate partners Adjusts amounts flowing from screen K1P line 20 code N Section 453 l 3 information Adjusts amounts flowing from the K1P screen line 20 code O Section 453A c information Adjusts amounts flowing from the K1P screen line 20 code P b Adjusts amounts flowing from the K1P screen line 20 code Q Adjusts amounts flowing from the K1P screen line 20 code R
115. rship Interest ee Overrides the information that flows from Schedule K 1 Partner before the transfer Name and Address Information SG ed ee and Address Information Ge ed the transfer Name and Address Information orm 8716 Election to Have a Tax Year Other Than a Reguired Tax Year Date of required tax year Overrides calculated date based on return type election orm 8804 Annual Return for Partnership Withholding Tax Overrides calculated number of foreign partners from K 1 3a Number of Foreign Partners l screens when Foreign partner check box is marked Fo EG or section 1446 genas Pane WP and Overrides amount of quarterly payments from Forms 8813 amount credited from last year C2 Overrides amount flowing from Form 3115 section A line 1h Th TH i Th Form 8822 Change of Address 6 New mailing address Overridesentyonscreenid 8 Dayimephonenumber JOveridesentyonscreenid Form 8873 Extraterritorial Income Exclusion ME 7 45 Part IV line 45 Overrides calculated results for line 42 override and enter i amounts from lines 33 36 38 or 44 orm 8925 Report of Employer Owned Life Insurance Contracts Type of business Overrides information entered on screen 1 Th O lient Bill Adjustments and Payments Mad AE EE Ee OS EG the billing option selected in Setup Options Custom paragraph opti
116. ry 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 All does not import notes are accompanied by further instructions in the column to the left of the Other Information column as shown in Figure 39 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 ne cret wmpott Reportedon Other Information T uen at natos or ENE saal Mare d my 3 ro OF ah n CN aw EN su M A Ae f ains pasi dm de sms Deem S w ad Mad AA 4 em am _ 7 t MIS v aa M E 3 pe s kd TT TE w ene F E EN Tax exempt securities ET wj B lin 5 pif d Other current assets 0 Mortgage and real estate loans 0 Other investments 0 Buildings and other depreciable assets 0 L line 9a col c 1065 page 5 line 9a col c optional Accumulated depreciation 0 L line 9b col c 1065 page 5 line Sb col c optional Depreciation 50 Figure 39 SCH2 screen required for does not import items To complete an SCH2 detail screen in data entry 1 Open the SCH2 screen for the return 2 Select the line number from the SCH2 drop list
117. screen There is no limit to the number of partners than can be entered If there are more than 10 partners for whom you must enter special allocations or an allocation type that must be allocated to more than 10 partners press PAGE DOWN for a new SA screen To allocate section 754 depreciation among specific partners Indicate an amount of section 754 depreciation using either but not both of the following methods e On screen 4562 select 754 from the For drop list e On screen K line 13d code W Section 754 depreciation enter the amount of section 754 depreciation to be reported to the partners 2 Allocate the amounts You can do this using either the K1 screen or the SA screen but not both e K1 screen On line 13 Other deductions select code W and allocate the amount of section 754 depreciation for that partner For any partner not receiving an amount for section 754 depreciation the code and a zero 0 must still be entered A statement will still be produced for that partner e SA screen Select item 148 Line 13 W Other deductions from the Allocation type drop list Tax Year 2011 Drake Software User s Manual Schedule K 1 for 1065 Partner Information Drake 2011 Data Entry 414141414 Partners in Grime Cleaning Partner Special Allocations NOTE Allocation type 148 Line 13 W Other deductions Allocation Method If no allocation method is chosen no amounts or percentages will b
118. ship Changes on page 20 Tax Year 2011 Drake Software User s Manual Updating a Prior Year Return in Drake Book Depreciation Schedules A book depreciation schedule will now be printed when the Carry book accumu lated depreciation and amortization to Schedule L check box is marked on the L screen Adjustment and Override Worksheets The Adjustment Worksheet and Override Worksheet are updated each year to help you understand what happens in the return when certain data is changed through the use of adjustment or override fields Figure 1 Book to tax depreciation adjustment 4 0 S 4o eod a p sts Book to tax amortization adjustment A OT re OE ABR TT ERU I T e gee Figure 1 Adjustment and override fields By default fields that allow overrides are preceded by an equal sign and display red text Data entered in these fields replaces or overrides program calculations Fields that allow adjustments are preceded by a plus minus sign and display blue text Data in these fields adjust program calculations by the amount entered A posi tive number increases the calculated amount a negative number decreases it The Adjustment and Override worksheets are available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the links at the top of the window Updating a Prior Year Return in Drake If you prepared the tax return in Drake last y
119. state data entry select the States tab from the return menu and select the desired states for state specific screens or type the two letter state code in the selector field and press ENTER Multi State New for 2011 Enter sales payroll and property factors on the APPT Multi State _Appor Apportionment screen accessible from the States tab or by entering APPT in the tionment selector field and pressing ENTER This screen provides one central location for enter ing all state apportionment information instead of having to open each needed state s screen In addition to making data input faster and easier the new feature provides two new worksheets a summary worksheet SA SUM that can be used for verifying input and a reconciliation worksheet SA REC that ties the total of the state amounts to the federal return figures These worksheets are available in View mode The individual state apportionment screens will continue to be available in Drakell but will be used to override data entered on the APPT screen No state apportionment related screens will be updated from Drake10 to Drakell Screen links Drake 2011 Data Entry 212121212 PATS PACKAGING Sales Payroll Property Additional Praperty State Apportionment Sales Factor State Selection Sales Outside state to inside state EE Required field Within state to within state ss Within state ta U S Government AE Throwback no
120. tached using any filename When you attach the document the program automatically assigns it the filename required by the IRS When the return is generated an EF Attachments worksheet is produced See Figure 50 This worksheet shows in table format the Reference section of Form 3115 the Description and the IRS required Filename of each required PDF docu ment This worksheet is displayed as EF PDF in View mode KEEP FOR YOUR RECORDS Bee EF Attachments Name of corporation PARTHERS IH GRIME CLEANING Reference Description Filename 3115 III Line 20 Proposed Change Documents ProposedChangeDocuments pdf 3115 A I Line 3 Proposed Change Documents SchAPartIProfitLossStatements pdtft oe NT PM a Meam uai N Er OE n ani M dime b do anl m a hs Figure 50 Example of an EF Attachments worksheet 6l Form 3115 Application for Change in Accounting Method Drake Software User s Manual Notices of Missing Attachments 62 In addition to Form 3115 and related schedules and statements the program produces EF message pages as applicable when the return is calculated All forms schedules EF message pages and worksheets are accessible from View mode EF messages for Form 3115 provide information about required attachments includ ing PDF attachments that are missing from the return Some messages list all state ments required for a particular section but do not indicate which statements specifically are missing
121. the PIN screen Phone and e mail are not required Form You must receive the completed and signed Form 8879 PE before the return is e filed 8879 PE This form must be kept in the tax office for three years from the return due date or IRS received date whichever is later Amending a Return When you amend a return in Drake the amended information replaces the original in the data file Before amending a return you CAUTI ON should archive the original to avoid losing previously submitted data For more information on archiving returns see Archive Manager in Chapter 6 Return Results of the Drake Software User s Manual Tax Year 2011 To file a 1065 return that has been amended 1 Go to screen 1 in data entry and select Amended return in section G Make changes as applicable to forms and schedules Go to the EF screen and select Amended 1065 in the left hand column Go to the SCH screen and complete the following fields ani ds e Statement number Type 1B e Title Enter a statement title of 28 or fewer characters Explanation text box Identify the amended items by line number and explain what was changed and why If amending just the K 1s go to each K1 screen select Amended K1 and make needed changes When amending a 1065 return all K 1s are amended and the NOTE Amended K 1 box on the return is marked by default To override this default go to the PRNT screen and mark Do NOT check amended
122. the income totals on the trial balance sheet and the expense totals on the applicable detail sheets Figure 41 Ensure that the balance sheet is in balance Import the trial balance worksheet into the return The applicable screens in data entry now contain the figures entered on the trial balance worksheet Compare the M 1 line 1 amount on the trial balance to the M 1 line 1 amount on the calculated return to ensure that they match If the amounts do not match review the imported amounts to ensure that all data was imported If the data appeared to have been imported correctly an M 1 adjustment could be necessary Complete all 8825 or RENT screens in data entry as applicable for the individual rental properties or items Delete the 8825 and RENT screens that were imported from the trial balance the screens reflecting the total rental expenses To delete a screen in data entry open the screen and press CTRL D If a multiple forms list appears ensure that the screen to delete is selected then click Delete Tax Year 2011 Drake Software User s Manual Form 3115 Application for Change in Accounting Method Form 3115 Application for Change in Accounting Method Form 3115 Application for Change in Accounting Method is an application to the IRS to change either an entity s overall accounting method or the accounting treat ment of any item Drake customers can now fill out and e file certain Forms 3115 and related schedules a
123. tic entity corporation partnership or trust owns directly or indirectly an interest of 50 or more in profit loss or capital of the partnership use the Line 3a section of screen B1 to enter the entity s name EIN type country of orga nization and maximum percentage owned in profit loss or capital If an individual or estate owns directly or indirectly an interest of 50 or more in profit loss or capital of the partnership use the Line 3b section of screen B1 to enter the individual or estate s name ID number country of citizenship and maximum per centage owned in profit loss or capital If the partnership owned directly an interest of 20 or more or owned directly or indirectly 50 or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation use the Line 4a section of screen B4 to enter the corporation s name EIN country of incorporation and percentage owned in vot ing stock If the partnership owned directly an interest of 20 or more or owned directly or indirectly an interest of 50 or more in profit loss or capital in any foreign or domestic partnership or in the beneficial interest of a trust use the Line 4b section of screen B4 to enter the entity s name EIN type country of organization and maxi mum percentage owned in profit loss or capital If question 6 on screen B is answered Yes Schedules L M 1 M 2 and Section L of Schedule
124. to enter interest expense amounts Do not include interest expense on the following e Debt required to be allocated to the production of qualified property Income and Deductions Drake Software User s Manual e Debt used to buy rental property or debt used in a rental activity e Debt used to purchase property held for investment e Debt proceeds allocated to distributions made to partners during the tax year Self Charged Self charged interest rules see Form 1065 instructions do not apply if a partnership Interest elects under Reg section 1 469 7 g to avoid the application of them If the partner ship is making this election a statement must be attached to the return To attach the statement 1 Open the SCH screen 2 Inthe Statement number field type 03 3 Assign a title such as Self Charged Interest no quotation marks needed 4 Enter the following data each on a separate line e Partnership name e Street address U S only e City U S only e Two digit state code U S only e ZIP code U S only e EIN e REGULATION SECTION 1 469 7 G DECLARATION no quotation marks needed Do not mark the In house note check box at the bottom of the SCH screen You can also find these instructions by clicking F1 in the Statement number field on the SCH screen For more information on self charged interest rules see the Self Charged Interest section of the Form 1065 instructions NOTE Using the SCH screen for this statement will
125. toolbar A list of SSNs that cannot be exported appears as applicable Figure 9 K1 Export Utility This screen gives a printable list of client SSM that cannot be exported Click the PRINT button to print this list Click the NEXT button to continue 400006666 Amelia Carter Client File Does Mat Exist 212121212 Pat s Packaging Client File Does Not Exist B dele o as alia ia el FT Lr HYT N FM Lu hE a N ee N as cams F Figure 9 SSNs that cannot be exported 4 Click Next to continue The Export K1s dialog box Figure 10 on page 22 lists all client SSNs that can be exported To prevent an item in this list from being exported remove the check mark to the left of it Tax Year 2011 21 Schedule K 1 for 1065 Partner Information Drake Software User s Manual K1 Export Utility This screen gives a selectable list of client SSNs that can be exported Click the EXPORT button to export this list Click the EXIT button to exit without exporting 400006665 william Carter B aos itis anime ism B Figure 10 SSN ready to be exported 9 Click Export The K 1 data will now appear the partner s 1040 tax return Basis information for individual partners should be entered in the 1040 NOTE package in Drake this information cannot be exported from the 1065 package to a 1040 return Such an import would override limitations and carryovers calculated in the 1040 program Supplemental Informatio
126. u can readily find it Many types of documents for instance documents created in Microsoft NOTE Word can be printed or saved as PDF documents if you have a PDF printer such as Adobe Reader installed Adding PDF To indicate in the software that a PDF document will be sent with the return Documents in Drake 1 Open the return in Drake and go to the PDF Attachments screen accessible from the Electronic Filing section of the General tab 2 Fill out the columns on the PDF Attachments screen See Table 3 for examples Table 3 PDF Attachment Window Columns Reference Source Name or number of regulation IRS Pub xxx 1 4 publication or form instruction that Form Instructions for 1065 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 Attachments window Because you ve indicated that a PDF document is attached the program generates an EF message regarding the attachment when the return is calculated Attaching To attach a PDF file to a return Documents to the Return 1 From the return click View If anything was entered in the PDF Attachments window see Adding PDF Documents in Drake previously there will be two PDF related items in the View Print window e An EF Message
127. ule M 3 The Schedule M 3 section of the Data Entry Menu now includes direct access to the various M3 screens Figure 14 Schedules M M1 Reconciliation of Income M2 Partners Capital Schedule M 3 M3 Part M32 Partll M33 Partll C Schedule C for M 3 Filers M3S Parti Supplemental Statements SCH3 Subsidiary Schedule 89164 Supplemental Attachment Figure 14 Data Entry Menu for M and M 3 schedules If a domestic partnership reports on Form 1065 Schedule L that its total assets at the end of its tax year equal or exceed 10 million or that its gross receipts equal or exceed 250 000 it must complete and file Schedule M 3 instead of Schedule M 1 The program calculates total assets based on IRS requirements For more information see the Adjusted Total Assets Worksheet produced N DIES with the return Some calculated amounts flow automatically to M 3 some data must be manually entered on the M3 screen Review all amounts on the M 3 30 Tax Year 2011 Drake Software User s Manual Schedule M 2 Analysis of Partners Capital Accounts The SCH3 Screen Parts II and III of Schedule M 3 reconcile financial statement net income loss for the tax return per Schedule M 3 Part I line 11 to net income loss on Form 1065 page 5 Analysis of Net Income Loss line 1 If the partnership is required to file or voluntarily files Schedule M 3 the partnership must file Form 1065 and all attachments and schedules inc
128. unt HSA 9 importing trial balance 43 52 inactive returns 39 income 5 7 increase to basis 23 instructions for filing 38 insurance and contributions to benefit plans 12 entering deductible payments for 8 proceeds income from 7 interest expense 9 income 7 ownership of Schedule B 15 16 inventory on Schedule A Cost of Goods Sold 6 IRAs 12 Item M on Schedule K 1 22 K K 1 Schedule for 1065 19 23 L letters K 1 26 M item on Schedule K 1 22 maintenance costs 9 medical care for employees 12 Tax Year 2011 Drake Software User s Manual Supplement Partnerships Multi State Apportionment 2 17 N name change 5 net farm profit or loss 7 gain or loss 7 next year depreciation listing 37 number of partners 5 O ordinary gains and losses 7 other costs Schedule A 6 income loss 7 overrides guide to 19 of calculations for partners 21 on screen 18 ownership of interest Schedule B 15 P partners compensation of 8 foreign addresses for 21 guaranteed payments to 8 health insurance for 12 number of 5 returns with numerous 20 Schedule K 1 19 special allocations for 24 updating data annually 23 partnership termination of 5 payments guaranteed 8 PDF 41 PDF documents e filing 40 43 PIN electronic signatures 13 printing 1065 returns 36 adjusted basis worksheets 37 cover letter for K 1 26 force 36 Form 8903 for each partner 25 K 1 items 20 suppressing forcing documents 37 prior yea
129. urns 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 24 Election Options Tax Year Elections ENTER ONLY ONCE 52 53 Week Tax Year Election 1 Month in which new 52 53 week tax year ends 44 Z 2 The day of the week on which the tax year always ends Fr iday bd 3 The date the tax year ends 12730 2011 oa ee m S lee Ao Figure 24 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 9 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 Entities that are inactive but are still required to file returns may e file inactive returns Returns in Drake To indicate that a return is inactive 1 Go to the PRNT screen accessible from the
130. usts amount flowing from screen 80 common credits 5735 and 8834 Client Bill Adjustments and Payments Adjusts amount to be printed on the client s bill corresponds to Adjustments Amount MAT the description on the BILL screen I Tl Tl T1 Tl T1 Tl co Tl T1 co Tl Tl Tl dy Tl Tl Drake Software User s Manual Supplement Partnership This page intentionally left blank Tax Year 2011 Drake Software User s Manual Supplement Partnership 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 1s 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 LT ocreen Line Field Name Location of Information Being Overridden 1065 ek Partnership General Information screen C Number of Schedules K 1 attached Overrides the number of K 1 schedules that are generated Preparerfee JOveridesthesystem sfeecalculation __ po Firm Overrides the program default setting 1 dPreparer
131. wnership changes press PAGE DOWN NOTE See FAQ item P in the program for more information on entering own ership change information Printed Data A Summary of Change in Ownership worksheet WK POWN is generated listing all partners and the ownership percentages and changes IRS K 1 Codes A code sheet can follow the printing of each Form 1065 K 1 to help the taxpayer inter pret the various codes used on Schedule K 1 To have this sheet printed with all K 1 schedules go to Setup gt Options gt Form amp Schedule Options tab and mark the Print Page 2 of Schedule K 1 check box The codes can also be printed by marking the applicable box on the PRNT screen and are available from Tools gt Blank Forms Code sheets are not displayed in View mode If the 1065 K 1 is NOTE selected for printing it is printed first followed by the statements per taining to that 1065 K 1 These are followed by the code sheets The Schedule K 1 may include asterisks with letter codes e An asterisk with a letter code indicates that multiple items have that code or that a statement is required for the code e An asterisk at the bottom of a group indicates that there are more items than can fit in the space provided for that group and a statement is attached or that the state ment is required as in the case of other amounts Returns with Numerous Partners For returns with a large number of partners you have the option of deactivating calcu
132. xt box shown in Figure 42 Codes on page 54 that allows you to link a screen or attachment to a particular Form 3115 If submitting more than one Form 3115 assign a multi form code to each new appli cation you create in Drake The first should be 1 the second 2 and so on When using other screens such as the 311E or ATT screens you can use those numbers to indicate which instance of Form 3115 the 311E or ATT screen should be associated with see Screen 311E Multi form Codes on page 59 for more information NOTE If only one Form 3115 is being submitted you do not need to enter any thing in the Multi form code box Form 3115 Screens When you open the 3115 screen from the Data Entry Menu the program displays the first of five 3115 screens These five screens are Tax Year 2011 53 Form 3115 Application for Change in Accounting Method Drake Software User s Manual Parts and Ill General Information Part Part Il 54 e Parts I III Form 3115 Parts I and IIT e Parts II IV Form 3115 Parts II and IV A B C Form 3115 Schedules A B and C e D L II Form 3115 Schedule D Parts I and IT e D III Form 3115 Schedule D Part III As shown in Figure 42 you can access these 3115 screens by clicking a link at the top of any other 3115 screen Form 3115 Application for Change in Accounting Method Multi form code ae m He E m METTRE NUT eee ptt A A n EE Figure 42 Tab lin
133. y Act TEFRA 14 taxes and licenses 9 technical termination 5 termination of partnership 5 trial balance import and depreciation 6 and SCH2 screens 28 instructions for using 43 52 U updating a prior year return 3 partner data annually 23 V Vista Windows operating system 44 45 48 W wages 8 vili Drake Software User s Manual Supplement Partnerships Tax Year 2011
134. y other line that does not require a detail worksheet NEW FOR Line la Merchant card and third party payments is new for Form 1065 in 2011 however because the IRS requires that a zero 0 be entered on 7 li this line for 2011 the field for line 1a on the INC screen is inactive grayed out Cost of Goods Sold Form 1125 A For cost of goods sold entries complete screen A Form 1125 A Cost of Goods Sold On screen A items 9a through 9f are direct entry fields and follow the NOTE format of IRS Form 1125 A For more information on completing these fields press F1 or consult the IRS instructions Inventory Inventory amounts entered on lines 1 and 7 of screen A automatically flow to Sched ule L line 3 Inventories Note that the inventory fields on screen L Schedule L Balance Sheet Assets are overrides entries here will override inventory data from screen A Line 5 Other Drake provides two fields for line 5 Other costs depreciation and Other costs Costs excluding depreciation Figure 3 Additional section 263A costs Other costs depreciation M Other costs excluding depreciation NE 4 n 5 7 Inventory at end of year 3 9a Methods used for valuing inventory ao pr m ad zal ae e Figure 3 Other costs and depreciation For Other costs depreciation enter any depreciation amounts that relate to the cost of goods sold Am
135. ysis by type of partner Limited Partners selection made in the Type of Partner section of the K1 screens elf Employment Earnings Loss Worksheet o o Overrides amounts on Schedule K line 2 Form 8825 which flows to worksheet for figuring Net Earnings Loss From Self Employment line 1b when selected on the 8825 screen Net income loss from certain rental real estate activities if different from the amount on Sch K line 2 id Ne loss from Form 4797 Part Il line 17 included on oid Ne 1a enter as a positive amount Overrides the loss that comes from Form 4797 Part II line 17 Overrides Worksheet Override Location LT 9creen Line Field Name Location of Information Being Overridden 1065 EE iiir TE EE TE iig 120 EE chedule M 1 Reconciliation of Income Loss per Books with Income per Return o Expenses recorded on books but not on Schedule K Overrides amount calculated by system of the difference Book to tax depreciation between book and tax depreciation Deductions included on Schedule K but not charged Overrides the book to tax depreciation adjustment calculated by against book income this year the system HB o chedule M 2 Analysis of Partner s Capital EE EE EG 3 Net income loss per books Overrides the amount carried from Schedule M 1 line 1 or p Schedule M 3 line 11 chedule M 3 Net Income Loss Reconciliation Part m

Schedule K-1 for 1065

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