User's Manual - Drake Software

Drake Software User’s Manual
Supplemental Income
5. Click Export. When the Export complete dialog box is displayed, click OK. The
transferred data is highlighted in the K1 screen of each personal return that
received the data.
IMPORTANT
Once the export is complete, any state K-1 amounts, if different
from the federal, must be entered manually. See “State K-1
Amounts (If Different)” on page 125).
Tracking
Adjusted
Basis
Drake takes current-year basis limitations into account when calculating K-1 amounts
and tracks the adjusted basis for a K-1 from a pass-through entity (partnership or S
corp). The program also limits any losses based on the basis calculation and carries
forward to subsequent years the adjusted basis and any disallowed losses.
When a return with adjusted basis data is calculated, the amounts entered on the K1P
and K1S screens undergo the basis limitation calculation. The limited amounts are
then used in at-risk and passive loss limitation calculations, if applicable. Because
amounts flow from both the K1 and Basis Worksheet screens to determine the
amount of basis the taxpayer has for deducting losses from the K-1, it is necessary to
enter all basis data on the Basis Worksheet screens. These are accessed from either
the K1P or K1S screen. (Tabs are shown in Figure 5-26 on page 124.)
NOTE
If you calculate a return with K-1 information but have not entered anything
on the Basis Worksheet screens, the program generates a note
advising you to do so.
How the
Calculation is
Applied
Adjusted
Basis
Once it is able to calculate the adjusted basis, the program takes steps based on calculation
results:
• Adjusted Basis More than Zero — If the adjusted basis is greater than zero
based on current- and prior-year entries, amounts flow to the return and the software
tracks and updates the adjusted basis amounts going forward.
• Adjusted Basis Zero or Less — If the adjusted basis is zero or less based on current-
and prior-year entries, amounts flow to page 2 of the printed Adjusted Basis
Worksheet (see “Printed Worksheets” on page 129) to determine how much loss is
allowed in the current year. Disallowed amounts are stored and updated to the
next year.
The first Basis Worksheet screen contains fields that are necessary to properly calculate
adjusted basis for the 1040 return. Figure 5-29 on page 128 shows the adjusted
basis fields for a partnership.
Tax Year 2012 127