Home

Drake Software User`s Manual

1. 12 NOL Carrybacks and Carryforwards 0 0 0 00 eee eere 13 Tax Refundable Credits and Payments 13 CINE C 13 Tax Year 2012 ill Drake Software User s Manual Supplement Corporations Estimated Taxes and Applied Refunds 0 0 0 000 eee teens 13 Direct Deposit of Refunds 0 0 0 cc eee 14 Electronic Funds Withdrawal Direct Debit 15 Program Defaults and Overrides 0 nnn nunana naaa aaaea 15 Required Information sse 10 0422 00ac sad ei eu ded edd x4 dee bedi RR E ARR RR ed ede eee dake 15 Withdrawal from Multiple Accounts 0 0 0 0 0 00 cc ne ee eee eee e eens 15 Fie aN EXIGNSION 4 oc pepecaedcvduweewcnse sen A GJ E eae NEN 16 Signing the Return co kate een casa te Seach ates eSeukeseueeanndases STE S 16 Amending a Return MePr Emm 17 SORBOHIB I sco a E E T E A EEEE CA n 18 Schedule K II 3 ow o b5 0ne od oo wd aed ooo Saws quo aoe Mee ed es ou DS 799 n o wee t COSE a ten tec 18 Schedule K LIne 4 nct ze monde oue 3 EX Eo Us hunt Sue sebeanee es poate teem eee Ieed e dos 19 Sehed le mb R 19 Schedule K LIN Teas avis Ga wan Geri ns amp deren ood bod ded ed oR Ae eaters E ere eae A 19 Behedulc K Eine 15a space case goes pede e ea ne ese ese REN GP KU oho ek Ea di dedo bee eric asus es 20 SOBBOHIE
2. lleles es 29 cei PHPER 30 Making an Election in Drake 1 RR RR I eens 30 Election Statements odore uet pue d Hod V EI eie e ERE e AU ey ee PEGS EGE se aqq qu qupd d 3l Making Changes on the Fly erlernen 32 1V Tax Year 2012 Drake Software User s Manual Supplement Corporations Suppressing Forcing Documents 0 ee eee eee eee eee ees 22 Calculation and Other Options 5 4 2c 40 a HERO RURAUE EE RR RERO SER D ap od E a prts 32 Overriding Other Setup Options 0 0 eee s 33 Guide to Overrides and Adjustments s 3 ad erem doe meus X XENERE RA REGE QGGAXAREESERRREREERS 33 EIGOITOBIG FID S s udo dao dod aoi 2 arde Rae e dod ied ded X 36009 9284 ee EC RA d td ed a 33 Common Biror COUS 34 Special Types of Returns 0 0 ce ees 34 Electing a 52 53 Week Year Initial Return 0 0 0 0 0 0 eee eens 34 lue CHIC 45 9044 tee aed pened Foes os be oe ee ROS AEE shee eee EEEE be EA 35 Binary Attachments 0 0c ce ees 35 The PDF Attachment PROCESSI uu acus e a ope Vx 920 9 ok Qed ok yb oie dol we doe ee ek e a ok Geo 36 Printing Generated Documents 0 0 eee s 38 Importing Trial Balance Information ees 38 Preparing to Use Trial Balance Import 0 0 0 0 0 0 0 e 38 Preparing Financial Data for Import 0 0 0 0 00 ee e 40 Entering
3. Figure 6 Federal section of DD screen also 8050 screen If receiving refunds from different state tax authorities use the State Account boxes on the DD screen to indicate where other state refunds should be deposited Tax Year 2012 Drake Software User s Manual Supplement Electronic Funds Withdrawal Direct Debit Electronic Funds Withdrawal Direct Debit Use the PMT screen accessible from the General tab to indicate that the balance due for an e filed return should be withdrawn direct debited from an account Program Defaults and Overrides By default the program indicates that the entire balance due line 34 Amount owed of Form 1120 is to be withdrawn on the return due date To indicate other wise complete the Requested payment date override fields see Figure 7 for the applicable payment If the return is e filed on or before the due date the requested payment date cannot be later than the due date If the return is transmitted after the due date the requested payment date cannot be later than the date the return is transmitted Required Information A Withdrawal selection item 1 in Figure 7 is required if the program is to direct tax authorities to withdraw funds from the corporation s bank account Account Information Account 1 Name of financial institution RTN Account number Type of account 2 sl Checking Savings Repeat Account Information Checking Savings Federal Federal paymen
4. 4 Tax Year 2012 Drake Software User s Manual Supplement Header Information 5 Click OK Filing Form 1120 C or 1120 H No preliminary steps are required for Forms 1120 C or 1120 H Use the same screens you might for an 1120 return but include one of the following screens in addition e 20C For Form 1120 C U S Income Tax Return for Cooperative Associations e H For Form 1120 H U S Income Tax Return for Homeowners Associations If one of these screens contains data the program automatically produces the type of return indicated For example if a deduction is entered on screen 20C an 1120 C return will be produced Is Form 1120 C or 1120 H being produced in error Check the corre p sponding screen 20C or H for data entered To delete a screen open the screen to delete and press CTRL D Header Information Screen 1 contains fields for the general information that is printed in the top section of page 1 of Form 1120 or Form 1120 C or 1120 H as applicable Name and Address Use screen 1 to enter the corporation name and address for Form 1120 For state pur poses only if the corporation has an alternate address such as a P O box you can enter that address on screen 2 State General Information in the Address Line 2 field at the bottom of the screen The screen 2 State General Information link is located on the States NOTE tab of the Data Entry Menu You can also type 2 into the selector field and pre
5. pun Populate Trial Balance Template Import Trial Balance Import direct entry data cells with 0 applicable detail worksheets totals for depreciation Schedule L rentals 1120S amp 1065 only Make corrections in TB worksheet Populate Data Entry Enter any trial balance data that cannot be imported via Trial Balance Import Screen SCH2 for Schedule L items Screen 4562 for individual assets depreciation Compare M 1 line 1 Does trial balance match Schedule M a line 1 Trial Balance Import General Process Is an M 1 adjustment necessary YES Make M 1 Adjust adjustment amounts elsewhere in data entry Were rental totals entered 11205 amp 1065 in trial balance Go to data entry an enter individual rentals on 8825 or RENT screens as applicabl Delete imported 8825 and RENT screens Process complete Drake Software User s Manual Supplement Appendix B Adjustment Worksheet Tax Year 2012 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 2012 Adjustments worksheet These worksheets are also available through the FAQ screen To access them open the FAQ screen click the Screen Help button or press CTRL ALT and click the li
6. Repairs and Maintenance Bad Debts Rents 10 Enter repair and maintenance costs on the DED screen An amount entered here 1s combined with the amount if any entered in the Repairs and maintenance field on screen F Use the Bad debts line on the DED screen to enter the total debts that became worthless in whole or in part during the year but only to the extent that such debts related to a trade or business activity Enter deductible non business bad debts as a short term capital loss on NOTE screen 8949 Capital Gains amp Losses Cash method corporations cannot take a bad debt as a deduction unless the amount was previously included in income Use the DED screen to enter rent paid on business property used for a trade or busi ness activity If the corporation rented or leased a vehicle enter the total annual rent or lease expense incurred in the trade or business activity of the entity and then complete Part V of the 4562 screens 8 and 9 The Rents field is an adjustment field An amount entered here is com NOTE bined with the amount if any entered in the Rent fields on screen F lines 24A and 24b Tax Year 2012 Drake Software User s Manual Supplement Income and Deductions Taxes and Licenses Interest Enter tax and license amounts in the Taxes and licenses section of the DED screen Amounts are combined and the sum generated on Form 1120 line 17 Taxes and licenses Note that credit from F
7. Support DrakeSoftware com gt 828 524 8020 Drake Software User s Manual Tax Year 2012 Supplement Corporations 1120 Support DrakeSoftware com 828 524 8020 Copyright Trademarks Drake Software User s Manual Supplement Corporations The 2012 Drake Software Manual Supplement Corporations Drake Tax Software and any other related materials are copyrighted material All rights are reserved by Drake Enterprises LTD including all ownership rights This document associated software and related material are the property of Drake Enterprises LTD Drake Enterprises LTD hereby authorizes you to download display print and repro duce the material in this document in an unaltered form only for your personal non commercial use or for non commercial use within your organization Copyright trademark and other proprietary notices may not be removed 2012 Drake Enterprises LTD All rights reserved While every attempt has been made to produce an accurate and complete manual there is no warranty expressed or implied to that effect Drake Enterprises LTD assumes no liability for damages or claims resulting from the use of the information contained herein The Drake Software Logo and Drake Tax are registered trademarks of Drake Enterprises LTD Other product names mentioned in this manual may be trademarks or registered trademarks of their respective companies Tax Year 2012 Drake Software User s Manu
8. save them as a PDF file and attach them to the return Importing Trial Balance Information Drake s trial balance import feature allows data to be imported into an 1120 return from a trial balance worksheet The trial balance template and importing function has the following benefits e Eliminates the need to duplicate entries e Reduces data entry errors by automatically importing data to the correct fields e Allows preparers to merge basic accounting functions with tax preparation NOTE A flow chart of the trial balance importing process is available as an appendix at the end of this manual Preparing to Use Trial Balance Import The trial balance import function can be used only on returns that were created in Drake 2008 or later If you haven t already create a client file in Drake or update an existing client file from the prior year Like several other functions of the tax software this new feature requires Microsoft Excel version 2000 or later In addition take these actions to ensure the trial balance import works properly e Activate Macros The trial balance import function uses macros in Microsoft Excel Check your Excel settings to ensure that macros are activated and that macro security is set to medium To do so go to Tools gt Options in Excel and 38 Tax Year 2012 Drake Software User s Manual Supplement Importing Trial Balance Information Tax Year 2012 pe sem select the Security tab Click M
9. 50 000 L line 2a cal c Form 1120 Sch L line 2a col c pelle QD Coh omine aM s ap RR a Ae pesa GO dye LEN cape teste RD Figure 27 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 44 Tax Year 2012 Drake Software User s Manual Supplement Importing Trial Balance Information indicate special conditions and additional information regarding certain rows Table 5 describes the most common notes in this column Table 5 Other Information Column Notes Note Description not included in totals The amount is required for importing purposes only but is not included in the totals shown on the trial balance does not import Information cannot be imported and must be entered on the appropriate screen in Drake Screen is specified in column to the left of Other Information optional Amount is optional not required for import but could require direct entry in the software enter deficit as negative number Some deficits must be entered as negative numbers import includes the calculated Used for total purchases when calculating cost of change in inventory goods sold COGS in the return the program takes the change in inventory into account for the Schedule A cal culation Form or Schedule may be Non financial information su
10. Tax Year 2012 Drake Software User s Manual Supplement Other Information and Overrides Other Information and Overrides Use screen 1 to enter the following additional information Resident State If the corporation has a mailing address in one state but does busi ness in another select the state in which the corporation does business from the Resi dent State drop list Drake Codes and Overrides Screen 1 includes fields for miscellaneous codes invoice numbers and several overrides See Listing a Different Firm Preparer or ERO on a Return in Chapter 2 and Miscellaneous Codes in Chapter 5 of Drake Software User 5 Manual Tax Year 2012 for more information Worksheets outlining these and other adjustment and override fields NOTE are accessible through the FAQs Frequently Asked Questions screen For more information see Guide to Overrides and Adjust ments on page 33 Schedule L Balance Sheet per Books Schedule L is required if the corporation s total receipts for the tax year or its total assets at the end of the year are greater than 250 000 Flow of Information Many of the entries made elsewhere such as inventory information from Schedule A flow automatically to the generated Schedule L Depreciable asset information from the 4562 screen and intangible assets and amortization also flow to Schedule L Use the corporation s balance sheet to enter data directly onto Schedule L NOTE See Im
11. 2012 Drake Software User s Manual Supplement Importing Trial Balance Information Template The trial balance template consists of three title rows and six columns The Entity Structure Name and Year End title rows can be edited double click a row to change the title Columns are described in Table 4 Table 4 Trial Balance Template Columns Column Description Account Title Title of account Debit Credit Debit and credit amounts Import to Screen and line in Drake to which the debit or credit amount is imported Form Page Sch and or line Location of the amount on the printed return Other information Additional details for preparers see Details for Pre parers on page 44 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 22 see also Figure 25 on page 43 I Wages etait elo Le ii a a gu ELE VEE 1 Officer compensation 0 Salaries and wages 0 Waste removal P 0 1 Net Income Loss Schedule M 1 line 1 301 056 2 el 3 TEC OUT OF BALANCE Figure 22 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 fil
12. 6 Changes on the fly 32 charitable contributions 11 29 codes error reject 34 miscellaneous screen 1 23 state 21 combined group 28 compensation of officers 9 consolidated returns 8 contact information for state returns 22 contributions charitable 11 29 controlled groups 13 28 converting to 1120 4 cost of goods sold see Schedule A Cost of Goods Sold coversheets 33 credit for tax on fuels 9 Tax Year 2012 Index credits and adjustments 29 Ctrl W detail worksheets 7 13 39 D data entry FAQ screen 33 trial balance import 41 debts bad 10 deductions and income 6 13 depletion 12 depreciation and auto balance errors 25 expense 12 for cost of goods sold Schedule A 7 on short year returns 6 trial balance business returns only 46 detail Ctrl W worksheets 7 13 39 direct debit of balance due 15 Domestic Production Activities 12 domestic production activities deduction 12 E e filing new features in Drake 33 PDF documents 35 38 electronic funds withdrawal direct debit 15 signatures PIN 16 entertainment and meals 13 envelope coversheets 33 error codes 34 estimated tax worksheet 32 estimates 13 32 extensions 16 33 F filing instructions 33 final returns indicating in the program 6 updating 4 fiscal year returns 5 foreign ownership 19 Form 1099 B Proceeds From Broker and Barter Exchange Transactions 2 Form 1120 C U S Income Tax Return for Cooperative Associations 5 vii I
13. Documents tab for the state filing instructions Overrides the option entered in Setup gt Options Optional Documents tab for the corporation envelope coversheet Overrides the option entered in Setup gt Options Optional Documents tab for the IRS envelope coversheet Overrides the option entered in Setup gt Options Optional Documents tab for the state envelope coversheet Overrides the option entered in Setup gt Options Optional Documents tab for the city envelope coversheet Overrides the default date on the Paid Preparer line at the Date to print on returns bottom of the 1120 page 1 the 1120 C the 1120 H the letter and the 8879 Overrides the default due date that is printed on letters and filing instructions Overrides the amount calculated by the software for Form 1120 page 1 line D Overrides the IRS Center address determined by the program IRS Service Center based on the corporation s location and amount of total assets at the end of the year TUUS Overrides the system calculation for the Current depr column of the Depreciation Detail Listing Override regular depreciation AMT if different Be Doe BEC PUR for the AMT Current column Override regular depreciation Book if different Overrides the calculated book amount Print corporation s envelope coversheet Print IRS envelope coversheet Print state envelope coversheet Print city envelope coversheet Due date to print on letter and filing
14. Elec tions are selected from the Return Elections section of the ELEC screen Figure 11 Return Elections EINE 0 es Desaipion_ n Cost basis amount years Date or year ending Other cost basis or amount Other date or year ending CIM oo E ZEND er ceno Other informam Expanalion SE tma Jr m NY ww c uS LM WM cT vu ow cm os Figure 11 Return Elections portion of ELEC screen Making an Election in Drake To indicate that the corporation is making an election 1 Openthe ELEC screen accessible from the Miscellaneous tab of the Data Entry Menu or by typing ELEC in the selector field and pressing ENTER 2 Make a selection from the Election drop list See Figure 12 on page 31 30 Tax Year 2012 Drake Software User s Manual Supplement Elections Return Elections Election E 01 General Election Statement Descplion ss 02 Capitalize and Amortize Circulation Costs over 3 Years Cost basis amount years 03 Capitalize and Amortize Research and Experimental Tu wv uur 04 Capitalize and Amortize Intangible Drilling and Development bn TEN i XOU 05 Capitalize and Amortize Mining Development Costs Other cost basis or amount 08 Capitalize and Amortize Mining Exploration Costs th fta nryaar anrdin Include Commodity Credit Loan in Income sec 77a y plpeagate OSA CNTR auos di cade
15. F1 or right click in a field and select View Help steps for e filing Form 1120 are the same as for e filing Form 1040 with the excep tion of bankruptcy returns which must be paper filed Tax Year 2012 33 Special Types of Returns Drake Software User s Manual Supplement Common Error Codes If one or more of the following IRS error reject codes is generated when e filing an 1120 return the preparer must contact the IRS for further information The IRS e Help Desk telephone number is 866 255 0654 e Reject Code 307 Filer s TIN and Name Control in the return header must match data in the e file database unless Form 1120 Item E 3 check box Name Change is marked e Reject Code 900 The return type indicated in the return header must match the return type established with the IRS for the EIN e Reject Code 905 Electronic Filing Identification Number EFIN in the return header must be listed in the e file database and in accepted status If you get this reject code you must update your e file application to include the 1120 return type This should be done at the IRS website Review publication 3112 for details Reject Code 910 If Amended Return or Superseded for 1120 1120S check box is not selected then Taxpayer TIN in the return header must not be the same as a TIN of a previously accepted paper return for the return type and tax period indicated in the tax return Special Types of Retur
16. Financial Dala 1 6 4 14 etd s RR daa ode coe oes oo ous Chee ERIS E ESSE S SEES ded 4 Ber TONS MMRETICCT 43 Importing Data into a Return lt lt 2244 4 44044 25644404864 Hh SUAE UA AA ERROREM IPLE cR RE EEE EES 43 Special Gen erresis irera ea Kae a DOTT OTT TOTO PTT 44 Appendix A Trial Balance Import leslen A 1 Appendix B Adjustment Worksheet erllles B 1 Appendix C Override Worksheet 00 0 eee C 1 lp vii Tax Year 2012 V vi Drake Software User s Manual Supplement Corporations This page intentionally left blank Tax Year 2012 Corporations 1120 The basics of data entry for a corporation 1120 1120 C 1120 H return are the same as for a 1040 return Field and screen level help shortcut keys and navigation throughout data entry all function as they do in the 1040 program See the Drake Soft ware User s Manual Tax Year 2012 for the basics of using the program What s New in Drake for Corporations Drake programs its tax software according to the latest IRS rules and regulations The 2012 program reflects all changes to credits and deductions including discontinua tions For details on the new regulations for the 2012 tax year see the IRS instructions for Form 1120 Required Fields Fields that require completi
17. One or more chains of corporations that are con nected through stock ownership with a common parent corporation if certain con ditions apply Brother sister group Two or more corporations if the same five or fewer per sons who are individuals estates or trusts directly or indirectly own stock of each corporation with a certain amount of voting power Combined group Three or more corporations each of which is part of a par ent subsidiary group or a brother sister group and one of which is 1 a common parent corporation included in a group in a parent subsidiary group or 2 included in a group of corporations in a brother sister group e Life insurance companies only Two or more insurance companies subject to tax under section 801 that are members of one of the previously described groups are treated as a particular type of controlled group Line 5 Apportionment Plan Status The corporation is required to provide information about the status of the group s apportionment plan Select the applicable box on screen O to show the status of the controlled group s apportionment plan If adopting a plan or amending the current 28 Tax Year 2012 Drake Software User s Manual Supplement Credits and Adjustments plan for a prior tax year at least one year must remain on the statute of limitations for each group member for assessing any resulting deficiency Credits and Adjustments Certain credits require an adjustmen
18. PRNT screen e Filing instructions federal and state e Envelope coversheets corporation IRS state and city e Date to print on return e Due date to print on letter and filing instructions see note below e Amount on Form 1120 page 1 item D Total assets e IRS Service Center NOTE A default due date for filing is printed on all letters and filing instructions generated with a return You can override the default by entering an alternate due date in the Due date to print on letter and filing instructions field on the PRNT screen Guide to Overrides and Adjustments Appendix B and Appendix C of this supplement are overrides and adjustments work sheets that allow preparers to see what data or calculations are being affected when an entry is made in an override or adjustment field These worksheets can provide a bet ter understanding of how overrides and adjustments work in the software NOTES Electronic Filing These worksheets are also available through the FAQ screen from any Data Entry Menu Click the Screen Help button at the top of the FAQ screen then click the link for the desired worksheet and wait for the worksheet to be displayed as a PDF file An Internet connection and Adobe Reader are required in order to view the worksheets Much of the information contained in the worksheets is also available from the field level helps within the program To access a field level help click inside a field and press
19. Retained Earnings flows from Schedule L Balance Sheet and the Net Income Loss per books flows from the completed Schedule M 1 or M 3 on Form 1120 These numbers combined with amounts entered on the M2 screen are used to calculate the ending Unappropriated Retained Earnings If the computed amount does not match the amount in the completed Schedule L Bal ance Sheet the system produces an EF message that the M 2 is out of balance Solv ing this problem can be challenging since it can have any of several causes e The beginning balance sheet entries are inaccurate e The Beginning of Year unappropriated retained earnings amount line 25 on screen L entered on the SCH2 screen for line 24 Retained earning Appropri ated is incorrect e Autobalance is not turned on See Autobalance on page 24 e The ending balance sheet entries are inaccurate e The net income per the tax return is inaccurate e The reconciling items on Schedule M 1 or M 3 need to be adjusted e The reconciling items on Schedule M 2 need to be adjusted If the items are off by a couple of dollars or less resolve the problem by entering a reconciling item on the M2 screen 1 Double click in a field on the M2 screen to open a detail CTRL W worksheet 2 Enter an amount and the word Rounding as the description 3 Press ESC The program returns to the M2 screen If the problem is not resolved it may be necessary to do a detailed comparison betwee
20. classes of the corporation s stock entitled to vote the applicable data appears on Schedule G In Drake Schedule G data is entered on screens G1 and G2 accessible through the G1 Screen and G2 Screen links on line 4 of screen K or from the Data Entry Menu If the stock is owned by any foreign or domestic corporation partnership or trust enter on screen G1 the name and EIN of the entity the type of entity corporation partnership or trust the country of the entity s organization and the percentage of stock the entity owns If the stock is owned by an individual or estate enter on screen G2 the name and ID number of the individual or estate country of citizenship and percentage of stock owned Use the CTRL PAGE DOWN function to open additional blank G1 or G2 screens For more information on line 4 of Schedule K see the IRS instructions Schedule K Line 5 If the corporation owned stock in other corporations or partnerships or the beneficial interest in a trust enter the information on the K5A or K5B screen Click the K5A Screen or K5B Screen links on the K screen or from the Data Entry Menu to access fields for entering this information Use the CTRL PAGE DOWN function to open additional blank K5A or K5B screens For more information on line 5 of Schedule K see the IRS instructions Schedule K Line 7 Enter information on line 7 of screen K if a foreign person owned directly or indi rectly at least 25 of the t
21. double tax benefit through interaction of NOL and charitable contribution carryovers The excess charitable deduction can reduce taxable income only once Under these rules a corporation s charitable contributions carry over but not the NOL carryover must be reduced to the extent the charitable contri bution deduction in computing the taxable income of an intervening year would increase the NOL to a succeeding year The total amount claimed cannot be more than 10 of taxable income line 30 com puted without regard to the following e Any deduction for contributions e The special deductions on line 29b 29 Elections Drake Software User s Manual Supplement The deduction allowed under section 249 The domestic production activities deduction under section 199 Any net operating loss NOL carryback to the tax year under section 172 Any capital loss carryback to the tax year under section 1212 a 1 To prevent the double benefit from the excess charitable contribution deduction when there is a charitable contribution on the return and an NOL carryover the program makes the IRC section 170 d 2 B adjustment In this situation the charitable contri bution carryover amount is reduced on column C of the Contribution Limitation Car ryover worksheet WK CNTRB in View mode and the NOL carryforward is increased on the ATT NOL worksheet Elections The ability to make certain tax elections is included in the business packages
22. during the tax year Total business income Federal Overrides line 5 on WK C179L eee eee 1118 Foreign Tax Credit Schedule B Part Il Overrides calculated amount from Form 1118 Schedule B Part Total foreign taxes paid or accrued lu n Overrides calculated amount for Form 1118 Schedule B Part I Total taxes deemed paid COURSES 3 Heduction of taxes paid accrued or deemed paid Overrides amount carried from Schedule G 5 Carryback or carryover of excess foreign taxes Overrides amount on Schedule K line 3 column XIV 7 Schedule J Part I line ii if Sch J is required Sii laa on Schedule J Part I line 11 or Schedule A 3800 Parts amp Il Current Year Credits See Overrides amount calculated by the software for Form 3800 Part 13 25 of the excess if any of line 14 over 25 000 Il line 13 This field is used for allocation of the total amount for controlled groups If there has been an ownership change acquisition or Overrides amount calculated by the software for Form 3800 Part reorganization Il line 19a Qualifying advanced coal project credit Basis of Overrides the cost entered on the 4562 detail screen as investment in gasification for section 49A d 3 B i determined by the code CA entered in the Investment credit projects code drop list Tl orm 3468 C1 Qualifying advanced coal project credit Basis of Overrides the cost entered on the 4562 detail screen as investment in coal based ge
23. fiscal year end you must enter the effective rates manually Enter 2012 estimates and 2013 overpayments for state returns on the ES screen For the federal return to override 2012 estimates and apply overpayments to 2013 use screen W Direct Deposit of Refunds 14 The IRS requires that Form 8050 Direct Deposit of Corporate Tax Refund be submit ted with an e filed return in order for a corporation s refund to be direct deposited To access this form in Drake go to the DD screen accessible from the General tab When filling out the DD screen e Ifthe federal refund is to go to the account listed select Yes for the Federal selec tion drop list otherwise select No Default is Yes e Ifa state refund is to go to the account listed select the state abbreviation from the State City selection drop list e Enter the name of the financial institution the routing number RTN the account number and the type of account Checking or Savings e Re enter the routing number account number and type of account to verify Figure 6 Account Information Account 1 Federal Account and State if same as Federal Deposit selection Federal selection Y IE State city selection CA m Name of financial institution RTN Account number Type of account First Bank and Trust 123456789 9876543210 R Checking Repeat Account information 123456789 9876543210 v Checking Savings Saving
24. instructions Total assets on Form 1120 page 1 line D 562 Detail Override regular depreciation Federal Overrides Worksheet Override Location Field Name Location of Information Being Overridden 1120 Overrides Form 4562 Part line 6 column c and the amount EE 179 expense elected this year Federal for the WK C179L i78 expeiise lected thisvear Book i differen CL HE calculated book amount and the amount for the Overrides Form 4562 line 12 If Method M is chosen there must be an entry made on line 179 expense elected this year or Method EXP must be used Overrides amount calculated for WK C179L gt 179 expense ALLOWED this year Book if different re calculated book amount and the amount for the Force Placed in Service and Like Kind Exchange Info Overrides convention determined by the dates of assets placed in service during the year 179 expense ALLOWED this year Federal convention UTI ee Overrides how the system calculates depreciation for the Life MACHS 9e Placed in Service and Like Kind Exchange Info i h M ditis tables and Method columns of the Depreciation Detail Listing 4562 Parti S O 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
25. less than 10 million Schedule M 3 is required if the balance sheet s total assets at the end of the year equal or exceed 10 million NOTE If the corporation is filing Schedule M 3 any entries on the M1 screen for Schedule M 1 should be deleted Schedule M 1 Schedule M 1 shows all items of income and expense that are not subject to tax plus those accounting items that are not income tax items When required the corporation must reconcile book income with the taxable income Use the M1 screen schedule to enter book to tax difference for Schedule M 1 Book to tax differences are classified as permanent or temporary and as favorable or unfa vorable Examples of both kind of differences are shown in Table 2 Table 2 Examples Book to Tax Differences for Schedule M 1 Permanent Book or tax items that will never be Meals amp entertainment limitations reported for book or tax purposes Penalties Jax 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 Tax Year 2012 25 Schedules M 1 and M 3 Reconciliation of Income per Books Drake Software User s Manual Supplement Schedule M 3 26 Parts I III Schedule B The SCH3 Screen Table 2 Examples Book to Tax Differences for Schedule M 1 Favorable Items that reduce taxable income Instances in which tax depreciation amount is gre
26. paca nascens AT Re MGR a ARE a MP aao Figure 12 Election drop list 3 Complete all other fields as applicable Press F1 in any field to learn if a field is required for your selection and the type of information that may be needed For example the help text for the Date or year ending field shows that the field is required only for election options 08 09 11 and 15 and it explains what specifi cally should be entered for each of these elections Drake Software Data Entry Help m Date or Year Ending direct entry Enter the date or year ending required for the selected election Ihe description field is used on the following election statements for this package SIM 08 029 11 15 Use Date of Disaster Date of Contribution Date Paid or Incurred Date Payment Received NOTE Figure 13 Help text for Date or year ending field on ELEC screen If the election option you selected is not listed in the help text for a field then that field should be left blank For example if you chose election 01 General Election Statement you would not need to enter anything into the Date or year ending field help text in Figure 13 To open a new ELEC screen for an additional election press PAGE DOWN Election Statements Tax Year 2012 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 el
27. royalties 1s an adjustment field Any amount entered here adjusts amounts flowing from line 7 of screen K1P Note that passive activity loss rules may be applied to rental activities held by a closely held corporation or a personal service corporation Use screen 8949 to enter capital gains and losses Short term capital gains flow to Part I lines 1 3 of Form 8949 Long term capital gains flow to lines 8 10 of Part II of the 8949 The net gain from screen 8949 is carried to line 8 of Form 1120 Any net capi tal loss is carried to the ATT D attachment to offset future gains You can import data for Schedule D using the Schedule D Import fea NOTE ture For more on using this feature see Schedule D Imports in Chap ter 5 of the Drake Software User s Manual Tax Year 2012 Ordinary Gains and Losses The amount generated on line 9 flows from screen 4797 Amounts can also flow from screen 4562 to Form 4797 making screen 4797 entries unnecessary but only if screen 4562 shows assets sold date and property type Tax Year 2012 Drake Software User s Manual Supplement Income and Deductions Other Income Loss Use the INC screen to enter amounts for the Other income line of the main form Specific INC screen entries are displayed on attached statements in View mode of the return For Form 1120 calculated amounts from the following screens also flow automati cally to the Other income line line 10 e Scree
28. 044 6459504 045 6456 EE REX FERIA Sheen es Dividends Schedule C iae ere tatia ERES 6 ub S44 aw des Gis UNS eua ads dee e 8 luni 4 ee a a oe OP Ok ee Bee Eh oe ee PhS eee eae he E 8 Renis and BoyaltleS 22032559 95 912 Fahd EEG ORES ESE RG eG PSI e did FS P AOT 34b Fd ditas 8 Capital Gals serre bens eke 2 eee oan eee ee eee G ee ae eee ee os oae eee teehee Bees 8 Ordinary Gains and Losses 1 ee hrs 8 Other Incon LOSS TFT 9 Compensation of Officers Form 1125 E l il iilllllelleee rs 9 Dal anes amd Wage eser ee EAEE nEn E OE RU ERE d Seu debut ee soe EEEE Prius hee e sess 10 Repairs and Maintenance uses 40a4nd odo aus Sow Fogo e be GAG oa ee te der ee Oo dos ee SC Pe qus 10 Bad DeD MMMRETT 10 T e e E 05084 50 E ET ene E E E EE E ET EE 10 Taxes aa Ee Sae A a a T TULIT oe ek A EEEE E 11 luna e e E E E E E E E E E E E S 11 Charitable Contributions i44 sss use ennenen 11 WE PECCIANOM oo orem ghd as d ves den ees LIESS Ge nae e nea dee eub Eee bed oe eee 12 ID DIGHOB sceau ruo ERSTES GROB ATIS EU Eg d ESSE AS E eee eas eee eee ens 12 POVEMISING oo d 05r SREPSATMP PUTSTOSTIMPAER MAS eee eee E DOR ES bee oe nee heenuesae S PEETE 12 PenstomamudPrOHtSSDarllb ss ui 9e qe 2 5 bow SHE ont eset abodes ees RUE RO ed oh saws SORA EE ood 12 Domestic Production ACH VIHeS sa moe ie prar rion Rabe 99 RARE Ge ot EUER T URP Rer xr qoas 12 Bliodbrulio STCPRRE T
29. 12011205 ABC Corporation State Apportionment Sales Factor State Selection Required field Zero Apportionment No Activity in State Sales Outside sa State drop lists gt am Within state lorem c Within state to LI S Government Throwback nontaxable jurisdiction Returns and Allowances i Outside to within s 7854 2222 A COE ET ee O T ee N See mm Figure 8 State APPT screen NEW FOR Mark the Zero Apportionment check box Figure 8 to add a state but not include any apportionment data This will include the state on the 7 li 7 apportionment summary worksheet SAC SUM available through View mode Tax Year 2012 2l State Specific Information Drake Software User s Manual Supplement APPT Screens The APPT screen is opened to the Sales tab Links at the top of this screen open the Payroll Property and Additional Property information tabs for each state selected These screens and their uses are listed in Table 1 Table 1 APPT Screens Screen Information Sales Select state enter sales returns and allowance and other income related information for each selected state Payroll Enter salary wage commission and labor amounts for each selected state Property Enter beginning and ending amounts of common apportion ment factors plus select additional apportionment factors from drop lists Additional Property Select additional apport
30. 7004 extends the deadline six months NOTE An 1120 return is due no later than eight and a half months after the close of the corporation s tax year Use one of the following options to file an extension for an 1120 1120 C or 1120 H e Go to the 7004 screen in Drake and select Generate an extension Complete any other applicable fields on the screen e Go to the PRNT screen and select Prepare Form 7004 extension based on screen 1 info Signing the Return Electronic PIN signatures are required for e filed returns If e filing a return com plete all fields on the PIN screen A return cannot be e filed if the PIN screen fields including the title and signature name of the officer signing the return are not com pleted An 1120 return must be signed and dated by one of the following individuals e The corporation s president vice president treasurer assistant treasurer or chief accounting officer e Any other corporate officer such as a tax officer who is authorized to sign If the return is prepared by a paid preparer the preparer must complete the required information and sign the return in the space provided on the PIN screen If it is pre pared by an employee or officer of the corporation go to screen 1 and select NONE in the Firm and Preparer drop lists To have the preparer s name and address information displayed on the printed return e Ifthe return preparer and ERO entered in Setup gt ERO are the
31. 79 exp allowed Overrides the allowed amount calculated on the WK_S179L Overrides the allowed amount calculated on the WK_S179L Prior year 179 exp allowed Prior year QRP 179 exp allowed i S 4 Application for Employer Identification Number County amp state Overrides information entered on screen 1 Date business started acquired Overrides information entered on screen 1 W Form 1120W Corporation Estimated Tax Taxable income expected for the tax year p S Overrides amount coming from Form 1120 page 1 line 30 Alternative minimum tax Overrides amount flowing from the Form 4626 line 14 C1 Overrides amount calculated by the software for Form 1120 line C2 Olz e Z O re z 9 2 3 318 ou os D wn O o O v O c D em D Q re 3 Oo Cc 2 c 23a Tax shown on current year tax return Overrides amount calculated by the software for Form 1120W line 25 column a d Overrides amount calculated by the software for Form 1120W line 25 columns a d 25 Required installment amounts 2 Overpayment applied aa TH orm 1120X Amended U S Corporation Income Tax Return Overrides amount from original Form 1120 line 11 Overrides amount from original Form 1120 line 27 Overrides amount from original Form 1120 line 31 Overrides amount from original Form 1120 line 32a Overrides amount from original Form 1120 line 32b Overrides amount from original Form 1120 line 32c Overr
32. Additional Import Options See Additional Import Options following this procedure 6 Click Next and wait for the import to be completed T Click Finish The program returns to the Data Entry Menu for the open return Note that all selected data from the trial balance worksheet has been imported into the return This can be seen both in the data entry screens and on the generated return Additional The program can import the following additional information when importing the trial Import balance data Select the items to import or click Select All Options Buildings amp other depreciable assets Accumulated depreciation Goodwill amp other intangible assets Land Accumulated amortization Special Conditions Some trial balance items cannot be entered into the trial balance worksheet and must be typed directly into Drake data entry Other items should be entered into the work sheet for balance purposes but are not carried to data entry these must be entered sep arately and the calculated results compared to the trial balance worksheet Details for Most trial balance items go directly to the location indicated in the program and on the Preparers return For example the amounts shown in Figure 27 go to Schedule L line 1 column d in the program and are shown on page 5 line 1 column d of the 1120 return Credit Import to screen line Form Page Sch and or line C L line 1 col d Form 1120 Sch L line 1 col d
33. Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Inventories 3 3 d Inventories 8a 10a a Depreciable assets 8a 10a c Depreciable assets 8b 10b a Accumulated depreciation 8b 10b c Accumulated depreciation 10 12 b 10 12 d 11a 13a a Intangible assets 11a 13a c Intangible assets r r D D 2 2 Qo Qo 11b 13b a Accumulated amortization 11b 13b c Accumulated amortization Overrides Worksheet Override Location Field Name Location of Information Being Overridden 1120 Schedule M 1 Reconciliation of Income Loss per Books With Income per Return Federal income tax Overrides the systems calculation based on taxable income 5 Expenses recorded on books but not deducted on Overrides the book to tax depreciation adjustment calculated by Form 1120 the system Deductions on form 1120 not charged against book Overrides the book to tax depreciation adjustment calculated by income the system Schedule M 3 Net Income Loss Reconciliatio
34. ES the estimated corporate taxes paid If necessary use screen W to override 2012 estimated taxes paid and apply any overpayments from 2012 to 2013 NOTE Estimate vouchers are not used in federal corporation tax returns To apply the current year overpayment to next year the corporation s current year taxable income must be greater than 0 zero Enter the amount to be carried to next year in the overpayment field at the bottom of screen W If current year taxable income is not greater than 0 and you want to apply the current year overpayment to next year enter a positive amount on line 1 Taxable income expected for the tax year at the top of screen W Direct Deposit of Refunds Drake Software User s Manual Supplement Quick Refund Under payment State Estimates To file Form 4466 Corporation Application for Quick Refund of Overpayment of Estimated Tax go to the PRNT screen and mark the Calculate Form 4466 box This is the only entry necessary to produce the form There is a link to the PRNT screen from the Other Forms tab of the Data Entry Menu Click Application for Quick Refund Use screen 2220 to enter information for Form 2220 Underpayment of Estimated Tax by Corporations Note that the 2220 screen in Drake consists of two screens Press PAGE UP and PAGE DOWN to move from screen to screen The program retains the underpayment and penalty rates as of IMPORTANT 12 31 of the calendar year If a corporation has a
35. ICT auc gos b qx RCRER aGae ERE REE ESSERE REE R ET EN ENA ELA eR ER RES 20 State Specific Information 0 00 ce ees 20 ISI IS EVI serene ees nee ees oie dee eee sa eae d Sess ae eee E ANAE ENEE ASES 20 Blvd RCM 21 Contact Information s 2s md d armo oec 9 seguro eabnene ge owes seaoaneaetes ee dH d eee en 22 Other Information and OverrideS 0 0 0 cece es 23 Schedule L Balance Sheet per Books es 23 Fiow Ol lnformaloN ss cee ood eae ae oa oaatee OO eg Es GHG ed FEE Eee Adee hae Hace hes 23 The nC OC eree se cn oes oe ee oe a eee dea eee ee SUS SEE Chee ee Eee SETS 23 PAMOD AVANCE sirini dea G88 4 6 4 SG eG ae ee OG har Spd Bs bd we ae eae aoe ees 24 Schedules M 1 and M 3 Reconciliation of Income per Books 25 eei EUTTEDPMM 23 wed r V VPV m 26 Schedule M 2 Unappropriated Retained Earnings 27 WieZ TTOUDICSHOOUNS 4 48504 bo quunt ren eu rd PO aue or Febre Vd PPS TROUPE EN USATE an PORT 2 Schedule O Controlled Group Information e 28 AMT Adjustments and Other Items 1 ers 28 Py pes Or Controlled Groups cuo 5c sop me UR dt eee edt ahd oe ahs aed lad RUE ed EUN n RALIS ed 28 Line 5 Apportionment Plan Status 0 lees 28 Credits and Adjustments i c caso Rer dA ERRRRO REA OPE REC Eae RUE uxo s 29 Adjusting Charitable Contributions NOL
36. III reconcile financial statement net income loss for the U S corporation or consolidated tax group if applicable as reported on Schedule M 3 Part II line 30 column d to taxable income loss as reported on Form 1120 page 1 line 28 The software carries certain items that are readily available but it does not balance the M 3 automatically To ensure that the M 3 balances additional data entry may be required on the M31 M32 and M33 screens Schedule B is required when an M 3 is present in a return Use screen M3B for Form 1120 Schedule B Additional Information for M 3 Filers The SCH3 screen is similar to the SCH2 screen and is used to provide detailed infor mation for Schedule M 3 and Form 8916 A It can be used in place of the actual M3 Tax Year 2012 Drake Software User s Manual Supplement Schedule M 2 Unappropriated Retained Earnings and 8916A screens For more information on using this type of screen see The SCH2 Screen on page 23 Schedule M 2 Unappropriated Retained Earnings Information from Schedule M 2 Unappropriated Retained Earnings form ties to the Schedule L line 25 portion of the balance sheet Increases distributions and other decreases to the retained earnings are entered on Schedule M 2 Unappropriated retained earnings refer to corporation income that has not been distributed to share holders that is available for dividend distribution M 2 Troubleshooting The beginning Unappropriated
37. 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 Tax Year 2012 Drake Software User s Manual Supplement Appendix A Trial Balance Import Tax Year 2012 The trial balance import allows data to be imported into a corporate tax return from a trial balance worksheet Drake s specially designed trial balance template and importing function has the fol lowing benefits e Eliminates the need to duplicate entries e Eliminates data entry errors by automatically importing data to the correct fields e Allows preparers to merge basic accounting functions with tax preparation See next page for a flow chart describing the use of the trial balance import EHUHUSUHUHUBUESHUIHUHUS HIBUEDHUHUUHPHUBUBUHUSUHUHUHISUEDHUHESYMDHUEUEUHUHUHVUUHUBUEDHUHESVHDHUECHUHUHEHUUUHIBUEDHDHEHEHDHUEUEUHUHIHUSUHIBUEDHOHIHUHDHUECHUHUHPHUNUHUBURCHOHESUHDHUEUEDHUHEEUEUHUBUHCHOHEUHPHUECHUHUHEHUHUHUSUEDHOHEHUEPHUECEUHUHUSUHOHISUEUHDHEHUHDHIHCEHUHUHESUHUHUEUECHUHESUEDHUBUHCHUUPHUNUHUHUECHUHESUEDHUBCHOHUHENSUHUHUHUHUHDHISUEDHUBUEHCHUHENUHUHUHUEUHUHUUEDHUBCHPHUHEBUHUHUHUHUE 990 990 EZ or 990 PF return Prepare to use Trial Balance Import Enable Excel macros Disable autobalance Force Schedule L Delete unnecessary detail worksheets
38. OF 2453 2453 DRB453C PDF M LENA LT WATER cns VM p uper T Figure 17 The EF PDF Attachments window Click the row of a document to attach one with a red X Click Browse Browse to the proper folder select the PDF file to attach and click Open or dou ble click the file name Repeat for all documents with a red X When all documents have been attached to a completed return recalculate the return to make sure all EF messages have been cleared If so the return 1s ready to be e filed 37 Importing Trial Balance Information Drake Software User s Manual Supplement Printing Generated Documents In some instances Drake generates a document that must be attached to the return For example if Form 851 Affiliations Schedule is present in a corporate return message 0132 is generated when the return is calculated 0132 FORM 851 REQUIRED STATEMENTS Form 851 has required attachments that must be attached in PDF format Supporting statements are required for each corporation included in the consolidated return and the attached statement cannot be a Form 1120 The statement must include Items of gross income and deductions A computation of taxable income audio nO uto cmt the Beginning ee ond ak the tar TRA ai a Figure 18 EF message regarding Form 851 As shown in Figure 18 the EF message states that attachments are required You would then need to obtain or complete the statements scan them into the computer
39. To open a trial balance template for a return i 1 Open the return to the Data Entry Menu we Click Import gt Trial Balance Import in the menu toolbar The preliminary Trial ees Balance Import dialog box is opened 3 Click Create New or Open Existing If opening an existing file click Open after selecting the correct file 4 Ifa Security Warning box appears click Enable Macros In Windows 7 and Microsoft Vista you may see a Security Warning NOTE message with an Options button Click Options to open the Security Options dialog box then select Enable this content Click OK The trial balance template 1s displayed in Microsoft Excel Naming Whenever a new template is opened the tax software assigns it a default file location Convention and name Trial balance templates are saved in the TB folder of your Drake12 soft ware The file name consists of the client name as entered in Drake plus TB for trial balance plus the xIs extension assigned to all Excel files as shown in Figure 21 prae r Entityamelra rus r 001 014 File location Name of Indicates Excel client trial extension balance file Figure 21 Example of trial balance template file name To change the name of a file in Excel select File gt Save As and assign the new name NOTE If saving a trial balance to a different location make a note of where youre storing it The program automatically looks in the default directory 40 Tax Year
40. acro Security and select Medium and then click OK In Windows 7 and in Microsoft Vista click the Office button in the upper left and then click the Excel Options button at the bottom of the win NOTE dow Next select Trust Center from the list at left then click the Trust Center Settings button Select Macro Settings from the list on the left then choose Disable all macros with notification Click OK and then OK Disable Autobalance When autobalance is disabled the program is prevented from automatically adjusting the year end retained earnings or capital amounts thus allowing you to see any discrepancies in the balance sheet To disable auto balance go to the PRNT screen and select Turn off autobalance Force Schedule L By default the program does not display the balance sheet amounts on the return if the entity does not meet the filing requirement If this is the case you must override the default in order to have the amounts shown on Schedule L To force the Schedule L amounts to be printed go to the PRNT screen and select the applicable check box Figure 19 Items to Print Force Form 1125 E Officer Compensation W Force Schedules G 1120 C L M 1 and M 2 to be printed Print Form 4562 Print next year depreciation listing Print inactive return FIM for preparers alternative electronic signature Figure 19 Check box for forcing Schedule L Check for Detail Worksheets The trial balance i
41. al Supplement Corporations Table of Contents Corporations 1120 2 0 ce es 1 What s New in Drake for Corporations ees 1 Reguired Fields a 1 One lOM Addresses rererere E rien AOS Rae RUP ee ee we Pa ee O39 ow ha Sot aa Gore OE I Fields Added to Name Address Information 0 0 0 0 000 000 ee e 2 Changes in Reporting of Capital Assets llli 2 Merchant Card and Other Third Party Income Reporting 000 teens 3 Qualified Real Property 4 4 ath RR RREEEEREGOR SERI EG ROUGE ORE GR Rd EO d RERO RUE GEORG Edda 4 Bonus Deprecidlon sien Tira sees ERSO PEINE DRE IG CEPR eee eos eee ore QU PIE ES 4 eters TOU Stal re a eA eet oe eee wee eae 4 Updating a Prior Year Return in Drake l l le 4 Converting from Another Return Type 0 annann anaana en ras 4 Filing Form 1120 C or 112021 i oues bw tie ed REA WHEE OS BOS 8 CRUS 84S SEES ESR ESTERS 5 Header Information uius d aud ui d c dedere ed dense hese SCORE ci a debe eee i 5 Name dud dd eSS cu eee at cokes avE RETE ER ER SSIRCRAE NUR dU IPAE Nd a Pug d P du SEE 5 lC 4d 5 Boxes A MOU rrE 6 Income and Deductions 6 26 ictndceccccceeveeestcdisdeisticdctintiiaws EE eR 6 Gross vc n 2 deco emacs oho eee 6 ee bea 6 oon re EN EEA EE E EE ae 6 Cost of Goods Sold Form 11255 i amd bs ate 55
42. an EF message will be generated with the return and the return cannot be e filed For more information on short year explanations see IRS Pub 4163 NOTE The program may not correctly calculate depreciation gains or losses for a short year return Depreciation for a short year return can be entered on screen 4562 and or screens 6 7 8 and 9 Boxes A through E Use screen 1 to enter most information for boxes A through E top of Form 1120 Note that boxes A 4 Schedule M 3 attached and D Total assets are completed automatically by the program based on data entered elsewhere Box 1a Consolidated return is automatically marked if there are NOTE entries on screen 851 Form 851 Affiliations Schedule Box A 2 Per sonal holding company is automatically marked if there are entries on screen PH Schedule PH U S Personal Holding Company PHC Tax Income and Deductions Only three screens are required in order to calculate taxable income for a return INC Includes all items of income reported on Form 1120 page 1 lines 1 through 10 that do not require a separate schedule Schedule C or additional information Income reported on Form 1065 Schedule K 1 also includes tax exempt interest income reported on the Schedule K DED Includes all deduction items reported on Form 1120 page 1 lines 13 through 26 that do not require a separate schedule or form Form 4562 e J Includes loss carryback
43. ance documents created in Microsoft NOTE Word can be printed or saved as PDF files if you have a PDF printer such as Adobe Reader installed Adding PDF To indicate in the software that a PDF file will be sent with the return Files 1 Goto the PDF screen in data entry 2 Fill out the columns on the screen See Table 3 for examples Table 3 PDF Attachment Window Columns Reference Source Name or number of regulation IRS Pub xxx 1 4 publication or form instruction that Form Instructions for 1120 makes attachments necessary Description Description of form or documentto Title of house on Oak Street be attached Appraisal of Lot 1234 File name Distinctive easily recognizable file TitleHouseOakSt pdf name followed by pdf AppraisalLot1234 pdf 3 Exit the PDF screen Because you ve indicated that a PDF file 1s attached the program generates an EF message regarding the attachment when the return is calculated 36 Tax Year 2012 Drake Software User s Manual Supplement Binary Attachments Attaching To attach a PDF file to a return Documents to the Return Tax Year 2012 1 From the return click View If anything was entered on the PDF screen see Adding PDF Files previously there will be three PDF related items in the View Print window e Ared MESSAGES alert see item 1 in Figure 16 e An EF PDF worksheet that lists all items entered on the PDF screen see item in Figu
44. ate Daytime phone number ate payment amount ate Requested payment date tate Daytime phone number e t e oe TO Federal Requested payment date Overridesfederalretum due date Federal Daytime phone numer Overrides phone number entered on screen 1 General Info Statepaymentamount Overrides amount calculated by the software State Requested payment date Overrides state s return due date or date the return is filed State Daytime phone number Overrides phone number entered on screen 1 General Info jStatepaymentamount Overrides amount calculated by the software State Requested payment date Overrides states return due date or date the returnisfiled State Daytime phone number Overrides phone number entered on screen 1 General Info Statepaymentamount Overrides amount calculated by the software State Requested payment date Overrides state s return due date or date the returnisfiled State Daytime phone number_CS Overrides phone number entered on screen 1 General Info TTT Sea Overrides the option selected in Setup gt Options Optional Documents tab for the federal filing instructions Overrides the option selected in Setup gt Options Optional rint Options Print federal filing instructions Print state filing instructions PES l
45. ater than book depre ciation amount Unfavorable Items that increase taxable income Disallowed meals amp entertainment Schedule M 3 is completed using the following screens all found on the General tab of the Data Entry Menu e M3 M31 M32 and M33 for Parts I IL and III of the Schedule M 3 e M3B for Schedule B Additional Information for M 3 filers e SCH3 for subsidiary schedules for Schedule M 3 and Form 8916 A e M3S for supplemental statements e 8916 for reconciling of M 3 with taxable income for mixed groups e 916A for supplemental attachments to the M 3 If the corporation is required to file or voluntarily files Schedule M 3 the corpora tion must file Form 1120 and all attachments and schedules including Schedule M 3 Certain income and deduction amounts and adjustments flow from NOTE Form 1120 to Schedule M 3 and Form 8916A in the program but all other M 3 data must be entered manually If Schedule M 3 is present in a return no Schedule M 1 is generated Part I of Schedule M 3 asks certain questions about the corporation s financial state ments and reconciles financial statement worldwide net income loss for the corpora tion or consolidated financial statement group if applicable as reported on Schedule M 3 Part 1 line 4 to net income loss per the income statement of the corporation for U S taxable income purposes as reported on Schedule M 3 Part 1 line 11 Parts II and
46. beginning of year column Statements SCH2 and Trial Balance Import Autobalance 24 when the returns are updated The total amounts entered on the SCH2 screen do not show up on the actual L screen in the program They are however printed on the return where needed with refer ences to the corresponding statements The type of statement produced by the program depends on the selected line and the IRS requirements If a line is required a statement labeled STATEMENT is pro duced and is e filed with the return If a line is not required a statement sheet STMT is produced and is NOT e filed with the return Note that an e fileable STATEMENT is referenced in the return Typically one or more SCH2 screens are needed for Schedule L items Data for the SCH2 screens cannot be entered directly into the trial balance worksheet Although the amounts must be included in the trial balance worksheet for the worksheet to bal ance the SCH2 detail screens must be created separately from the worksheet When the return is produced Schedule L will reflect both the amounts imported from the trial balance worksheets where direct entry was allowed and the totals of the SCH2 screen amounts See Importing Trial Balance Information on page 38 for detailed instructions using the trial balance worksheet for SCH2 items and amounts Autobalance forces Schedule L to balance for both the beginning and end of year amounts The pr
47. ch as names of officers for required a Schedule E must be completed in Drake in addition to the financial data entered in the worksheet All does not import notes are accompanied by further instructions in the column to the left of the Other Information column as shown in Figure 28 SCH2 Detail Typically a balance sheet subsidiary schedule SCH2 detail screen for Schedule L is required for an item marked does not import on the trial balance Enter Corporation Name Here Trial Balance 2012 Account Title B d Import to screen line Form Page Sch and or line Other Information A LLL NP WT UU Y I S n te adf eal uio i diete iet eee a ts p MEUM ur ee Saad 2 mb i at aadik sai a a v uai 2 nd ai adeat aia v Aimer a Form 1120 Sch L line 4 col d eo ster eee ae i6 ie A line 7 L line 4 col d 7Enangwwen ry lt U S government securities Tax exempt securities Other current assets Loans to shareholders L line 7 col d L line 8 col d Mortgage and real estate loans Other investments L line 10a col c Lp mons acit Me ade M Buildings and other depreciable assets PP emtilatotirteosodii ings ool Lois entm Figure 28 SCH2 screen required for does not import items To complete an SCH2 detail screen in data entry 1 Open the SCH2 screen for the return 2 Select the line number from the SCH2 drop list 3 Enter the applicable it
48. chers 13 W wages 10 Drake Software User s Manual Tax Year 2012
49. come on line 6 ai a i Close the INC screen and open screen 2X Schedule K Schedule K E filing an Amended Return T 8 Drake Software User s Manual Supplement Enter the line number from the X screen that corresponds to the changes that were made in data entry For this instance if you made a change to income on the INC screen enter 1 for Total Income in the Line Number field of the 2X screen Enter an explanation in the Explanation of changes text box Calculate and view the return Note the adjustments made on the Form 1120X To add Form 1120X to the queue for e filing go to the EF screen for the return and mark the 1120 X box For detailed instructions on e filing the returns in the queue see Chapter 8 e File in the Drake Software User s Manual Tax Year 2012 Use screen K to enter data for Schedule K Other Information Screen K should also be used for Schedule K of Form 1120 C Detailed here are some specific areas that might need your attention Schedule K Line 3 On line 3 line 5 for 1120 C enter the EIN and name of the parent corporation if the corporation is a subsidiary in an affiliated group or a parent subsidiary controlled group Be aware of the following guidelines from the IRS If the corporation is an excluded member of a controlled group see section 1563 b 2 it is still considered a member of a controlled group for this purpose An affiliated group is one or more chai
50. d conservation contributions Enter the gross amount of contribu tions for the year that are not subject to the 10 limit These contributions have a carryover period of 15 years see IRS instructions for details The program calculates the contributions allowed and determines carryover capability for amounts entered in both fields for line 19 and reflects the applicable amount on Form 1120 Refer to the contribution limitation carryover worksheet WK_CNTRB for calculation of allowed amount Contribution carryovers from prior years are entered on the LOSS screen Note that both fields of line 19 are adjustment fields entries here adjust amounts flow ing from screen K1P line 13 codes A and B 11 Income and Deductions Drake Software User s Manual Supplement Depreciation Enter depreciation on the 4562 screen Select a form from the For drop list Figure 5 to associate the depreciable item with the correct form or activity Data from the 4562 screens is calculated and carried to Form 1120 and to the selected schedules or forms Form 4562 Ise amp Multi form code 1120 Corporation Main Form Form 1120 C or 1120H Schedule A Cost of Goods Sold Schedule F Profit or Loss From Farming Delivery Iruck 01 10 2009 25656 10m Federal State F a RR LL AF S mn ehe a seme nant T Description Figure 5 Selecting Form 1120 from the 4562 screen For drop list NOTE For more on the For drop
51. e 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 44 Direct Entry Most cells in the trial balance worksheet are view only In a new template editable debit and credit cells are indicated by a dollar amount 0 Tax Year 2012 4 Importing Trial Balance Information Drake Software User s Manual Supplement Detail Some cells require more detail than can be entered on a single line These cells are Worksheets indicated by buttons Buttons do not work if macros are disabled see Opening a Template on page 40 Form 1120 p l Form 1120 nag E Other Expenses Detail requires d Es DED Form 1120 p g E 5 Non deductible Expenses Deti requires deta Form 1120 p Figure 23 Example of cells that require worksheets Click a worksheet button to open a worksheet in a new tab Figure 24 shows an exam ple of the Other Income worksheet A B D G G J Statement Required Other Income Form 1120 page 1 line 11 INC line 10 INC line 10 INC line 10 5 Section 481 adjustments INC line 10 6 State tax refund cash basis INC line 10 Total other income Figure 24 Trial balance worksheet for Other Income To return to the pr
52. ection For example election 01 General Election Statement is generated as STM ELOI The election statement includes the election title election wording and any additional information required for the election such a date or amount Entries for 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 3l Making Changes on the Fly Drake Software User s Manual Supplement Making Changes on the Fly Use the PRNT screen to override most program defaults Suppressing Forcing Documents To suppress or force the printing of certain documents go to the PRNT screen and select the desired options Many on the fly changes override the options established in Setup You can force the program to print the following 1120 items on a return Form 1125 E Schedules G 1120 C L M 1 and M 2 Form 4562 Next year depreciation listing Inactive returns PIN for the preparer s alternative electronic signature Form 1125 E is required if total receipts line 1b lines 4 through 10 NOTE are 500 000 or more Schedules L M 1 and M 2 are not required if receipts and total assets Schedule K line 13 are less than 250 000 The PRNT screen can also be used to suppress printing of the following items on a return Form and attachment references References are printed by default Form 4626 Alternat
53. em descriptions and beginning and end of year totals Tax Year 2012 45 Importing Trial Balance Information Drake Software User s Manual Supplement Depreciation 46 To enter details for additional lines of the Schedule L press PAGE DOWN and repeat steps 2 and 3 Data is saved automatically upon entry When the return is produced the Schedule L of the return reflects both the amounts imported from the trial balance worksheet and the totals of the amounts entered on the SCH2 screen On an 1120 return total depreciation consists of COGS depreciation which is reported on Form 1125 A Cost of Goods Sold and any remaining depreciation which is reported on page of the return For trial balance purposes enter deprecia tion amounts directly into the appropriate fields on the trial balance worksheet When the trial balance 1s imported the COGS depreciation expense amount flows directly to the appropriate line of Form 1125 A on the return Because the remaining depreciation can comprise any number of assets the amount entered on the trial bal ance does not flow to the return To ensure that each component of the total remaining depreciation is calculated into the return each asset must be entered on the applicable depreciation screens in data entry Entering the remainder of the depreciation 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
54. ered on 5471 screen orm 5472 25 Foreign Owned U S Corporation 1j 1 2 3 4 1 8b 4 17 5 2 7b TH Overrides entry on screen 1 for foreign address if is entered in ST field Country of Incorporation orm 7004 Application for Automatic Extension for Form 1120 l l Overrides calculated amount on Form 1120 page 1 line 31 6 Tentative tax before credits Payments Credits Form 1120 C line 28 Form 1120 H line 22 7 Overrides calculated amount on Form 1120 page 1 line 32h Form 8027 Employer s Annual Information Return of Tip Income and Allocated Tips Form 1120 C line 29 Form 1120 H line 23g 7 Allocation of tips if using other than calendar year Overrides calculated amount for line 7 of form place x in line 6 to activate this override Total payments and credits Form 8082 Notice of Inconsistent Treatment or Administrative Adjustment Request AAR Corporation s tax year Overrides the dates entered on screen 1 Overrides Worksheet po Override Location o j O 1120 Form 8716 Election to Have a Tax Year Other Than a Required Tax Year Form 8822B Change of Address eae ae 6 New mailing address Overrides information entered on screen 1 8 j Daytime phone number Overrides information entered on screen 1 Form 8873 Extraterritorial Income Exclusion D 5a 5b Overrides calculated results for line 42 override and enter 45 a
55. es cannot be carried back but are carried for ward up to 10 years Date of Sale or Exchange If a single date does not apply type Bankrupt Worthl1ss or Expired as applicable Select S or L from the Type of gain or loss drop list to have it treated as short term or long term If Expired is entered the return must be paper filed Date of Acquisition Enter the date acquired as an eight digit number using MMDDY Y Y Y format This date is used to determine whether the sale is short term or long term Enter VARTOUS INHERIT or INH2010 as applicable Only Various Inherit and Inh2010 are acceptable for e filing Press CTRL F to force the software to accept INH2010 Select S or L from the Type of gain or loss drop list to have it treated as short term or long term Tax Year 2012 Drake Software User s Manual Supplement What s New in Drake for Corporations e Type of gain or loss Select from the drop list to describe the gain or loss as long term or short term e Stock or other symbol Enter the stock or other symbol for the security sold e Quantity Sold Enter the quantity of securities sold Proceeds from sale Enter the sale amount If only the gain amount is avail able enter the gain amount and leave the Cost or other basis field blank e Check if loss Mark this check box if a loss based on the amount in the Pro ceeds from sale field 1s not allowed e Cost or othe
56. evious worksheet click the Corp TB tab labeled 1 in Figure 24 or click the Return button above the worksheet tabs labeled 2 in Figure 24 Note that a detail tab the Other Income tab in Figure 24 might include one or more detail worksheets labeled 3 in Figure 24 Do not create detail worksheets in data entry if the trial balance work NOTE sheet does not provide an equivalent detail worksheet Otherwise the trial balance will not be imported correctly 42 Tax Year 2012 Drake Software User s Manual Supplement Importing Trial Balance Information Totals Totals are displayed at the bottom of each worksheet If credit and debit columns are out of balance the worksheet highlights the out of balance amount Figure 25 i Tirages tine deias adie a N Uo ts Officer compensation p0 Salaries and wages p0 Waste removal 0 Het Income Lass Schedule M 1 line 1 301 056 Totals 971 301 OUT OF BALANCE Figure 25 Out of balance amount is highlighted if columns are out of balance In addition to credit and debit totals the main trial balance worksheet shows the net income loss to be calculated for line 1 of Schedule M 1 after all entries and adjust ments are made in the software see Figure 19 on page 39 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 w
57. heet Override Location Field Name Screen Line Location of Information Being Overridden 1120 ol Corporation General Information screen Overrides the fee calculated by the software The fees are entered in Setup gt Pricing irm number Overrides the default selection 1 reparer number Overrides the default selection 1 D D O D D my D D mH Overrides the default setting the login name Overrides the selection made from the ERO SSN Indicator drop list at Setup Options EF tab 3 mM UOI U D Q O 2 10 ca a lt o O O 0 m O g o Q c Oo o o Overrides amounts entered on screen E in Compensation of Officers field Overrides state income taxes calculated from information entered on ES screen using the code IN Overrides state franchise taxes calculated from information entered on ES screen using the code FH 12 Officer Compensation State income taxes 2 otate franchise taxes orm 1125 A Cost of Goods Sold 5 chedule J Loss Carryback Tax Computation and Payments 12 Tl Overrides calculated amount for entries on 4562 detail screen Depreciation p directed to the COGS in the Form selection box o Prior year overpayment credited to current year Overrides entry made on ES screen Overrides the estimated tax payments for TY 2011 entered on the ES screen Overrides amount coming from Form 4466 to line 32c
58. hen saving select File gt Save As For more information on file names in the trial balance program see Naming Convention on page 40 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 44 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 1 Open the return to which you will import the trial balance information i ie 2 Click Import gt Trial Balance Import from the menu toolbar The preliminary Trial Balance Import dialog box is opened 3 Click Next Tax Year 2012 43 Importing Trial Balance Information Drake Software User s Manual Supplement 4 Enter or select the trial balance file to be imported Use the Browse feature if nec essary By default each trial balance file is an Excel xls file showing the client name and ending in TB for trial balance as shown in the example in Figure 26 See Naming Convention on page 40 1 Import File Name ICADRAKET2ATBAABC L arperationT BLS Bl Figure 26 Selected file to import 5 Select the Trial Balance
59. ides Worksheet Override Location Screen Line Field Name 1120 Overrides amount from original Form 1120 line 32d 5f Overrides amount from original Form 1120 line 32f 1 Overrides amount from original Form 1120 line 32f 2 Overrides amount from original Form 1120 line 34 Overrides amount from original Form 1120 line 35 139 Application for Tentative Refund for Current Year Loss Carryback Overrides the IRS Service Center determined by the program 2C based on the location and amount of total assets Location of Information Being Overridden O1 C KO D uh Service Center TH orm 2220 Underpayment of Estimated Tax Screen 1 of 2 10 OVERRIDE installment amounts Overrides amount carried from ES screen orm 2553 Election by a Small Business Corporation TH Officer title for signature section Overrides the entry made in Part l line H Title on screen 2553 orm 3115 Change in Accounting Method General Information Principal business activity code venides selection made onscreen K lie 2a Overrides default calendar year dates or fiscal year dates entered on screen 1 Overrides default calendar year dates or fiscal year dates entered on screen 1 Overrides entry made on screen 1 Tax year of change begins Tax year of change ends 2 E 3 Oo D Contact person s telephone number Er Net Section 481 a adjustments for the year of change Overrides amount fl
60. instructions on e filing returns in Drake see Drake Software User 5 Man ual Tax Year 2012 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 Tax Year 2012 35 Binary Attachments Drake Software User s Manual Supplement port or explain an entry in the return In either case a PDF must be available to be attached to the return in order to be e filed with the return Attach files through the PDF Attachments screen accessible from the Electronic Filing section on the General tab of the Data Entry Menu The PDF Attachment Process Three main steps are involved in the PDF attachment process in Drake 1 Creating a PDF file to be attached 2 Informing the program that a PDF file will be sent with the return 3 Attaching the PDF file for e filing These steps are described in the following sections Creating a To create a PDF file PDF File 1 Scan the document to be attached to the return as a PDF document Ip Its a good idea to use the DDM scanning feature for this step 2 Save the document to your client s DDM file your computer s desktop or any where you can readily find it Many types of documents for inst
61. ionment factors from drop lists The Ending amount entered on the Property and Addition Property N TE screens in Drake12 will become the Beginning amount for property on the APPT screen when the client s return is updated next year in Drakel13 You may enter up to four states on one APPT screen If you need more than four states press PAGE DOWN for a new APPT screen The same state can be entered more than once when additional fields are needed select OT Other Reconciliation from the State Selection drop list when using the reconciliation worksheet Not every item appearing on the federal return may be sub ject to multi state apportionment When you select OT the data entered becomes a reconciling adjustment amount to aid in tying to the federal return Enter as much or as little detail as the states require If a state does not require any information to be entered no information will flow to that state s return Contact Information 22 If certain contact information required for state purposes is different from that entered on screen 1 use screen 2 This screen has fields for the following types of contact information e Registered office e Principal place of business e Books in care of e General contact information for the name title e mail address ID number and telephone number of the corporation s contact person Access screen 2 from the States tab or by entering 2 in the selector field and pressing ENTER
62. ive Minimum Tax Corporations Calculation and Other Options 32 The following calculation and other options are available Calculate Form 2220 penalty Select this box to have the program calculate the penalty for Form 2220 Underpayment of Estimated Tax by Corporations The program retains the rates as of 12 31 of the calendar year If a corporation has a fiscal year end the preparer must enter the effective rates manually Calculate WK 1120W based on 2012 taxable income The WK 1120W is an estimated tax worksheet based on the current tax year taxable income Calculate Form 4466 application for quick refund Form 4466 Corpora tion Application for Quick Refund of Overpayment of Estimated Tax A check mark in this box 1s the only entry needed to generate the form Turn off autobalance For more information on the autobalance feature in Drake see Autobalance on page 24 Tax Year 2012 Drake Software User s Manual Supplement Electronic Filing Prepare Form 7004 extension based on screen 1 info Select this box to pre pare a six month extension based on the information that has already been entered into the return Note that screen 1 must be completed to prepare an extension NOTE To prepare Form 7004 based on information other than or in addition to that provided on screen 1 use the 7004 or EXT screen Overriding Other Setup Options The following program defaults can be overridden from the
63. k value of property distributions other than cash made during the tax year An entry here is added to the amount calculated from entries on line 5 Distributions on the M2 screen and reflected on page 4 line 13 of the 1120 return If the answer on line 13 is Yes the corporation is not required to com NOTE plete Schedules L M 1 or M 2 To force the software to print these forms go to the PRNT screen and select Force Schedules G 1120 C L M 1 and M 2 to be printed Schedule K 1 The 1120 package includes a K1P screen for entering information from Form 1065 Schedule K 1 This screen works the same as it does for the other packages with amounts being carried automatically to the appropriate forms schedules and lines In addition e Ordinary income is carried to Form 1120 page 1 line 10 Other income with the partnership name and EIN required information e Ordinary losses are carried to Form 1120 page 1 line 26 Other deductions with the partnership name and EIN required information Codes or lines not included require additional information not available to the pro gram and must be manually entered in the proper place in the return State Specific Information Resident State The program automatically generates a return for the corporation s resident state Use screen 2 to enter company information as it should appear on the state return NOTE The link to screen 2 is on the States tab or ente
64. l 3 TIhedaleihetaxyearends aaa Other short year reasan Figure 15 Elections for 52 53 week tax years 4 For line 1 select the month in which the 52 53 week year ends for the current fis cal year 01 January 02 February etc 5 For line 2 select the day of the week the tax year always ends 6 For line 3 enter the actual date that the tax year ends the same date entered in the Fiscal year ending field on screen 1 Once a 52 53 week year is selected the entity must use that account NOTE ing period every year To change accounting periods the entity must submit to the IRS Form 3115 Application for Change in Accounting Method In subsequent years only the 52 53 week tax year check box on screen 1 must be marked the program automatically updates the dates Inactive Returns Entities that are inactive but are still required to file returns may e file inactive returns in Drake To indicate that a return is inactive 1 Go to the PRNT screen accessible from the General tab 2 Under Items to Print mark the Print inactive return box When the return is calculated the program displays the words Inactive Return on the main form of the return specifically in the box above line 1c Zeros are displayed where required by the IRS in order for amounts to be properly included in the e file data All EF messages must be cleared in order to e file an inactive IMPORTANT E For detailed
65. le costs not entered on lines 2 through 4 purchases cost of labor and additional section 263A costs In Drake two data entry fields are used to complete line 5 one for other costs excluding deprecia tion and one for depreciation Figure 3 Additional section 2634 cots 2 Other costs excluding depreciation 1 Demeddiomn aaa aaa fs Inventory at end of year 70 Methgdmeed fopeshiicinueqien ad Figure 3 Screen A Schedule A line 5 In the Depreciation field enter any depreciation that relates to the cost of goods sold unless the amount is flowing from the 4562 Depreciation Detail Items screen with COGS selected from the For drop list Note that this field of screen A is an override field an entry here overrides calculations from the 4562 screen Amounts entered in this field automatically adjust the total depreciation that is carried to page 1 of Form 1120 An entry in the Other costs excluding depreciation field opens a CTRL W worksheet The depreciation amount is included on the statement for other costs and should not be included in the Other costs excluding depreciation work sheet If using the trial balance import feature see Importing Trial Balance Information on page 38 enter depreciation amounts directly into the appropriate fields on the trial balance worksheet not in the fields in data entry When the trial balance is imported the COGS depreciation expense amount flows direc
66. list in Drake see Associating One Screen with Another in the Drake Software User s Manual Tax Year 2012 Depletion Enter depletion deductions on the DED screen See Form 1120 instructions and Pub 535 for more information on depletion Advertising Enter advertising expenses on the DED screen Pension and Profit Sharing The software reduces this expense based on the credit amount calculated from Form 8881 Credit for Small Employer Pension Plan Startup Costs Domestic Production Activities Use screen 8903 to complete Form 8903 Domestic Production Activities Deduction DPAD The calculated total of screen 8903 flows to line 25 of Form 1120 NOTE The DPAD is not allowed on returns with a net operating loss NOL for the current year It also cannot be used to create a current year loss Other Deductions Enter all other deductions on the DED screen The program calculates these amounts and incorporates the total into line 26 Other deductions of Form 1120 The follow ing deductions credits adjustments and exclusions also flow to line 26 e Amortization from Form 4562 e Credit from Form 8820 Orphan Drug Credit Tax Year 2012 Drake Software User s Manual Supplement Tax Refundable Credits and Payments e Exclusion from Form 8873 Extraterritorial Income Exclusion e Credit from Form 8941 Credit for Small Employer Health Insurance Premiums Drake automatically calculates meals and entertainment limitation
67. ly Check with your state for required codes Merchant Card and Other Third Party Income Reporting Tax Year 2012 Last year the IRS introduced Form 1099 K for merchant card and other third party income reporting and added a line to the Income section of the 1120 return for reporting this income Drake incorporated a data entry field in the Income INC screens of the Corporation package in anticipation that this field would be used how ever because the IRS required that a zero 0 be entered in this field for tax year 2011 the field was inactive grayed out in Drake This year the IRS reversed itself and removed the line from the Income section of the 1120 return and Drake removed the Merchant Card and third party payments from Form 1099 K line from the INC screens of the Corporation package No special reporting of this income is necessary Before You Start Drake Software User s Manual Supplement Qualified Real Property The provision of the Small Business Jobs Act of 2010 under which taxpayers could expense up to 250 000 of the cost of qualifying real property QRP placed in service during tax years 2010 and 2011 rather than recovering that cost through depreciation deductions was set to expire at the end of 2012 but through the American Taxpayer Relief Act of 2012 been extended for the 2012 and 2013 tax years Bonus Depreciation For the 2012 tax year e Assets placed in service in 2012 50 bo
68. mounts from lines 33 36 38 or 44 when using alternative computation Form 8903 Domestic Production Activities Deduction l Overrides program calculations for Form 8903 line 11 from 11 Form 1120 line 28 adds back 8903 DPAD amount from Form 1120 line 25 Form 8925 Report of Employer Owned Life Insurance Contracts 1 Type of business Overrides entries made on K screen line 2 Business activity Client Bill Adjustments and Payments CE Billing option overrides what is set up in options Override the option selected in Setup gt Options Billing tab Custom paragraph option overrides what is setupin Override the option selected in Setup gt Options Billing tab options Date to be printed on bill Overrides current date Drake Software User s Manual Supplement This page intentionally left blank Tax Year 2012 Drake Software User s Manual Supplement Corporations Index A address change of 6 e mail 22 entering on Form 1120 5 adjustment fields 33 adjustments and credits 29 advertising expenses 12 affiliated groups 18 alternative minimum tax AMT 28 amended returns 17 amortization 12 23 apportionment plan status 28 attachments binary 35 38 PDF see PDF files auto balance 24 32 B bad debts 9 10 bankruptcy 2 33 book to tax difference Schedule M 1 25 brother sister group 28 C calendar years 5 capital gains and losses 8 carryover of NOLs 13 29 change of name or address
69. mport allows only those detail worksheets required by the IRS Check updated returns for detail CTRL W worksheets that are not required For example the IRS does not require a detail worksheet for the Gross receipts or sales field on the INC screen if a return has a detail worksheet for that field the trial balance will not be imported correctly into the return Detail worksheets are indicated by red shading as shown in Figure 20 Ta Gms reces UN SAES o e S eee RE E t eee M ee Re ee 1b Returns and allowances plus any other adjustments T S cO E GHI c c Hu M Mc ee CE AULDNNIMMIS ooo ce coc S aT DM M M M Ee Rms FLT Ae 5 Interestingome E RECEN IE mur UN at e aao AR MENU c E uu Ea S Figure 20 Example of an unnecessary detail worksheet Remove unnecessary detail worksheets prior to import See Detail Worksheets on page 42 for more information on using detail worksheets in the trial balance 39 Importing Trial Balance Information Drake Software User s Manual Supplement 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
70. n l TP Overrides default calendar year dates or fiscal year dates 2a Income statement period Beginning entered on screen 1 l Overrides default calendar year dates or fiscal year dates 2a Income statement period Ending entered on screen 1 f Sch M 3 with Taxable Reconciliation o 3 with Taxable Income for Mixed Gr c a 1 Sch M 3 tax reconciliation amount from Pt Il line 30 Overrides amount calculated by the system for Part Il line 30 column d column d MT Electronic Funds Withdrawal Information Form 8916 R a o c o U Overrides amount calculated by the software for line 34 of Form 1120 Amount Owed Overrides federal return due date Overrides phone number entered on screen 1 General Info Overrides amount calculated by the software Overrides state s return due date or date the return is filed Overrides phone number entered on screen 1 General Info Overrides amount calculated by the software Overrides states return due date or date the return is filed Overrides phone number entered on screen 1 General Info Overrides amount calculated by the software Overrides state s return due date or date the return is filed Overrides phone number entered on screen 1 General Info Federal payment amount ederal Requested payment date ederal Daytime phone number ate payment amount ate Requested payment date ate Daytime phone number ate payment amount ate Requested payment date
71. n 6478 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit e Screen 8864 Form 8864 Biodiesel and Renewable Diesel Fuels Credit Additional fields for other income on the INC screen include e Amount of credit for tax on fuels e Interest income on receivables e Recoveries of bad debts e Section 481 adjustments e State tax refund e Taxable income from insurance proceeds e Other itemize Detail worksheet is required Data from Forms K 1 received from partnerships should be entered on NOTE the K1P screen This information is reflected in an attached statement in View mode of the return Losses are included with Other Deduc tions entered on the DED screen Compensation of Officers Form 1125 E Officer Information Screen E Check Boxes Ownership amp Participation Tax Year 2012 Form 1125 E Compensation of Officers 1s not generated automatically with the return unless it is required in other words unless total receipts line la plus lines 4 through 10 on Form 1120 are 500 000 or more To force the software to print Form 1125 E from the PRNT screen select Force Form 1125 E Officer Compensation Use screen E to enter officer information and compensation amounts Press PAGE DOWN to enter additional officers Screen E totals are calculated and carried to line 12 of Form 1120 The total of officer compensation can be entered in the Officer Compensation over ride field on the DED screen generally
72. n the corporation s financial records and the completed return information Tax Year 2012 27 Schedule O Controlled Group Information Drake Software User s Manual Supplement Schedule O Controlled Group Information Use screens O and OM accessible from the first Other Forms tab to fill out Sched ule O Consent Plan and Apportionment Schedule for a Controlled Group Press PAGE UP and PAGE DOWN to navigate from screen to screen N ITE Members of a controlled group are entitled to one 50 000 one 25 000 and one 9 925 000 taxable income bracket amount in that order AMT Adjustments and Other Items Alternative Minimum Tax AMT adjustments are limited among the members of a controlled group These should be entered in the Other information fields of the OM screen Figure 10 ite No s i J D aea Oe NE ae E 1 v Ae d pang T diam up vv wettce Ss Af OW Mat ae i ATO TO v Treue Other apportionments for the corporation listed on screen 1 Phaseout of AMT AMT Penalty for Accumulated exemption exemption failure to pay earnings credit amount amount estimated tax Figure 10 Other information fields for other AMT adjustments Types of Controlled Groups At the top of screen O mark the box indicating the type of controlled group for which Schedule O is reporting Controlled group types are briefly defined below See Sched ule O instructions for more details e Parent subsidiary group
73. ndex Form 1120 H U S Income Tax Return for Homeowners Associations 5 Form 2220 Underpayment of Estimated Tax By Corpora tions 14 32 Form 4466 Corporation Application for Quick Refund of Overpayment of Estimated Tax 14 32 Form 4797 Sales of Business Property 8 Form 5884 Work Opportunity Credit 29 Form 6252 Installment Sale Income 8 Form 6478 Alcohol and Cellulosic Biofuel Fuels Credit 9 29 Form 6765 Credit for Increasing Research Activities 29 Form 7004 Application for Automatic Extension of Time to File 16 33 Form 8050 Direct Deposit of Corporate Tax Refund 14 Form 8820 Orphan Drug Credit 29 Form 8844 Empowerment Zone and Renewal Community Credit 29 Form 8845 Indian Employment Credit 29 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Employee Tips 11 29 Form 8864 Biodiesel and Renewable Diesel Fuels Credit 9 29 Form 8873 Extraterritorial Income Exclusion 13 Form 8881 Credit for Small Employer Pension Plan Star tup Costs 29 Form 8903 Domestic Production Activities Deduction 12 Form 8912 Credit to Holders of Tax Credit Bonds 29 Form 8932 Credit for Employer Differential Wage Pay ments 29 Form 8941 Credit for Small Employer Health Insurance Premiums 29 Form 8941 Credit for Small Employer Health Insurance Premiums 13 G gains and losses 8 gross receipts 6 H header information 5 importing Schedule D data 2 importing t
74. neration for section determined by the code entered in the Investment credit code 49A d 3 B ii projects drop list Overrides the cost entered on the 4562 detail screen as determined by the code entered in the Investment credit code drop list Qualifying gasification project credit Basis of investment property not included in a above Overrides the cost entered on the 4562 detail screen as determined by the code RA entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as 11g Rehabilitation property Other pre 1936 buildings determined by the code RB entered in the Investment credit code drop list Rehabilitation property Pre 1936 buildings in the Gulf Opportunity Zone Form 3468 Overrides Worksheet Override Location Field Name 1120 Location of Information Being Overridden Overrides the cost entered on the 4562 detail screen as determined by the code RC entered in the Investment credit code drop list Overrides the cost entered on the 4562 detail screen as e a a determined by the code RD entered in the Investment credit Rehabilitation property Certified historic structures in the Gulf Opportunity Zone structures ode drop list 1h 1 C Energy Credit Basis of property using geothermal Overrides the cost entered on the 4562 detail screen as 2a energy placed in service during 2009 determined by the code EA entered in the I
75. ng 4 S salaries 10 SCH2 screen for Schedule L 23 Schedule A Cost of Goods Sold 7 25 Schedule B Additional Information for M 3 Filers 26 Schedule C Dividends amp Special Deductions 8 Schedule D Capital Gains and Losses entering data for 2 Schedule E Compensation of Officers 32 Schedule G Information on Certain Persons Owning the Corporation s Voting Stock 32 Schedule G Schedule G Information on Certain Persons Owning the Corporation s Voting Stock 19 Schedule K 18 Schedule K line 13 20 Schedule K line 3 18 Schedule K line 4 19 Schedule K line 5 19 Schedule K line 7 19 Schedule K 1 20 Schedule L Balance Sheet per Books 23 25 32 Schedule M 1 Reconciliation of Books with Return 25 32 Schedule M 2 Unappropriated Returned Earnings 27 32 Schedule M 3 Reconciliation of Books with Return 26 Schedule O Consent Plan amp Apportionment Schedule for a Controlled Group 28 section 263A costs 7 481 9 short year return 6 signatures electronic PIN 16 signing the return 16 state codes 21 tax refunds 9 stock ownership 18 20 Tax Year 2012 Index tax alternative minimum AMT 28 and payments 13 exempt interest 8 on fuels credit for 9 to book difference 25 years fiscal vs calendar 5 taxes and licenses 11 trial balance import 7 23 24 38 46 troubleshooting the M 2 27 U underpayment of estimated tax 14 updating a prior year return 4 V Vista Windows operating system 39 vou
76. nks at the top of the window Adjustments Worksheet Adjustment Location Screen Line Field Name Location of Information Being Adjusted Form 1120 NC Income ia Crosscsssipie arses Adjusts amounts from Schedule F line 11 if cash method is p used or line 45 if accrual method is used l Adjusts taxable interest income from Form 6252 when check 5 Interest income box is selected 7 Gross royalties Adjusts amounts from K1P screen line 7 DED Deductions l Adjusts the amount that flows from Schedule F line 17 to this Adjusts the amount that flows from Schedule F lines 23 a and Em Adjusts the amount that flows from Schedule F lines 26 a and s EIS oec a WAGES Detto NOUS KGHONOE Adjusts the amount that flows from Schedule F line 24 employees Form 1125 A Cost of Goods Sold Schedule C Dividends and Special Deductions Adjusts amounts coming from K1P screen line 6a Schedule K Other Information If YES enter the total amount of cash distributions and Adjusts amounts entered on M 2 screen for lines 5a 5b and or 14 13 LA the book value of property distributions here 5C Schedule M 1 Reconciliation of Income Loss per Books With Income per Return Adjust amounts credit adjustments made from Forms 5884 Expenses recorded on books but not deducted on 5884A 6765 8820 8845 8846 8881 expense amounts Form 1120 Other subject to limitations and nondeductible expenses carry automatically t
77. ns This section covers 52 53 week year returns and inactive returns Both types of returns can be e filed using Drake Electing a 52 53 Week Year Initial Return 34 To elect a 52 53 week year a new entity one that has never filed a return must enter data on both screen 1 and the ELEC screen To elect a 52 53 week year for any entity 1 In the If not calendar year section of screen 1 enter the Fiscal year beginning and Fiscal year ending dates Use MMDDY Y Y Y format as shown in the exam ple in Figure 14 2 Mark the 52 53 week tax year box If not calendar year Fiscal year begins 08 25 2012 Fiscal year ends 89 25 2013 52 53weektaxyear ELEC Figure 14 In this example the fiscal year begins 09 25 2012 and ends 09 26 2013 the Wednesday closest to the end of September giving the entity a 53 week year for 2012 An entity that has filed returns in the past must complete only steps 1 NOTE and 2 of this process An entity that has never filed a return before must continue with steps 3 through 6 3 Click the ELEC link to open the Election Options screen Figure 15 on page 35 Tax Year 2012 Drake Software User s Manual Supplement Binary Attachments 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 x 2 The day ofthe week on which the tax year always ends x
78. ns of includible corporations section 1504 a connected through stock ownership with a common parent corporation The common parent must be an includible corporation and the following require ments must be met The common parent must own directly stock that represents at least 80 of the total voting power and at least 80 of the total value of the stock of at least one of the other includible corporations Stock that represents at least 80 of the total voting power and at least 80 of the total value of the stock of each of the other corporations except for the com mon parent must be owned directly by one or more of the other includible corpo rations For this purpose the term stock generally does not include any stock that a is nonvoting b is nonconvertible c 1s limited and preferred as to dividends and does not participate significantly in corporate growth and d has redemption and liquidation rights that do not exceed the issue price of the stock except for a rea sonable redemption or liquidation premium See section 1504 a 4 See section 1563 d 1 for the definition of stock for purposes of determining stock owner ship Tax Year 2012 Drake Software User s Manual Supplement Schedule K Schedule K Line 4 If a corporation partnership trust individual or estate owned directly or indirectly 20 percent or more or owned directly or indirectly 50 percent or more of the total voting power of all
79. nus depreciation e Assets placed in service in 2013 50 bonus depreciation Before You Start Actions you might need to take before starting a 1120 return in Drake include e Updating a prior year return if you prepared the tax return last year e Changing a return from another type of return to an 1120 if the corporation has made such a change in the last year Updating a Prior Year Return in Drake A prior year return can be updated in three ways e Asa single return updated one at a time using Last Year Data gt Update Clients 2011 to 2012 recommended e When you open a return for the first time in the 2012 program and are prompted to update it e With all other returns in the program using Last Year Data gt Update Clients 2011 to 2012 not recommended When you update an 1120 return that was marked final the previous year the pro gram informs you that the return was marked final before prompting you to proceed Converting from Another Return Type If the corporation is electing to become an 1120 corporation after existing as another type of entity S corporation partnership etc it is necessary to indicate this in the program To change from another type of entity to an 1120 corporation in the program 1 From the Home window select Tools gt File Maintenance gt Change File Type 2 Enter the EIN of the entity and click Continue 3 Select the new return type 4 Click Continue to save the change
80. nvestment credit code drop list Energy Credit 11b Basis of property using Overrides the cost entered on the 4562 detail screen as 12b solar illumination or energy placed in service during determined by the code EB entered in the Investment credit 2009 code drop list Ux Energy Credit iic Qualified fuelceli ileal een in R M d property Basis of property installed etermine by e code EC entered in the Investment credi code drop list l Energy Credit Qualified microturbine property Basis of ACOE OSEN OEG oe Octal Sereen a 12i i determined by the code ED entered in the Investment credit property installed code drop list C Form 6478 2 ACON i es Pl Sealed RD oan Overrides the default rate Refer to the form instructions greater in fuel mixtures Alcohol less than 190 proof but at least 150 proof and 3 alcohol less than 190 proof but at least 150 proof in Overrides the default rate Refer to the form instructions 4 fuel mixtures aa Sees CE DIGSIG DID Meh egueeranereyye mets Overrides the default rate Refer to the form instructions Form 8609 Low Income Housing Credit Allocation Certification ai iets Me yee OMe pulee Overrides computed rate on Form 8609A Part Il line 2 Form 8827 Credit for Prior Year minimum Tax Overrides the amount calculated for Form 8827 line 8a if the Section 383 or Section 384 Amounts ds corporation has special items See Form 8827 instructions Schedule K 1 for 1065 Current Year 1
81. o this line cce Oi POOKS DU NONNE UCE OM TONM Adjusts amounts from K1P screen line 18 code B 8611 Recapture of Low Income Housing Credit 8 Recapture amount from pass through entity Adjusts amounts from K1P screen line 20 code F and G 4562 Part1 Carryover of disallowed deduction from prior year Adjusts amounts from the 4562 screen Form 1120 4 Form 4626 Alternative Minimum Tax Adjustments amp Preferences depreciation expense reported on Fed_Depr Form 8903 Domestic Production Activities Deduction eee 7 annog proauchon AUVES INCOME ION Pass Adjusts amounts from K1P screen line 13 code U through entities Form W 2 wages from pass through entities Adjusts amounts from K1P screen line 13 code V Client Bill Adjustments and Payments Adjusts amount to be printed on the client s bill corresponds to Adjustments Amount M the description on the BILL screen Drake Software User s Manual Supplement Appendix C Override Worksheet Tax Year 2012 The Override Worksheet is updated each year to help you understand what happens in the return when certain data is changed through the use of override fields The follow ing pages contain the 2012 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 Works
82. of Form Prior year s refund applied for on Form 4466 1120 Go to PRNT Print Options screen and select the option Calculate Form 4466 Overrides amount entered on screen 7004 Application for 6 Tax deposited with Form 7004 extension application Automatic Extension for Form 1120 Amount paid with extension 13 Estimated tax payments for current year DA o chedule K Other Information 10 9 Tax exempt interest received or accrued during the tax Overrides the amount of tax exempt interest entered on the INC year screen chedule L Balance Sheet Assets 3 3b o Overrides entries from screen A Cost of Goods Sold line 1 Inventory at beginning of year Overrides entries from screen A Cost of Goods Sold line 7 Inventory at end of year Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the Balance Sheet SCH2 screen Overrides calculations from on the 4562 detail screen or the Subsidiary Schedule for the
83. ogram adjusts the unappropriated retained earnings amount on Sched ule L by the difference between the total assets and the total liabilities and capital before the adjustment For example if assets are 1 000 and liabilities and capital are 900 the program increases the unappropriated retained earnings by 100 Tax Year 2012 Drake Software User s Manual Supplement Schedules M 1 and M 3 Reconciliation of Income per The program makes the adjustments due to differences in the balance sheet Incorrect data entry could cause these differences but they are usually the result of one of the following issues e An asset was deleted from 4562 screen Depreciation Detail Items instead of being indicated as sold e Beginning inventory amounts were adjusted on the Schedule A or ending inven tory amounts were entered incorrectly e Amounts were erroneously deleted from or changed on screen L To reconcile the differences it is best to compare the corporation s beginning and end ing balance sheet amounts for the tax year To turn off this feature for a specific return go to the PRNT screen and select Turn off autobalance NOTE If you are using trial balance import autobalance must be turned off prior to import See Preparing to Use Trial Balance Import on page 38 Schedules M 1 and M 3 Reconciliation of Income per Books Schedule M 1 is required if the balance sheet s total assets at the end of the year exceed 250 000 but are
84. on before a return is eligible for e file are highlighted in blue item 1 in Figure 1 You can change the colors at Setup gt Colors and turn off the warnings at Setup gt Options gt Data Entry tab Name and Address Information 11 2011205 ac Corporation ince gb ro UE E UR E ELE BHABDoRgDuSIMGSSqS ee U S ONLY Gui E CMI cC amid Access Foreign ONLY Province State Country Postal Cod Phone Figure 1 Required fields item 1 and foreign address fields item 2 Foreign Addresses Tax Year 2012 For 2012 Drake has increased support for foreign addresses with new Foreign Only fields on multiple screens in all packages These fields are locked to keep incorrect data from being entered and must be clicked once to unlock them item 72 in Figure 1 Click the field to unlock foreign address fields throughout the return Close the return and re open it to re engage the lock for unused screens What s New in Drake for Corporations Drake Software User s Manual Supplement To use the foreign address fields click in the first field and then enter the name of the foreign province or state as appropriate Select the appropriate foreign country from the drop list and then enter the postal code if appropriate Fields Added to Name Address Information In Care Of and Doing Business As data have been given separate data entry fields in the business packages to allow thi
85. orm 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips adjusts the line 17 amount These amounts also appear on the Taxes and Licenses Attachment NOT F ATT CTL referred to on line 17 with an ATT CTL reference To keep the notification from appearing go to the PRNT screen and select Suppress printing form and attachment references State tax amounts income tax and franchise tax entered on the ES Estimated Taxes screen are carried to the tax computation ATT TAX worksheet The state tax amount carried from the ES screen may differ depending on which method of accounting cash or accrual is used Enter interest expense on the DED screen Note that the Interest expense field is an adjustment field Any amount entered here is combined with the amount if any entered in the Interest fields on screen F Charitable Contributions Tax Year 2012 The DED screen provides two fields for entering data for line 19 Charitable contri butions Se e c IESU ET NUUS 9 rM poc we En mom cd NEN US Fn Be cL _ 1 004 o eee vec eed Cohosh Qualified conservation contributians FP Credit and collection costs 1 Lom a Deliv P ET iie Jen Ae e 1 A n e Te Figure 4 Charitable contribution lines on the DED screen e Contributions Enter the gross amount of contributions for the year that are subject to the 10 limit on deduction e Qualifie
86. otal voting power of all classes of the corporation s stock entitled to vote or the total value of all classes of stock of the corporation If there is more than one 25 or more foreign owner complete the fields for the person with the highest percentage of ownership Enter the percentage that person owned and the owner s country of residence Generally a 25 foreign owned corporation with a reportable transac tion during the tax year must file Form 5472 Information Return of a NOTE 25 Foreign Owned U S Corporation or a Foreign Corporation Engaged in a U S Trade or Business See Form 5472 for filing instruc tions and penalties for failure to file See section 6038A c 5 and the related regulations for the constructive ownership rules of section 318 that apply in determining if a corporation is foreign owned Tax Year 2012 19 Schedule K 1 Drake Software User s Manual Supplement If another entity owns 20 or more of the client s corporation or owns NOTE 50 or more of the corporation s stock entitled to vote see Schedule K Line 4 on page 19 Schedule K Line 13 On line 13 of screen K select Yes if the corporation s total receipts line 1a lines 4 through 10 on page 1 of Form 1120 are less than 250 000 for the tax year and its total assets at the end of the tax year are less than 250 000 If the answer to line 13 is Yes in the lower text box of line 13 enter the total amount of cash distributions and the boo
87. owing from Form 3115 section A line 1h Form 4626 Alternative Minimum Tax Overrides the calculated amount for line 8c for members of controlled groups See Form 4626 instructions 8c Member s reduced share orm 5471 SCHI Schedule I and Worksheets Subpart F income Overrides calculations from worksheets A D Earnings invested in US property Earnings invested in US property Overrides calculations from worksheets A D Previously excluded subpart F income withdrawn from Dvemdescalemmedtom wedcsdesis AD qualified investments Previously excluded export trade income withdrawn Gvemdescalseisn onto qu eene A uy from investment in export trade assets Worksheet A Shareholder s pro rata share of line 30 Overrides calculated amount Worksheet A Average exchange transaction rate Overrides rate entered on 5471 screen Worksheet B U S shareholder s pro rata share of l Overrides calculated amount U S property held Worksheet B U S shareholder s pro rata share of line l 1 Overrides calculated amount Th 3 3 oo Worksheet B Year end spot translation rate Overrides rate entered on 5471 screen Worksheet C U S shareholder s pro rata share of line l 4 Overrides calculated amount Worksheet C Average exchange translation rate Overrides rate entered on 5471 screen Worksheet D Pro rata share of line 1 Overrides calculated amount Worksheet D Average exchange translation rate Overrides rate ent
88. porting Trial Balance Information on page 38 for information on using the trial balance import to enter Schedule L data The SCH2 Screen The SCH2 screen see Figure 9 on page 24 is used to provide detailed information required by the IRS for certain lines on Schedule L The amounts are carried to Form 1120 and printed on an attached statement This screen can also be used in place of the actual L screen in Drake If you use this screen for all applicable lines on Schedule L you do not need to make any entries on screen L NOTE To access the SCH2 screen from screen L click an SCH2 Screen link Press Esc to return to screen L Entering To create a statement for a line using the SCH2 screen select the desired line from the Information Line Number drop list and enter descriptions and their corresponding amounts Tax Year 2012 23 Schedule L Balance Sheet per Books Drake Software User s Manual Supplement Line Number 6 Other current assets m Beginning of End of Description year year Notes receivable g Farts inventory 54321 Loans receivable 10203 Taxes prepaid 12033 D ee ee Figure 9 SCH2 screen fields for line number description and amounts Once the information is entered or if additional descriptions are required for the line press PAGE DOWN to access a new screen All line selections and screen descriptions are carried to the next year NOTE and year end amounts are carried to the
89. r 2 in the selector field and press ENTER 20 Tax Year 2012 Drake Software User s Manual Supplement State Specific Information Company information includes the type of return that applies for state purposes con solidated composite controlled group multi state and state specific dates and num bers for identification NOTE The company information fields on screen 2 apply for the resident state only Other States Data for other states must be entered manually in state data entry To access state data entry select the States tab or enter the two letter state code in the selector field and press ENTER Multi State Enter sales payroll and property factors on the APPT Multi State Apportionment Appor screen This screen provides one central location for entering all state apportionment tionment information instead of having to open each needed state s screen In addition to making data input faster and easier this feature provides two work sheets a summary worksheet SA SUM that can be used for verifying input and a reconciliation worksheet SA REC that ties the total of the state amounts to the fed eral return figures These worksheets are available in View mode The individual state apportionment screens will continue to be available in Drake12 but will be used to override data entered on the APPT screen No state apportionment related screens will be updated from Drakell to Drakel2 Drake 2012 Data Entry 1
90. r basis Enter the cost or basis If only the loss amount is available enter the loss amount and leave the Proceeds from sale field blank e Federal tax withheld Enter the amount of federal tax withheld from the pro ceeds of a sale e Wash sale loss disallowed Enter amount of wash sale loss that is disallowed Description Enter a description of a capital gain or loss item using stock ticker symbols or abbreviations In the past Drake supported 32 characters but only the first 15 were transmitted with an e filed return By default the first 15 characters were displayed in black text on the screen additional characters were displayed in red With Modernize e File MeF all characters are now transmitted and all char acters are displayed in black text on the screen e Basis not reported If the asset being entered is not being taken from a Form 1099 B indicate why by selecting an option from the drop list e Adjustments Up to three adjustments per screen are permitted For each adjustment select the applicable code from the drop list and enter the amount of adjustment and AMT adjustment 1f applicable to the gain or loss e AMT Several AMT related fields are included on screen 8949 Form 4626 will use amount in the AMT Adjustment to gain or loss fields on screen 8949 1120 package only Amount of gain loss subject Enter amount of gain or loss subject to 28 rate e State Use On
91. re 16 e An Attach PDF button on the toolbar item 2 in Figure 16 pg m Q wi Data Entry Print Setup Archive Email Hefresh Basic me Select Forms to View Print All Forms Sets EF Federal worksheets Notes Message Colorado Massachusetts North m 1120 U S Corporation Income Us 4 For calendar year 2012 or tax year beginning j Be information about Form 1120 and its separat ABC Corporation TYPE Number street and room or sufe no F a PO Bor see Instructions OR PRINT EE Main Street j F Sm Figure 16 The red MESSAGES file and the Attach PDF button Click MESSAGES file to view EF messages which provide information on how to attach the required documents to the return Click the Attach PDF button in the toolbar at the top of the window The EF PDF Attachments window Figure 17 displays the information entered on the PDF Attachments window in data entry A red X means the document has not yet been attached a green check mark indicates an attached document Drake 2012 EF PDF Attachments Hequired PDF Attachments The list below contains PDF Attachments that are required for electronic filing Select an item from the list and click Brawse to locate the associated PDF file Items with a green check mark already have the PDF file Items with a red 7 are missing the required PDF File Reference Description Required POF FileM ame e Form Instructions Title of House of Oak St TITLEHOUSEQAEST P
92. rial balance 38 46 income and deductions 6 13 instructions for filing 33 insurance proceeds income from 9 interest expense 11 viii Drake Software User s Manual Supplement Corporations income 8 9 inventory 7 L life insurance companies 28 limitations meals and entertainment 13 on NOL deductions 29 M 2 out of balance troubleshooting 27 maintenance costs 10 meals and entertainment 13 Multi State Apportionment 21 N net operating losses NOL 12 13 29 new features in Drake 1 next year depreciation listing 32 O officer compensation 9 ordinary gains and losses 8 Other Deductions 12 other income loss 9 out of balance M 2 troubleshooting 27 overrides 33 ownership foreign 19 of stock 18 20 percentages 10 P parent subsidiary group 18 28 PDF documents e filing 35 38 Pension and Profit Sharing 12 percentage stock and ownership 10 PIN electronic signatures 16 printing statements for Schedule L 24 suppressing forcing 32 prior year returns updating 4 R receipts 6 references to forms and worksheets 32 refunds direct deposit of 14 state tax 9 Tax Year 2012 Drake Software User s Manual Supplement Corporations reject codes 34 rent paid on business property 10 rental amp royalty income 8 repair costs 10 Resident State 20 resident state 23 returns consolidated 8 converting from another type 4 fiscal and calendar year 5 tax exempt organizations 990 35 38 updati
93. s NOTES A detail CTRL W worksheet is required for the Other itemize field The program automatically generates a worksheet if an entry is made here or in any other field where a worksheet is required by the IRS NOL Carrybacks and Carryforwards Enter NOL carrybacks from future years to the current year on screen J To enter mul tiple carryback amounts use a detail CTRL W worksheet Use the LOSS screen to enter NOL carryforwards capital losses and contribution carryforwards from prior years Use screen J Loss Carryback Tax Computation Payments to enter current year carrybacks to prior years Tax Refundable Credits and Payments Total Tax Screen J has fields for completing the Tax Refundable Credits and Payments sec tion of Form 1120 Note that some fields are overrides Press F1 to view more infor mation on a field For corporations that belong to a controlled group complete all applicable fields on screen J If allocating income to the various brackets on this screen you must enter 0 zero in the fields of the brackets to which no income is allocated The total tax from Schedule J is calculated and carried to line 31 of Form 1120 Controlled groups are also required to complete Schedule O Use the O NOTE screen in Drake to complete Schedule O See Schedule O Controlled Group Information on page 28 Estimated Taxes and Applied Refunds Over payment Tax Year 2012 Enter on screen
94. s controlled group tax bracket amounts tax payment information and certain credits Gross Receipts Enter gross receipts Form 1120 line 1a and returns and allowances Form 1120 line 1b on lines 1a and 1b of the INC screen Exclude any amounts that are to be reported on lines 4 through 10 of Form 1120 6 Tax Year 2012 Drake Software User s Manual Supplement Income and Deductions Cost of Goods Sold Form 1125 A Inventory Line 5 Other Costs Importing Trial Balance to SchA Tax Year 2012 Enter the cost of goods sold COGS on screen A Form 1125 A is not produced unless entries are made on screen A On screen A items 9a through 9f are direct entry fields and follow the NOTE format of IRS Form 1125 A For more information on completing these fields press F1 or consult the IRS instructions Inventory amounts entered on lines 1 and 7 of screen A automatically flow to Sched ule L line 3 Inventories Lines 1 and 7 of screen A are adjustment fields Amounts entered in these fields adjust add to or subtract from any amount being carried from the F screen Form 1040 Schedule F Profit or Loss from Farming NOTES to line 2 of Form 1120 The fields on screen L Schedule L Balance Sheet Assets for line 3 Inventories are override fields Anything entered in these fields over rides replaces the data entered for inventory on screen A Line 5 Other costs 1s designated for any applicab
95. s info to flow to state forms Figure 2 Name and Address Information Employer ID Ure Corporation s legal name DBA Doing business as Z sss Address Suite 8 State Info Figure 2 C O and DBA lines split in business packages Changes in Reporting of Capital Assets Screen codes 8949 D2 D Form 8949 Schedule D Form 1099 B Significant changes have been made to the way capital assets are to be reported In the past capital gains and losses from stocks bonds mutual funds and other investments were listed on Schedule D Capital Gains and Losses Now they are to be listed on the new Form 8949 Sales and Other Dispositions of Capital Assets and summarized on Schedule D Information for these forms is entered on screens 8949 D or D2 These screens are available under the Assets Sales Recapture tab of the Data Entry Menu Form 1099 B Proceeds From Broker and Barter Exchange Transactions N DTE now reports individual transaction information and contains cost basis fields for brokers who are required to supply such information Enter 1099 B data on screen 8949 Screen 8949 has fields for Form 8949 Schedule D and Form 1099 B data Following are some guidelines for data entry on this screen first for 1099 B information and then for 8949 specific information Foreign Expropriation Mark this box if the corporation sold foreign property Foreign expropriation capital loss
96. s to automatically fill the screen with data from the original return that is the return as originally entered in Drake If the corporation s name or address information has changed enter the new information on screen X Make all other nec essary changes to the regular data entry screens Open screen 2X or press PAGE DOWN while in screen X Enter the line number from the X screen that corresponds with the changes that were made in data entry For instance if you made a change in the tax on screen J enter 4 for Tax in the Line Number field of the 2X screen Enter an explanation in the Explanation of Changes text box If more than one item was changed in data entry press PAGE DOWN to open another screen 2X Enter the line number from screen X that corresponds to this change and enter another explanation When you go to View mode the program calculates the amended return To amend a return not previously prepared in Drake create an 1120 return in Drake and open screen X Complete the applicable fields on this screen and then enter the amended data in the appropriate other screens as described in the example below Example An 1120 return was filed using a different tax software but gross rental income was not reported on line 6 To amend the return From the Data Entry Menu of an 1120 return open screen X Complete all applicable fields on screen X Close screen X and open the INC screen Enter the amount of unreported in
97. same Goto Setup gt Preparer s and ensure that the Alternative Electronic Signa ture box is marked for the preparer Complete the PIN screen for the return e Ifthe return preparer and ERO are not the same Goto the PRNT screen for the return and complete the field labeled PIN for preparer s alternative electronic signature The PIN entered should match 16 Tax Year 2012 Drake Software User s Manual Supplement Amending a Return the one entered for the preparer in Setup gt Preparer s For more informa tion press F1 in this field NOTE Setup gt ERO must still be completed in Drake for e filing See the IRS instructions for further details on signing requirements Amending a Return Returns Previously Prepared in Drake New Returns Tax Year 2012 The program can automatically fill the 1120X screen for Form 1120X Amended U S Corporation Income Tax Return When you amend a return in Drake the amended information replaces the original in the data file Before amending a return you CAUTI DN should archive the original to avoid losing previously submitted data For more information on archiving returns see Archive Manager in Chapyer 6 Return Results of the Drake Software User s Manual Tax Year 2012 From the Data Entry Menu of an 1120 return enter an X in the selector field and press ENTER Screen X is also accessible from the first Other Forms tab At the prompt select Ye
98. ss ENTER Tax Year The software uses the calendar year as the default tax period for all corporate returns no date entries are required on screen 1 for a December 31 tax year end Fiscal and Ifthe corporation uses a fiscal year where the year begins in the current calendar year Calendar and ends in the next specify the beginning and ending dates in the If not calendar Years year section in the lower left corner of screen 1 The program adjusts calculations for depreciation and for gains and NOTE losses on sales of assets based on the entity s tax year For information on filing with a 52 53 week year see Electing a 52 o3 Week Year Initial Return on page 34 Tax Year 2012 5 Income and Deductions Drake Software User s Manual Supplement Short Year An entity may have a short year return if the entity is changing accounting periods Returns with IRS approval Form 3115 or if this is its first or last year in business and the tax year 1s not a full year To indicate a short year return use the fiscal year date fields on screen 1 to indicate the beginning and ending dates for the current year If filing a short year return other than an initial or final return you have to provide an explanation To do so go to the ELEC screen and select an explanation from the Other short year reason drop list Your explanation will be displayed at the top of the first page of the tax return If you do not select an explanation
99. t amount Requested payment date Daytime phone number 3 Payment is for State State payment amount Requested payment date Daytime phone number Figure 7 Required fields on PMT screen withdrawal selection 1 account information 2 specified return 3 The name of the financial institution RTN account number and account type are required As with the DD screen the RTN Account number and Type of account data must be entered twice item 2 in Figure 7 Finally the PMT screen must indicate the return to which the payment data applies item 3 in Figure 7 Mark the box of the applicable return type 1120 7004 or 1120X Withdrawal from Multiple Accounts Only one account can be designated for direct debit of funds for payment of federal or state taxes To have state amounts withdrawn from an account other than the account indicated for federal payments complete the fields in the State Account sections of the PMT screen NOTE Neither the federal nor the state balance due can be paid from more than one account Tax Year 2012 15 Filing an Extension Drake Software User s Manual Supplement Filing an Extension Calendar year returns are due on March 15 2013 By filing Form 7004 a corporation can extend the deadline six months to September 15 Fiscal year returns are due on the 15th day of the third month after the end of the corporation s year The
100. t to either income or expenses Drake 2012 carries the required adjustments to the appropriate line of the return and to Schedule M 1 or M 3 Manually reducing the expenses deductions or increasing the income for these credits causes the return to be out of balance Adjustments are made to other income for the credit amounts for the following cred its e Form 6478 Alcoholic and Cellulosic Biofuel Fuels Credit e Form 8864 Biodiesel and Renewable Diesel Fuels Credit e Form 8912 Credit to Holders of Tax Credit Bonds interest income Adjustments are made to the appropriate deduction expenses for the credit amounts for the following credits e Form 5884 Work Opportunity Credit e Form 6765 Credit for Increasing Research Activities e Form 8820 Orphan Drug Credit e Form 8845 Indian Employment Credit Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Cer tain Employee Tips e Form 8881 Credit for Small Employer Pension Plan Startup Costs Form 8844 Empowerment Zone and Renewal Community Employment Credit e Form 8932 Credit for Employer Differential Wage Payments e Form 8941 Credit for Small Employer Health Insurance Premiums Adjusting Charitable Contributions NOL Limitation on Deduction Tax Year 2012 Corporations with a net operating loss NOL carryover from any taxable year must apply the special rule of IRC section 170 d 2 B for charitable contributions The rules are designed to prevent a
101. tly to the appropriate line of Form 1125 A and is calculated accordingly Income and Deductions Drake Software User s Manual Supplement Dividends Schedule C Interest Enter dividends and special deductions on screen C Schedule C The Dividends Received Deduction Worksheet WK DRD is generated from data entered in these fields The result of the WK DRD is carried to Schedule C of the return The total from Schedule C line 19 column A is carried to Form 1120 line 4 Dividends and the total from Schedule C line 20 column C is carried to Form 1120 line 29b Special deductions NOTE If the corporation is filing a consolidated return do not enter non included dividends here or anywhere else in the program Line 5 of Form 1120 1s for interest income which 1s entered on the INC screen Note that the Interest income field is an adjustment field an amount entered there is com bined with the interest amount if any entered on screen 6252 Form 6252 Installment Sale Income and interest income entered on screen K1P Schedule K 1 Form 1065 Enter tax exempt interest income on the INC screen This amount flows as applica ble to Schedule K line 9 and to Schedule M 1 line 7 Override fields are available on screens K and M1 if necessary to override the INC screen amount Rents and Royalties Capital Gains Enter gross rents and gross royalties using the direct entry fields on the INC screen Line 7 Gross
102. used when Form 1125 E is not required An entry in that field overrides any calculations from screen E changing lines 12 and 27 of the 1120 but not Form 1125 E Screen E has two check boxes Signs return and Books in care of Mark the applica ble box on the screen that identifies the officer who either signs the federal or state paper returns or is the contact person for the books state return only The Ownership and Participation fields on screen E are required Fields are as fol lows Income and Deductions Drake Software User s Manual Supplement e Total Enter the officer s ownership percentage e Common Enter the percentage of common stock owned by the officer Preferred Enter the percentage of preferred stock owned by the officer e Time Enter the percentage of time the officer devotes to the corporation Enter percentage amounts in whole numbers For example enter 40 for 40 Salaries and Wages Use the DED screen to enter salaries and wages paid Note that the DED screen amount is reduced by the amount if any of credit from Form 5884 Also note that this is an adjustment field an amount entered here adjusts any amount entered on screen F Form 1040 Schedule F Profit and Loss from Farming in the Labor hired field The Salaries and wages amount should not include compensation of NOTE officers Enter officer compensation data on screen E or as Officer Compensation on line 12 of the DED screen

Drake Software User`s Manual

Contents

Download Pdf Manuals

Related Search

Related Contents