User's Manual - Drake Software

Drake Software User’s Manual
Individual Entity Packages
Figure 14-1: Line 2, “Net rental real estate income (loss)” of Schedule K-1
The amount on line 2 of Schedules K-1 is the shareholder’s or partner’s pro-rated
share of the totals from line 21of Form 8825, Rental Real Estate Income and Expenses
of a Partnership or an S Corporation. The resulting attachment, “K-1 Rental Real
Estate Activity” (listed as “K1_8825” in View mode), includes the shareholder’s or
partner’s name, ownership percentage, address of the property, the property “type” (as
selected from the Type of Property drop list on screen 8825 in Drake; see Figure 14-
2), and the total from line 17 of Form 8825 (the resulting net income or loss).
Preparers should be aware:
Figure 14-2: Selecting Land as property type on screen 8825
• Attachment K1_8825 is generated automatically whenever Form 8825 is generated.
• If the property type selected from the Type of Property drop list on screen 8825
(Figure 14-2) is Land (type “5”) or Self-Rental (type “7”), this type of property is
“recharacterized” by the IRS as “active” income if there is a net profit. (Net losses
are subject to passive limitations.) The preparer must use this K-1 information
when completing the individual shareholder’s or partner’s return.
• Columns for “Line 19, 4797” and “Line 20s, Pass-thru” appear on the attachment,
but only a total will be included for those columns. No other details will appear.
• To explain details of the totals from the “Line 19” and “Line 20a” columns of the
“K-1 Rental Real Estate Activity” attachment (lines 19 and 20a of Form 8825) to
the shareholders or partners, open Drake, go to the K1 screen, click the Supplemental
Info tab, and enter the information from the attachment. (Figure 14-3 on
page 370)
Tax Year 2012 369