Drake Software User's Manual Tax Year 2011 Supplement: S ...

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Income and DeductionsDrake Software User’s Manual Supplement• Interest income on receivables• Recoveries of bad debts• Section 481 adjustments• State tax refund• Income from insurance proceedsCompensation and WagesTo enter income or loss from a partnership, estate, or trust, use the K1P or K1Fscreen. (Click the screen links on the INC screen or access them from the OtherForms tab).To enter additional sources of income not shown, create a CTRL+W worksheet usingthe Other Income (itemize) field on the INC screen.Enter shareholder compensation and employee wages on the DED screen. Drake hastwo fields each for officer compensation and employee salaries/wages: one for nonshareholders,and one for shareholders.NOTESThe Salaries and wages to non-shareholders field is an adjustmentfield. An amount entered here is combined with any amount entered inthe Labor hired field on screen F.The shareholder fields are used for calculating section 179 income limitations;see the WK_S179L worksheet in View mode.CreditAdjustmentsA credit adjustment is made for the following forms:• Form 5884, Work Opportunity Credit• Form 8844, Empowerment Zone and Renewal Community Employment Credit• Form 8845, Indian Employment CreditThe adjustment is indicated on Form 1120S with the ATT_SSW literal. (Figure 3).Actual adjustments are shown on the ATT_SSW worksheet in View mode.Figure 3: ATT_SSW literal on Form 1120SRepairs and MaintenanceEnter repair and maintenance costs on the DED screen. An amount entered there iscombined with the amount, if any, entered in the Repairs and maintenance field onscreen F.8 Tax Year 2011
Drake Software User’s Manual SupplementIncome and DeductionsBad DebtsUse the Bad debts field on the DED screen to enter the total debts that became worthlessin whole or in part during the year, but only to the extent that such debts related toa trade or business activity.NOTESEnter deductible non-business bad debts as a short-term capital loss onSchedule D (Form 1120S).Cash-method corporations cannot take a bad debt as a deductionunless the amount was previously included in income.RentsUse the DED screen to enter rent paid on business property used for a trade or businessactivity. If the corporation rented or leased a vehicle, enter the total annual rent orlease expense incurred in the trade or business activity of the entity, and then completePart V of the 4562 (screens 8 and 9).NOTEThe Rents field is an adjustment field. An amount entered here is combinedwith the amount, if any, entered in the Rent fields on screen F.Taxes and LicensesEnter tax and license amounts on the DED screen. Amounts are combined and thesum generated on Form 1120S, line 12 (“Taxes and licenses”). Note that credit fromForm 8846 (Credit for Employer Social Security and Medicare Taxes Paid on CertainEmployee Tips) should be entered on screen 8846, which is accessible via a link fromthe DED screen. These amounts also appear on the “Taxes and Licenses Attachment,”referred to on line 12 with the printed “ATT_STL” reference. (Figure 4.)Figure 4: Notification on line 12 of the 1120S return that theTaxes and Licenses Attachment has been produced with the return.To keep the notification from appearing on line 12 of the return, go to the PRNTscreen and select Suppress printing of 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 taxamount carried from the ES screen may differ depending on which method ofaccounting (cash or accrual) is used.Tax Year 2011 9
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