User's Manual - Drake Software

Drake Software User’s Manual
Supplemental Income
• This is your main home, or second home — Select this box if the property is the
taxpayer’s main or second home. If personal use is indicated and this box is
marked, mortgage interest is carried to Schedule A.
NOTES
The program uses the percentages entered when calculating the business
percentage of expenses and taking deductions. The remaining
percentage of taxes entered is carried to Schedule A.
A taxpayer with more than 10% use of a rental can take expenses up to
the amount gained, regardless of percent use. With 50% use, for example,
the system does not calculate 50% of expenses; it instead calculates
the gain and takes expenses up to that gain.
If the If multi-dwelling unit... box is marked, a worksheet is produced
for each property that lists expense types and divides expense amounts
into personal, rental, and total amounts.
Direct and
Indirect
Expenses
The program can take both direct and indirect expenses into account when calculating
a return for a taxpayer who occupies one unit of a multi-dwelling property while renting
out the others.
NOTE
Direct expenses are those that affect only the rental units. Indirect
expenses are those that affect both the rental units and the taxpayer’s
dwelling. Indirect expenses can also be personal expenses.
Enter expense amounts using the columns on screen E (Figure 5-24).
Figure 5-24: Columns for Direct Expenses and Indirect Expenses
IMPORTANT
If the If multi-dwelling unit... box is not marked, the program
ignores any figures entered in the Indirect Expenses column.
Sale of
Property
PMI
If a property was sold and Schedule E must be associated with data from a 4797
screen (Form 4797, Sales of Assets), use a passive activity number (PAN) code to tie
them together. To do so, enter a number in the PAN box on screen E, and then enter
the same number in the PAN box of the applicable 4797 screen.
To indicate that insurance includes Private Mortgage Insurance (PMI), mark the check
box under item 9 on screen E. The program will display “PMI” on line 9 of the printed
Schedule E (Figure 5-25 on page 124).
Tax Year 2012 123