User's Manual - Drake Software

Supplemental Income
Drake Software User’s Manual
General
Property
Information
Information entered in the Property description for reporting field at the top of the
screen (shown in Figure 5-22 on page 121) appears in the headings of all generated
worksheets associated with the activity.
The following general-information fields are also located at the top of screen E:
• Activity type — If option D (“Not a passive activity”) is selected and EIC is
involved, the program prints “NPA” on the appropriate line of Schedule E. For
more on selecting activity types, see “Activity Types” on page 124.
• Address and Type of Property — Enter the property address in the fields provided,
and select the property type from the options below those fields. If Other,
type a brief (20 characters or fewer) description of the property type.
• Some investment is NOT at risk — Mark this box if portions of the real-estate
investment are not at risk. To enter data for computing deductible profit or loss
from at-risk activities, click the Form 6198 link to open the 6198 screen (for
Form 6198, At-Risk Limitations). When you exit the 6198 screen, the program
returns you to screen E.
• Property was 100% disposed of in 2012 — Mark this box if the property was
sold or otherwise disposed of in the current tax year.
• Property is an SMLLC — Mark this box if the property is a Single Member
Limited Liability Company (state use only).
NOTE
If the property was 100% disposed of and a 4562 screen has been
completed, the software automatically determines if the disposal was at
an overall loss or gain and prepares Form 8582, Passive Activity Loss
Limitations, and its worksheets accordingly.
Property
Usage
Item 2 of screen E contains fields for indicating how much of a property was used for
fair rental and personal purposes, and a check box to indicate that a taxpayer owned a
property as a member of a qualified joint venture that is reporting rental income not
subject to self-employment tax.
Other property-usage fields are:
Figure 5-23: Item 2 of screen E
• If multi-dwelling unit... — If the taxpayer lives in one unit of a multi-dwelling
property while renting out the others, enter the percentage occupied by the taxpayer.
An entry here causes the software to take indirect expenses into account
when calculating the return (see “Direct and Indirect Expenses” on page 123).
• To use Tax Court... — Mark the applicable check box (see Figure 5-23), and
enter the number of days owned in the text box next to it. (If the text box is left
blank, the program uses 365 as the default.)
122 Tax Year 2012