Drake Software Evaluation Guide

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Drake Software Evaluation Guide

2 0 0 8 D R A K E S O F T W A R E C o p y r i g h t | iCopyrightThe 2008 Drake Evaluation Guide, Drake Tax Software, and any other related materials are copyrightedmaterials. All rights are reserved by Drake Enterprises, LTD., including all ownership rights. This document,associated software, and related material are the property of Drake Enterprises, LTD. No part of this documentor associated online documentation may be reproduced or transmitted in any form or by any means without theexpress written permission of Drake Enterprises, LTD.Publication Date: Spring 2009© 2009 Drake Enterprises, LTD. All rights reserved.Printed in USA.While every attempt has been made to produce an accurate and complete manual, there is no warranty,expressed or implied, to that effect. Drake Enterprises, LTD., assumes no liability for damages or claimsresulting from the use of the information contained herein.TRADEMARKSThe Drake Software logo and Drake Software are registered trademarks of Drake Enterprises,LTD. Other product names mentioned in this manual may be trademarks or registered trademarksof their respective companies.Copyrighted MaterialDrake Software Evaluation Guide


i i | C o p y r i g h t2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E | i i iTable of ContentsCopyright.......................................................... iTrademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iWelcome............................................................1CPE Information..............................................3Installing the Software.....................................5System Requirements. . . . . . . . . . . . . . . . . . . . . . 5Registering Your Software . . . . . . . . . . . . . . . . . 5Installation from CD . . . . . . . . . . . . . . . . . . . . . . 6Installing from Drake Software Website . . . . . 7State and City Programs. . . . . . . . . . . . . . . . . . . . 7Installing PDF995 . . . . . . . . . . . . . . . . . . . . . . . . 9Viewing Drake Tutorials . . . . . . . . . . . . . . . . . . 10Navigating the Program ................................13Logging in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Home Window . . . . . . . . . . . . . . . . . . . . . . . . . . 13Navigating Drake . . . . . . . . . . . . . . . . . . . . . . . . 14General Flow of Commands . . . . . . . . . . . . . . . 16Program Setup ...............................................17Setup Wizard . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Required Program Settings . . . . . . . . . . . . . . . . 19Optional Program Setup. . . . . . . . . . . . . . . . . . . 26Review Questions 1 ........................................37Hot Keys.........................................................39Review Questions 2 ........................................41Return Preparation........................................43Opening a Return . . . . . . . . . . . . . . . . . . . . . . . . 43Data Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Preparing The 1040 Evaluation Return . . . . . . . 61Review Questions 3 ........................................99Electronically File the Return.....................101Applying for an EFIN . . . . . . . . . . . . . . . . . . . 101Verifying EF Settings. . . . . . . . . . . . . . . . . . . . 101Preparing the Return for Electronic Filing. . . . 102Electronically Filing Returns . . . . . . . . . . . . . . 105Practicing Electronic Filing . . . . . . . . . . . . . . . 110Searching the EF Database. . . . . . . . . . . . . . . . 110Viewing Your Online EF Database . . . . . . . . . 111Including Bank Products . . . . . . . . . . . . . . . . . 112Review Questions 4 ......................................113Business Return............................................115Preparing the 1120 Evaluation Return . . . . . . . 115Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133Review Questions Part 5..............................135Partnership Return......................................137Preparing the 1065 Evaluation Return . . . . . . . 137Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157Review Questions Part 6..............................159Tools ..............................................................161Updating the Software . . . . . . . . . . . . . . . . . . . 161Printing Blank Forms . . . . . . . . . . . . . . . . . . . . 161Repairing Index Files . . . . . . . . . . . . . . . . . . . . 162Maintaining Files . . . . . . . . . . . . . . . . . . . . . . . 162Producing Letters . . . . . . . . . . . . . . . . . . . . . . . 163Amortizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163Edit EIN Database . . . . . . . . . . . . . . . . . . . . . . 164Scheduling Appointments . . . . . . . . . . . . . . . . 164Other Tools. . . . . . . . . . . . . . . . . . . . . . . . . . . . 166Calculate and Print the Return ....................89Return Calculations . . . . . . . . . . . . . . . . . . . . . . 89Viewing and Printing the Return . . . . . . . . . . . . 91Copyrighted MaterialDrake Software Evaluation Guide


2 0 0 8 D R A K E S O F T W A R E W e l c o m e | 1WelcomeThank you for taking the time to review Drake Software and the 2008 Evaluation Guide. We appreciate thisopportunity to familiarize you with our software and its capabilities. Drake is a pioneer in the tax software andelectronic filing industry. This year alone, Drake filed more than seven million federal-accepted, and more thanfive million state-accepted electronic returns. If you are not already electronic filing your clients’ returns, let ushelp you. Electronic filing is free for federal and state returns in Drake Software.You can also review this guide and receive CPE credits.Upon completion of this Evaluation Guide you will be able to:• Navigate Drake Software• Prepare basic 1040, 1120, and 1065 returns• Electronically file returns• Utilize the EF Online Database, Tax Planner, and Drake Document Manager• Run various reports using Drake ToolsIf you have any questions about Drake Software, please contact your salesperson at (800) 890-9500 or ourcourteous and knowledgeable support staff at (828) 524-8020.This Evaluation CD contains:• A complete copy of the 2008 Drake Software tax software• All state programs• Drake Document Manager• Tax Planner• Client Status Manager• Tutorials• Practice returns and solutions in PDF format• PDF995 software• 2009 Client Write-Up softwareDrake Software ManualCopyrighted Material


2 | W e l c o m e 2 0 0 8 D R A K E S O F T W A R EDrake Software ManualCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C P E I n f o r m a t i o n | 3CPE InformationNo prerequisites are necessary to participate in this self-study (distance-learning) overview course. There is nocharge to participate in this program and no refund policy.Up to eight credits (based on a 50-minute hour) are available. CTEC credits are available, 4 federal/0 state,based on a 100-minute hour).To receive CPE credits, install Drake Software and read the chapters in this guide. Take the final exam usingthe answer sheet, complete the evaluation, and send both to:Drake Software Education235 E. Palmer St.Franklin NC, 28734-3049If you prefer, send the exam answer sheet and evaluation by fax to (828) 349-5713.The exam and the evaluation must reach Drake Software no later than April 15, 2010.For questions or complaints regarding Drake Software CPE credits, contact Drake’s Education Department at(828) 524-8020.Drake Software is registered with the National Association ofState Boards of Accountancy (NASBA) as a sponsor ofcontinuing professional education on the National Registry ofCPE Sponsors. State boards of accountancy have finalauthority on the acceptance of individual courses for CPEcredit. Complaints regarding registered sponsors may beaddressed to the National Registry of CPE Sponsors, 150Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417.Web site: www.nasba.org.Drake Software has been approved by the California TaxEducation Council to offer the 2008 Evaluation Guide,3038-CE-0036, which provides 4 hours of federal credit and 0hours of state credit towards the annual continuing educationrequirement imposed by the State of California. A listing ofadditional requirements to register as a tax preparer may beobtained by contacting CTEC at P.O. Box 2890, Sacramento,CA, 95812-2890, toll-free by phone at (877) 850-2832, or on theInternet at www.ctec.org.Drake Software is registered with the Texas State Board ofPublic Accountancy as a sponsor of continuing professionaleducation.Drake Software is approved the Oregon State Board of TaxPractitioners as a sponsor of self-study continuing professionaleducation. The 2008 Evaluation Guide is approved for 7CPEcredits based on a 60 minute hour.Drake Software is an IRS qualified sponsor of continuingprofessional education for Enrolled Agents. Sponsor ID # 275Copyrighted MaterialDrake Software Evaluation Guide


4 | C P E I n f o r m a t i o n 2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E I n s t a l l i n g t h e S o f t w a r e | 5Installing the SoftwareThe 2008 Evaluation Guide software disc includes the federal packages, state packages, and PDF995 software(required for printing PDF files). The software is also available for download on Drakesoftware.com. Afterinstalling the software, complete the required and recommended software settings. For setup instructions, see“Setup Wizard” on page 17.SYSTEM REQUIREMENTSTo run Drake Software, your computer operating system must be Windows 98 or later and mustmeet or exceed the following system requirements:• Windows 2000/NT/XP/ME/Vista (Windows NT users must have Service Pack 4.0 or higher,available from www.microsoft.com)• Pentium-class processor operating at 166 MHz or higher• For optimum performance, 540 megabytes (MB) available hard drive space (minimumperformance requires at least 100 MB available hard drive space, plus 7 MB for each stateprogram)• A minimum of 64 MB RAM for Windows 2000, or NT• A minimum of 128 MB RAM for Windows ME, XP, or Vista• VGA monitor capable of 800 X 600 resolution and 256 colors• Internet Explorer 6.0 or later• Adobe Acrobat Reader for viewing PDF files• CD driveTo take maximum advantage of the software’s features, we also recommend the following:• Hewlett-Packard (HP)–compatible laser printer• High-speed Internet access• Backup media source (such as a USB drive, memory stick, floppy disk, etc.)• A document-feed scanner (Drake supports all TWAIN-compliant scanners for use with theDDM)___NOTEIf your computer is running Windows Vista, it may be necessary to upgradeyour version of Adobe Acrobat Reader to version 8.0 or later.REGISTERING YOUR SOFTWAREWhen you register your software, Drake supplies you with a temporary EFIN and password–bothof which are required when setting up the program. If you downloaded your demo software fromDrakeSoftware.com, you were assigned a temporary EFIN and do not need to re-register yoursoftware.Copyrighted MaterialDrake Software Evaluation Guide


6 | I n s t a l l i n g t h e S o f t w a r e 2 0 0 8 D R A K E S O F T W A R ETo register your copy of Drake 2008, go to DrakeSoftware.com and click the registration link. Youwill receive an e-mail with your assigned EFIN and password. Enter this EFIN and password whencompleting ERO Setup. See “ERO Setup” on page 20.INSTALLATION FROM CDComplete the following steps to install Drake Software from CD:1. Insert the 2008 Drake Evaluation CD into the CD drive.2. After the introduction, from the menu, click Install Drake Software.3. From the installation window, choose Install Drake 2008 Tax Software. Other installationoptions include Install Client Write-Up and Install PDF995 (PDF Printer).4. Read and accept the licensing agreement. Click Next.5. Select which programs to install: Install 2008 Drake Tax Software and Install State TaxPrograms are the defaults. Click Next. If you choose to not install states at this time, you mayinstall states later. See “State and City Programs” on page 7.6. Select a location to install Drake Software. If this is your initial installation, click New. IfDrake Software has been installed on your computer or network before, choose the drivewhere you want this installation stored and click Next.7. Enter DEMO in the text box. Click Next, and in the small popup window, click OK.8. If this is your initial installation, choose an installation drive from the list of available drivesand click Next.___NOTEIf a drive letter does not appear, the software has determined that there isnot enough space on the drive.9. If you chose to install states at this time, the Select States to Install/Update window isopened. Select from States on CD in the left pane. Click Select or Select All. The selectedstates appear on the right side and are updated automatically unless removed from the list.Click Next.10. Click Install to continue.11. When the installation is complete, click Finish to return to the main installation window.12. Choose to install Client Write-Up, PDF995, the Drake software manuals, practice returns, orIRS publications, or click Exit.After the program has been installed, three icons appear on your desktop:• Drake 2008 Tax SoftwareDrake 2008 Tax Planner• Drake Document ManagerTo start the program, click the Drake 2008 Tax Software icon.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E I n s t a l l i n g t h e S o f t w a r e | 7INSTALLING FROM DRAKE SOFTWARE WEBSITEComplete the following steps to install Drake Software from the website:1. Go to www.DrakeSoftware.com and click Products > Download Center.2. Enter your EFIN and Drake password.3. Choose the software package to download (Drake 2008).4. Double-click the download link. The File Download - Security Warning window opens.Click Save.5. Choose a location to save the download. For instance, on the computer’s desktop or hard drive.6. The download begins, showing you the progress on a status bar.7. When the download is complete, double-click the file you downloaded, Drake08_Federal.exe.If the Open File - Security Warning window is opened, click Run.8. Click Yes to begin installation. Select the drive on which to install Drake (local hard drive ornetwork drive) and click Install.9. Enter your Drake serial number if this is a first-time installation. Enter DEMO to install thesoftware as the limited demonstration version. Click OK.10. A message appears to verify that you are installing the Drake Software Demo Version. ClickOK. Another message appears to verify the installation drive. Click Yes to continue.11. After installation is complete, click Exit to exit the installer.After the program has been installed, three icons appear on your desktop:• Drake 2008 Tax SoftwareDrake 2008 Tax Planner• Drake Document ManagerTo start the program, click the Drake 2008 Tax Software icon.STATE AND CITY PROGRAMSInstalling state and city programs is optional since state and city programs do not have to beinstalled on the hard drive in order to process and electronically file state tax returns. State and cityreturns are calculated directly from the CD if the disc remains in the CD drive during returncalculation.___NOTEDuring tax season, install the applicable state programs and install updatesdaily to ensure you have the most up-to-date information available.Copyrighted MaterialDrake Software Evaluation Guide


8 | I n s t a l l i n g t h e S o f t w a r e 2 0 0 8 D R A K E S O F T W A R ERUNNING STATE AND CITY PROGRAMS FROM THE CD1. Insert the 2008 Evaluation CD into the CD drive.2. Open the Drake program. Go to Setup > Directories/Paths. See Figure 1 below. In theDrive Letter for State Programs field, select the CD drive letter from the drop list. ClickOK.Figure 1: Directories and Paths Setup3. Open a return.4. Access state screens on the States tab or type the two-digit state code in the selector fieldat the bottom of the Data Entry Menu and press ENTER. City data entry screens arelocated within each state on the Cities tab of the Data Entry Menu.INSTALLING STATE AND CITY PROGRAMSIf you did not install states during the initial installation, choose one of the following methodsfor installing state and city programs. Installing a state also installs its city programs.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E I n s t a l l i n g t h e S o f t w a r e | 9State and city returns are automatically produced with the federal return if indicated on thefederal data entry screens. For example, if you indicate in the State field (box 15) of the W2screen that the W-2 is for NY, Drake generates a New York return along with the federalreturn.___NOTEIf you downloaded the software from the Drake Software website, stateswere not included and you must choose one of the following methods toinstall states.Installing States From CD1. Insert your Drake CD into the CD drive.2. From the Home window, go to Tools > Install State Programs.3. Select Install State(s) from this drive. Select your CD drive letter from the list.4. Click to select the states to install from the States Available list in the left pane. ClickSelect. (To select all states, click Select All.) The selected states appear in the Statesselected for installation list in the right pane.5. Click Install to continue with the state installation.6. When the installation is complete, click Exit.Installing States From the InternetIf you installed the Demo software from DrakeSoftware.com, you received only thefederal package. To install states online, complete the following steps:___NOTETo install states over the Internet, ERO Setup must be complete. See “EROSetup” on page 20.1. From the Home window, go to Tools > Install State Programs.2. Select Install State(s) from the Internet.3. Click to select the states to install from the States Available list in the left pane. ClickSelect. (To select all states, click Select All.) The selected states appear in the Statesselected for installation list in the right pane.4. Click Install to continue with the state installation.5. When the installation is complete, click Exit.INSTALLING PDF995PDF995 is the program used to print documents in PDF format, which can then be viewed inAdobe Acrobat Reader. Follow these steps to install and operate:1. Place the 2008 Drake Evaluation CD in the CD drive.2. Go to Setup > Printing > PDF Printer.Copyrighted MaterialDrake Software Evaluation Guide


1 0 | I n s t a l l i n g t h e S o f t w a r e 2 0 0 8 D R A K E S O F T W A R E3. Select your CD drive letter.4. Click Install. A message informs you when the installation is complete. Click OK and Exit.After PDF995 is installed, to make a PDF document of all or part of a tax return, follow thesesteps:1. In Print mode, select the desired forms to print. Click Print.2. When the Print Selection box is opened, select PDF995 from the Printers drop list.3. Select Print.4. You are prompted to save the PDF file to a specific location. Select the desired location, namethe file, and click Save. When attaching the return to an e-mail message, browse to this locationto attach the saved PDF file.___NOTEUse the PDF995 program in conjunction with the Drake DocumentManager. See “Drake Document Manager” on page 192.To view the program’s settings, access the PDF995 program from Start > Programs > Software995.VIEWING DRAKE TUTORIALSYour Evaluation CD includes four Drake tutorials: “Required Settings,” “Setup Options,” “DataEntry,” “Printing Setup,” and “Electronic Filing.” These tutorials help you to learn the basics ofthe software by viewing a short video. (A sound card and speakers are needed for the audio portionof the tutorials.)To access the tutorials from the CD, complete the steps below:1. Insert the 2008 Evaluation CD into the CD drive. To skip the flash introduction, click SkipIntro.2. When prompted, click Tutorials.3. Select one for viewing and double-click it, or click once then click Run.4. When the tutorial ends, you are returned to the list of tutorials. To exit a tutorial before it ends,press ESC on your keyboard.5. From the window with the list of tutorials, click Exit.Drake has more than 50 tutorials available (and more on the way). For more information on thesetutorials, call your Drake sales consultant at (800) 890-9500.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E I n s t a l l i n g t h e S o f t w a r e | 1 1The following tutorials are available:• 7216 • 8615 Export• Appointment Scheduler • Archiving• Bank Application • California W2CG• Check Print* • Client Status Manager• Conversions • Custom Data Entry• Custom Fields • Data Entry*• Drake Document Manager • Drake Setup*• Drake Tax Planner • EIC• Electronic Filing* • Email to Drake• Enhanced View/Print • ETC• Field Flags • Forms Based Data Entry• Installing Updates • Intro to Data Entry• Knowledge Base • Letters• Michigan Cities • Michigan Residential Credit• Networks / Directories and Paths • New Jersey Sick Pay• Ohio Cities • Online EF Database• Organizers/Proformas • Pay Per Return• PDF Attachments • Pennsylvania Deceased Spouse• PIN Signature • Preparer Websites and Online Filing• Pricing • Printing Setup• ProSeries Conversion • Reports• Required Settings • Schedule D Imports• School District Codes • Search EF Database• Setup Options • State Database• Support Resources • Trial Balance Import• Virginia • W-2 Import*Tutorials in both English and Spanish.Visit our complete library of tutorials, tax preparation courses, and practice returns atwww.DrakeETC.comCopyrighted MaterialDrake Software Evaluation Guide


1 2 | I n s t a l l i n g t h e S o f t w a r e 2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E N a v i g a t i n g t h e P r o g r a m | 1 3Navigating the ProgramLearning to navigate the program before tax season begins can save time and frustration. This sectionhighlights the basics of navigating the program.___NOTEFor details on return navigation and data entry, see “Data Entry” onpage 46.LOGGING INThe first time you open the software, you are automatically logged in. If you close the software,when you reopen it, you may be asked to log in. See Figure 2 below.Figure 2: Preparer LoginIf, during your initial login, you created a preparer ID or set a password for the Admin account,enter a Preparer ID and Password. Click Login.HOME WINDOWThe main window of the Drake program is referred to as the Home window. See Figure 3 onpage 14. The Home window’s features include:• Menu bar — Allows you to accomplish specific tasks in the program.• Toolbar — Displays “speed” buttons used to quickly navigate the program.• Recent Files — Displays the last nine files opened in data entry. Click a client file to open it orpress its corresponding Print/View button to open the return in View mode.• Appointments — Displays current day Scheduler appointments for the logged-in preparer.• Message Center — View important notifications, including messages stating that you haveacknowledgements (“acks”) or check print files to download, updates to install, or e-mail todownload and read.• Hints — Displays various helpful facts about the software.• Status Bar — The status bar displays the current Preparer Name, the date the software waslast updated, the drive on which the software is installed, the operating system in use, thestatus of scheduler reminders and the current date.Copyrighted MaterialDrake Software Evaluation Guide


1 4 | N a v i g a t i n g t h e P r o g r a m 2 0 0 8 D R A K E S O F T W A R EFigure 3: Home WindowNAVIGATING DRAKETo navigate Drake, choose the method that is most comfortable for you. You can access Drakescreens using your mouse, keyboard, and toolbar. Drake also offers several shortcut keys to makenavigation quicker and easier.MOUSE• Left mouse button — Move the pointer over an item and click the left mouse button toselect that item.• Right mouse button — During data entry, place the pointer in any gray area and right-clickto display a menu of common program functions. Right-click in a specific data entry fieldto cut, copy, paste, or view help for that field, or add a worksheet where applicable.• Speed buttons — For a description of a speed button, place your pointer over the buttonand see a pop-up box with a description.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E N a v i g a t i n g t h e P r o g r a m | 1 5KEYBOARDManeuver through the Drake program with the computer keyboard. A variety of specialty keysmakes the job easier.Shortcut keys — These keys allow you to move through the menus and select options quickly.Press ALT to display the underlined shortcut key for each option on the menu bar. Theunderlined letter for each option is the shortcut key. For example, to open a return with thekeyboard, press ALT, F (for “file”), and O (for “open”). Press ENTER.Hot keys — Similar to shortcut keys, hot keys perform various actions with simple keystrokes.In Drake Software, right-click to display a list of hot keys available for that screen. Forexample, to calculate the return while in screen 1, press CTRL + C. To view the return, pressCTRL + V. For a list of Home window and data-entry hot keys, see “Hot Keys” on page 39.Macros — Use a macro to enter frequently-used data entry items with just a couple ofkeystrokes. To set up your own macros, go to Setup > Macros.TOOLBARThe speed buttons located under the menu bar are shortcut keys that can be used to maneuverthrough the program quickly. Different areas of the program are associated with specific speedbuttons. For a description of a speed button, place your pointer over the button and see apop-up box with a description. See Figure 4 below.Figure 4: Speed buttons for the Home window• OPEN/NEW opens an existing returnor begins a new return.• CALCULATE opens the Batch Calculationwindow.• PRINT opens the Return Selector toprint returns.• VIEW opens the Return Selector toview returns.• SUPPORT takes you to Support.Drakesoftware.com.• HELP takes you to the Drake Helpsystem.• RESEARCH opens the RIA Checkpointtax research Web site.• CSM opens the Client Status Manager.• SCHEDULER opens the AppointmentScheduler.• EXIT closes the software.Copyrighted MaterialDrake Software Evaluation Guide


1 6 | N a v i g a t i n g t h e P r o g r a m 2 0 0 8 D R A K E S O F T W A R EGENERAL FLOW OF COMMANDSProgram instructions refer to parts of the program as follows:• Menu bar — The list of menu options across the top of the window.• Drop list — The list of available actions shown when an option is selected from the menu.Also, some fields on some screens display an arrow ( ) next to an open text box. Click thearrow to open a list of available choices.• Speed buttons on toolbar — The toolbar directly under the menu bar. Speed buttons are usedfor quick access to functions and are represented by icons.• Data Entry Menu — The list of available screens when a return has been opened for dataentry.• Selector field — The field at the bottom of the Data Entry Menu. Type the letter or numbercode of the desired form to open its screen in data entry.• Tabs — The Data Entry Menu displays tabs along the top of the screen. Each tab displays alist of additional data entry screens.• Buttons — Items that perform actions. For example, click the Exit button to leave theprogram.When instructions are given to perform an action, the flow of commands (for example, Tools >File Maintenance > Backup) is as follows:1. Select the menu option to reveal the drop list. (For example, Tools.)2. Select the action from the drop list. (For example, File Maintenance.)3. If the action displays an arrow () to the right, another list is available.4. Select the action from that list. (For example, Backup.)To shorten the commands in the instructions, the flow of commands is given with arrows (alsoknown as “angle brackets”) between each function. For example, “Go to Tools > Install Updates”simply means, “From the menu bar, go to the Tools menu, click to open the drop list, and chooseInstall Updates.”Use the keyboard or the mouse to select the menu option.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 1 7Program SetupDrake Software’s Setup menu allows you to customize the software to your office requirements. Many ofthese settings can be carried forward each year, saving you time and effort. From the menu, go to Last YearData > Update Settings 2007 to 2008.___NOTEDrake recommends that you log in as Admin or as a preparer with Adminrights when accessing the setup screens. This way, you have full rights toall the features accessible only when logged in as Admin.SETUP WIZARDThe Setup Wizard guides you through the required and recommended software setup screens.The Setup Wizard is opened the first time you log in to Drake and each time you access theprogram until all the required information is entered, or until the wizard is disabled. To prevent theSetup Wizard from automatically opening each time you enter the program, click the Do not showSetup Wizard at startup box. See Figure 5 on page 18.The required settings must be completed before preparing and electronically filing tax returns.___NOTEIt is not necessary that these screens be completed through the SetupWizard. To exit the wizard at any time, click Exit Wizard. Return to thewizard later by going to Help > Setup Wizard, or access each setup screenindividually from the Setup menu.Copyrighted MaterialDrake Software Evaluation Guide


1 8 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EFigure 5: Setup WizardIMPORTANTWhile the Recommended settings are not required, several of them arecrucial for proper program functioning. For example, if you plan to useDrake Document Manager, the DDM path must be correct before creatingreturns. For details, see “Drake Document Manager” on page 192.To get the most out of the Client Status Manager, your custom statusesmust be determined before tax season begins so that they are availableduring tax season and can help provide accurate reporting. See “ClientStatus Manager” on page 172.When all required settings are completed and marked with a green check mark, you are promptedto continue displaying the Wizard at startup or to no longer show the wizard. This message alsoappears when the Do not show Setup Wizard at program startup box is cleared.To exit the Setup Wizard, click Exit or OK.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 1 9REQUIRED PROGRAM SETTINGSThese settings must be completed before beginning tax preparation and electronic filing:• Firm(s) — Set up and edit the firm information that appears on tax forms. Select bank anddetermine fees.• ERO — This information is required for Electronic Return Originators (EROs) or preparerswho use Drake e-mail and other Internet-related features.• Preparer(s) — Enter each preparer’s general information, designate a login name andpassword, and set security options.FIRM SETUPEnter and edit information for a specific firm on the Firm Setup dialog box. See Figure 6 onpage 20. There is no default firm information in the program.1. From the menu bar, go to Setup > Firm(s).2. From the toolbar at the top, click Add to activate the lower portion of the box.3. Enter the firm information. A yellow field indicates required information.4. Enter a ZIP code and the city and state fill in automatically. Enter an address.5. Enter the phone number without spaces, dashes, or parentheses. (The programautomatically formats the number.)6. Select a starting DCN. DCNs must be staggered if you will be creating returns from morethan one stand-alone computer.7. Click Save to save the information. Click Exit to exit without saving changes.When a firm is created, it is given a firm number in the Number column of Firm Setup. Usethis number to identify which firm is associated with a tax return in screen 1 of data entry.Copyrighted MaterialDrake Software Evaluation Guide


2 0 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EFigure 6: Firm SetupERO SETUPYou must complete Electronic Filing Setup to:• Electronically file returns• Use the Drake E-mail program• Download software updates through Tools > Install Updates• Access your Online EF Database from EF > Search EF Database > F10-Online DB• Access RIA from the toolbarIMPORTANTA temporary EFIN assigned by Drake allows you to test electronic filing andgives you access to Drake Internet tools. Preparers who are new toelectronic filing and wish to transmit live returns must apply to the IRS foran EFIN.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 2 1To set up an ERO’s information:1. From the menu bar, go to Setup > ERO.2. Enter or edit the general information fields. Fields highlighted in yellow indicate requiredentries. See Figure 7 below.___NOTEYou must enter your Drake Account Number in Setup > ERO. Enter yourtemporary EFIN and password in the EFIN and Drake Password fields.Your account number, EFIN and password are included on your packingslip or in the email confirmation you received after registering for a Demo.The default Connection Settings are the settings that work for mostcomputers. If you are experiencing problems connecting to Drake, pleasecontact Drake Support for technical assistance.The Service Bureau section must be configured only by offices practicingas Service Bureaus. Service Bureaus actively collect and transmit returnsfor other preparers. This is small percentage of offices.3. Click OK to save changes. Click Exit to exit without saving changes.Figure 7: Electronic Filing SetupCopyrighted MaterialDrake Software Evaluation Guide


2 2 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EPREPARER SETUPEach preparer must be entered in Preparer Setup. See Figure 8 on page 23. Enter preparerinformation into the program and the preparer is assigned a preparer number. The preparernumber is used to display unique preparer information on letters, returns, and reports___NOTEIt is not necessary to edit the Admin information. Log in as Admin whenaccessing program setup features. Set up a preparer for use whenpreparing returns.Set up Data Entry (DE) operators in Preparer Setup. Preparer numbers entered on returns areused primarily for tracking purposes.To enter a new preparer in the software, complete the following steps:1. From the menu bar, go to Setup > Preparer(s).2. From the toolbar at the top of the Preparer Setup dialog box, click Edit Preparer tomake changes to an existing preparer, or Add to add a new preparer.3. Enter preparer information. A yellow field indicates required entries.4. To set security options, click the Security button at the top of the dialog box. See“Preparer Security Settings” on page 24.5. Click Save to save changes. Notice that the preparer is now saved with a preparer number.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 2 3Figure 8: Preparer SetupReturn Signature OptionsDesignate a PIN signature for electronically signing returns to produce the 8879 IRSe-File Signature Authorization.1. Enter a PIN in the PIN Signature field. (Choose any five-digit number).2. Select Use PIN for: 8879 PIN Signature.___NOTEFor details on electronically signing returns, see “Signing the ReturnElectronically” on page 102.Return signature options may also be set for the Third Party Designee andAlternative Electronic Signature. For details, review the Drake User’sManual: Tax Year 2008, available on your Evaluation CD, PDF folder.Copyrighted MaterialDrake Software Evaluation Guide


2 4 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EPreparer Security SettingsThe Security Setup information defines what functions the preparer can access in theprogram. Menu options that are not accessible to the preparer are not active.Custom Security SetupDetermine which areas of the program a preparer can access.1. Double-click a preparer’s name or click once then click the Edit Preparer buttonto open the preparer’s information in Edit mode. Click the Security button at thetop of the window and select Custom Security. The Preparer Security Setupdialog box is opened. See Figure 9 on page 25.2. Click an item on the menu bar to display a drop list. Click to select menu items foraccessibility or clear the check marks to deny access. Boxes with check marksindicate access is permitted. Go through all seven menus.3. Click Save. When prompted, click OK.4. Click Save to save the preparer settings. Click Exit.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 2 5Figure 9: Preparer Security SetupOther Security OptionsWith a preparer selected and in Edit mode, select one of the following options:• Set Security to Allow No Options — The preparer cannot access any items in theprogram.• Set Security to Allow All Options — The preparer has rights to access all areasof the program.• Set Security Equal to Existing Preparer — Select this option and choose anexisting preparer from the list. This sets the current preparer’s security rights tomatch the existing preparer.• Front Office — Select this option to allow a receptionist to set up views andmanage appointments in the Scheduler. For more information, see “SchedulingAppointments” on page 164.• Administrator — The preparer has full administrative rights similar to log in as“Admin.”Preparer ScheduleBefore you can use the Scheduler program, you must create schedules for eachpreparer. See “Generating Preparer Schedules” on page 165 for details.Copyrighted MaterialDrake Software Evaluation Guide


2 6 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EOPTIONAL PROGRAM SETUPThe following settings are not required but Drake recommends reviewing each option to determinewhich can help your office take best advantage of the software.___NOTEMost optional settings can be carried forward each year. From the menu, goto Last Year Data > Update Settings 2007 to 2008.SETUP OPTIONSSelect program preferences from the Options screen. See Figure 10 below. The defaultpreferences are those that are most common. To change or view the defaults, follow thesesteps:1. From the menu bar, go to Setup > Options.2. Click the tabs to open the various option windows.3. After selecting all options, click OK to save.Figure 10: Setup OptionsDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 2 7The following options are available:Data Entry tab• Maximize data entry screens where possible for easier viewing• Size data entry screens to show most fields without scrolling• Disable sizing of data entry screens• Tab to ZIP code field (skip city/state and use ZIP code database)• Show notes/reminders to preparer when opening a return• Display formatting in SSN, EIN, date, phone and ZIP fields• Verify SSN when creating new return• Classic Mode — simulates DOS data entry• Enable Windows standard keystrokes• Small Cursor• Autofill preparer and firm number• Magnify data entry• Activate preparer fee override (on screen 1)• Activate W2 wage and federal witholding verification fields• Language for menus and data entry screens — Select English or Spanish• Language for field-specific help in data entry — Select English or Spanish• Letter case for data entry — Select Upper Case or Mixed Case• Override field indicator — Select to display indicators, colored fields, and field labels• Adjustment field indicator — Select to display indicators, colored fields, and fieldlabels• Choose to use grid data entry format for the Dependent, DIV, INT, and 4562 screenCalculation and View/Print tab• Auto-calculate tax return when exiting data entry• Display client fee on calculation screen• Print only one overflow statement per page• Go directly to form when accessing View mode from Data Entry modes• Audible notification of calculation error messages• Layout for depreciation schedule — Select Portrait or Landscape from the drop list• Pause option for calculation — Always after calculation pauses the calculationwindow when the calculation is complete. After view or print only pauses aftercalculating from the View button or when using CTRL + C to calculate a return. Onlywhen using File > Calculate pauses only when calculating from the main menu.Never use pause option removes the pause option• Number of days to store print files — If the return is needed after the softwareremoves the print file, recalculating the return recreates the print file• Sort options for Interest and Dividends screensCopyrighted MaterialDrake Software Evaluation Guide


2 8 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EForm and Schedule Options Tab___NOTEMany of these settings can be adjusted from the Print screen in data entry.(Type PRNT in the selector field and press ENTER.) An “on-the-fly”adjustment affects only the open return and does not change the globalsettings in Setup > Options.Select to print forms when required:• Print Schedule A only when required• Print Schedule B only when required• Print Form 4562 only when required• Print Form 6251 only when required• Print next year depreciation schedule• Print optional worksheets• Print W2/1099 forms (Print two W2/1099s per page)• Print carryover worksheet• Print page 2 of Schedule K-1 in the 1120S, 1065, and 1041 packagesSelect print options for 1040A/EZ (suppress), Form 1045 page 2 (NOL), and Form 2210.Select to turn ON:• W2 list if greater than (select from 0-50 W2s).• 1099 list if greater than (select from 0-50 1099s).• Dividend list if greater than (select from 0-50 dividends).• K1 list (business returns only) if greater than (select from 0-50 K1s).Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 2 9Optional Documents TabSelect the appropriate boxes to print the following items with each return:• Folder cover sheet• Notes page when applicable• Prior-year comparison form• Return summary• Bill summary• Federal filing instructions• State filing instructions• Referral Coupons (3 per sheet) – Enter the number of sheets to be printed with eachreturn and the amount of the coupon. (To customize the text of these coupons, go toSetup > Letters > Open > Individual > Individual Referral Coupon.)• Envelope Sheet – Taxpayer address. Select None, Small, Large, or X-Large• Envelope Sheet – IRS service center address• Envelope Sheet – State address• Envelope Sheet – City address• Result Letter – Choose from among 10 default Individual letters and three each forCorporation, S-corporation, Partnership, Fiduciary, Tax Exempt, and EstateCustomize your letters in Setup > Letters > Open• Include privacy letter with returns, include engagement letter with returns, includecustomized supplemental letter with returnsOptional Items on Return TabClick the corresponding check box to print an item on the returns:• Date on return – the date is pulled from the date on the computer. To change this date,enter the required date on the Misc screen• Print dates for taxpayer and spouse signatures (excludes 1040)• Taxpayer phone number – Pulls the phone number from screen 1 Name and Address(Demographics screen)• Third Party Designee – Prints a name on the main form for the tax return. Choosefrom specific preparers, the return preparer, or the ERO• Rounding Amounts – Select dollar or penny rounding. Dollar rounding is required forelectronic filing. Penny rounding prints penny amounts on all formsCopyrighted MaterialDrake Software Evaluation Guide


3 0 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EBilling Tab• Click the corresponding box to turn a feature on:• Print taxpayer’s SSN on bill.• Show preparer fees as withheld from bank product.• Show preparer fees associated with bank product.• Sales Tax – Sales tax percentage to add to client statement. Enter a number greaterthan 1. For example, 4.5 would represent a sales tax rate of 4.5%.• Billing statement format – Select a statement option: Show only total amount; Showform list and total; Show forms, form prices, and total; Bill by time; Show forms,number of forms, and charges per form; Move Prep Time Charge To Bottom OfBill; or Do not prepare bill.• Header on bill – Show preparer’s name, Show only tax year, Professional servicesstatement, or None.• Custom Paragraph – Chose to print a custom paragraph at the top of the bill, thebottom of the bill, or not at all. Enter the text for the paragraph in the field.States Tab• There are specific options available for some states. Select the state from the drop listand select the options that apply. Set up each desired state separately.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 3 1EF Tab___NOTEMany of these settings can be adjusted from the EF screen in data entry.These “on-the-fly” changes do not affect settings in Setup > Options.Click the corresponding box to turn a feature on:• Auto-generate taxpayer(s) PIN (1040 only).• Require Ready for EF indicator on EF screen.• Lock client data file after EF acceptance — Log in as Admin to edit or unlock a filethat has been transmitted and accepted. Allow preparers the same ability by givingthem access to Tools > File Maintenance > Unlock Client Files through theirsecurity settings.• Print the bank application when entered on return. (The application must be completedon the bank screen).• Print 9325 when eligible for EF.• Suppress federal EF (1040 only).• Print EF status page.• Alert preparer when bank product is not included.• Activate imperfect return election in data entry — Drake allows e-filing returns withrejects 501 and 504 (without a state or bank product included). Activating this featureallows an imperfect return election on the EF screen in data entry when applicable.• Allow selection for EF from the Calculation Results screen — Select a return fore-filing directly from the Calculation Result screen without going to the EF > SelectReturns for EF screen.• Activate prompting before automatic transmission of Check Print records• E-mail 9325 Notice to Taxpayer (automatic from Drake Processing Center)• ERO SSN Indicator — Choose from preparers 1 through 9, Paid Preparer, or None.This field selects the ERO for the return. Override the default in data entry, screen 1.• Check for e-mail during EF transmit/receive.• Combine EF steps (Select, Transmit, Post Acks) — Select this option and the onlyscreen needed from the EF menu is Select Returns for EF. After the returns areselected, click OK to start the remainder of the EF routine. No further steps arenecessary.• State EF — Suppress. By selecting this box, you can suppress all states or choosewhich states to suppress.• EF Selection Report Options — Customize EF Selection Reports - Click Customizeto select the columns of information you want to appear on the electronic filingtransmission reports.Copyrighted MaterialDrake Software Evaluation Guide


3 2 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EAdministrative Options TabThe Administrative Options tab allows program customization. You must be logged inas Admin or as a preparer with Admin rights to access this tab.Customize Data Entry MenuCustomize the Data Entry Selection Menu to help reduce data entry errors bylimiting screens available on the menu. In Setup > Options, go to the AdministrativeOptions tab and click the Use Customized Selection Menu option.Customize the use of verification flags (Flag Fields)Verification flags remind you to double-check certain information before you file areturn. Choose to set flags on fields where a screen is created or when a return iscreated. A return with flagged fields generates an EF MESSAGES page when thereturn is calculated. Once you have verified the information in the field, press F4 toremove the flag. Pressing CTRL + SHIFT +SPACEBAR clears all flags from the screen.For more information on flagged fields, see “Field Flags” on page 51.PAY PER RETURNThe Pay Per Return package is available for offices preparing a small number of returns in atax year. Pay Per Return setup is necessary only for those who have a PPR version of theprogram installed. Activate returns and purchase additional returns from Setup > Pay PerReturn. (Restrictions apply.)DIRECTORIES/PATHSDirectories and Paths determine where the program finds and stores client data and other files.If you are installing Drake on a network, complete Setup > Directories/Paths. If you areinstalling Drake to a stand-alone computer, you can skip this section.PRICINGThe Pricing setup information is used to calculate and generate a client bill during calculation.Prices can be defined for each form and for each item on some forms. Set minimum andmaximum charges for a completed return.To access Pricing, go to Setup > Pricing.___NOTEYou can override Pricing during data entry, either by entering an amount inthe Fee Override field on screen 1 or by adjusting fee amounts on the BILLscreen.Bank product costs are established in Setup > Firm.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 3 3Pricing on the FlyTo edit or add pricing amounts without entering Pricing Setup, edit “on the fly.” FromView/Print mode, right-click a form in the category and select Setup > Form Propertiesto set pricing. Pricing changes made on the fly change the pricing file “globally” (for allreturns).MACROSMacros are used in data entry to make the process of repetitive data entry quicker and easier. Astring of data is set to a combination of keys called “hot keys.” When you use a hot key, thatpre-set string of data fills the chosen fields. To create your own macros, go to Setup >Macros.___TIP To access a list of macros in data entry, press CTRL + SHIFT + M.LETTERSVarious client letters are available in Drake and can be printed in batches or generatedindividual with a tax return. Preparers can modify letters associated with return preparationand various tools in Letters Setup. Pre-written letters are available for all packages andinclude: schedule, preseason, estimate, cover, result, extension, amended, after-season,engagement, EF status, and business results letters, plus referral coupons and the privacypolicy. The individual results letters are available in English and Spanish.To edit a letter, go to Setup > Letters. The Client Communications Editor is split into twoparts, with the left pane listing keyword and conditional paragraph categories in an expandabletree format, and the right pane displaying the selected letter template.• One comprehensive result letter is available for each package and is printed with allpertinent return information for most return scenarios. This includes paper filing andelectronic filing information, federal, state, and city result information, and such specialtaxes as school district or franchise tax.• Further customize letters by choosing from the various keywords and conditionalparagraphs.• Many editing and formatting features are available. Change alignment, font size, or font.Cut, copy, or paste.• Preview letters as you edit from within the Client Communications Editor.• Create your own letterhead and print logo and firm information on the top of letters.Copyrighted MaterialDrake Software Evaluation Guide


3 4 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EOther Features:• Choose a default letter to print with each return, or override the default on a per-returnbasis.• Add custom paragraphs to result letters on a per-return basis.• Carry letters forward each year.When the letterhead feature is activated, the preparer’s firm information is printed with eithera selected bitmap graphic or the default simple graphic. Set the letterhead to be printed onclient bills and client letters. From the Letter Editor, click the Setup button and chooseLetterhead Setup from the drop list.___NOTETo print batches of letters, mailing labels, envelopes or post cards, go toTools > Letters.COLORSCustomize the appearance of the Drake program on your screen. Match the color scheme toyour Windows scheme or select other custom colors. To customize your color scheme, go toSetup > Colors.IMPORTANTMake sure the background color and the text color contrast or the textdisappears.DOWNLOADING UPDATESBecause tax law is ever-changing and Drake Software is continuously being enhanced, theupdate process should be part of a daily business routine. Installing updates online with theUpdate Manager ensures that you are always running the most current version of thesoftware.Before you install updates, you must create an Update Profile. This profile tells the UpdateManager what parts of the program to update, customizes the update process, and reducesdownload times where possible. If you have a constant Internet connection such as DSL, youcan also choose to automate the update process. To create an Update Profile, go to Setup >Update Profile.PRINTINGWhen Drake is installed, the program designates the default printer in Windows as the defaultprinter in Drake. It is not necessary to add and set up a printer, even if you add another printerin Windows. Every printer installed in Windows is accessible from Drake.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P r o g r a m S e t u p | 3 5Editing Printer SetupTo edit printer settings, go to Setup > Printing > Printer Setup. In the Printer Setupwindow, make adjustments as necessary.Printing Sets and Print OrderThe [F6] ‘Sets’ Setup tab allows you to choose which forms are printed with each return,the number of each form that gets printed, and the order in which the forms are printed.Sets can be defined in Printer Setup, from the forms list in View/Print mode, or byright-clicking a form and selecting Setup > Form Properties. To set up Sets and the printorder, go to Setup > Printing > Printer Setup and select Sets and Set Form Order.Drake Document ManagerTo change the location where Drake Document Manager files are saved, or to integrateyour DDM files with Drake’s filing system, go to Setup > Printing > DocumentManager.For more on the Drake Document Manager, see “Drake Document Manager” on page 192.PDF995PDF995 is the program used to print documents in PDF format, documents that can thenbe viewed in Adobe Acrobat Reader. If you did not install PDF995 during initialinstallation of the tax software, insert your Drake CD and go to Setup > Printing >PDF995. Indicate the drive letter of your CD-ROM drive and click Install to install theprinter.For more information PDF995, see “Installing PDF995” on page 9.Copyrighted MaterialDrake Software Evaluation Guide


3 6 | P r o g r a m S e t u p 2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s 1 | 3 7Review Questions 1Answer the questions below. See page 38 for answers and explanations.1. Which of the following is true about state and city programs in Drake?a) You must install state and city programs before you can process state and city returns.b) State and city programs are purchased separately. Install them from the State CD you receivefrom Drake.c) State and city programs do not have to be installed; run them from the Drake CD.d) If you do not install state and city programs during the initial software installation, you can runstates only from the Drake website.2. Which option on the Setup menu would you use to indicate a bank to be used for bank products?a) EROb) Pricingc) Firmd) Preparers3. Which setup screen(s) must be completed before beginning tax preparation and electronic filing?a) Optionsb) Directories/Pathsc) Firm, ERO, and Preparer(s)d) All Setup menu screens4. You hire your first data entry assistant. This person is responsible only for entering tax return data inthe software. You would prefer that this person not do any electronic filing. When creating a preparerlogin for your new hire, which security settings do you use?a) Front Officeb) Custom Security Setupc) Set Security to Equal Existing Preparerd) Set Security to Allow no Options5. To configure Drake to automatically download the latest software changes and enhancements, go towhat item on the Setup menu?a) Optionsb) Update Profilec) Update Optionsd) MacrosCopyrighted MaterialDrake Software Evaluation Guide


3 8 | R e v i e w Q u e s t i o n s 1 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 11. The correct answer is c) State and city programs do not have to be installed; run them from theDrake CD. To run states and cities from the CD and not install them, set a drive letter for state programsin Setup > Directories/Paths.a) is incorrect. It is not necessary to install state programs. State and city calculations can be madedirectly from the Drake CD.b) is incorrect. State and city programs are included in the Drake Software package.d) is incorrect. If you choose to not install state and city programs during the initial installation, youcan always run your Drake CD again and choose to install state programs only or you can downloadstate programs from the Support.DrakeSoftware.com website.2. The correct answer is c) Firm. Go to Setup > Firm(s) and select your firm. Click Edit Firm. On theright side of the screen, select the bank used for bank products from the Select Bank drop list.a) is incorrect. Setup > ERO is used to enter information about the ERO and to indicate the connectionsettings used during the electronic filing process.b) is incorrect. Set pricing for forms and schedules in Setup > Pricing. The amounts entered here areused to compile the client bill.d) is incorrect. Establish preparer information in Setup > Preparer(s). Custom security and accessoptions are also set here for each preparer.3. The correct answer is c) Firm, ERO, and Preparer(s). At least one firm and one preparer must beentered, and the ERO screen is required for electronic filing or using Drake’s Internet tools.a) is incorrect. Options setup is not required, although we recommend reviewing each option to seewhich settings suit your office environment..b) is incorrect. Directories/Paths settings are required only when running Drake on a network.d) is incorrect. Not all setup screens are required, but we do recommend reviewing each setup screenbefore tax season.4. The correct answer is b) Custom Security Setup. Using custom security, determine what areas of theprogram the preparer can access. Disable the preparer’s access to the Electronic Filing menu.a) is incorrect. Front Office security is designed for office personnel that would need access only tothe Scheduler. This would not be the setting to choose for a preparer who needs to access data entry.c) is incorrect. Choose Set Security to Equal Existing Preparer when you want to copy an existingpreparer’s custom rights to the new preparer. This keeps you from going through the Custom Securityprocess again.d) is incorrect. You would not want Set Security to Allow no Options. This would block the new hireout of every menu in the program.5. The correct answer is b) Setup > Update Profile. Choose the packages and time you wish to downloadthe updates. You may also choose to have Drake automatically install the updates.a) is incorrect. There is no access to updates through Setup > Options.c) is incorrect. There is no option available named Update Options.d) is incorrect. Setup > Macros is used to set up shortcuts used to make data entry quicker and easier.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E H o t K e y s | 3 9Hot KeysHot keys allow you to perform specific actions quickly and easily. Knowing when and where to use these keyscan save you valuable time during tax season.Home Window Hot KeysDesired ActionKeyboard KeysOpen returnsCalculate returnsPrint returnsView returnsCTRL + OCTRL + CCTRL + PCTRL + VOpen recent client files 1 - 9Open the Quick EstimatorOpen the Client Status ManagerOpen the EF Return SelectorTransmit and receiveOpen Drake Software HelpExit the programCTRL + QCTRL + LCTRL + SCTRL + TCTRL + F1ESCData Entry Hot KeysField Help during data entry SHIFT + ?, F1, or ALT + ?Verify valid Social Security Number SHIFT + ?, F1, or ALT + ?Insert today’s date into any date fieldCalculate a returnView a returnPrint a returnReturn to data entry from view/print modeSplit MFJ return to MFS returnOpen unformatted schedule; Access form 4562 fromthe Depreciation fieldView preparer notesIncrease Declaration Control Number (DCN)Toggle heads-down and standard data entryALT + DCTRL + CCTRL + VCTRL + PCTRL + ECTRL + SDouble-click, CTRL + W or right-click > AddWorksheetCTRL + RCTRL + MCTRL + NCopyrighted MaterialDrake Software Evaluation Guide


4 0 | H o t K e y s 2 0 0 8 D R A K E S O F T W A R EDelete a data entry screenReset the screenExit screen without saving changesCTRL + DCTRL + USHIFT + ESCOpen the Help system CTRL + ?Open the Drake Document ManagerOpen the Tax PlannerOpen the Set Client Status menuGo to EF DatabaseActivate the popup calculatorE-mail a client data fileExit data entryEnter the preparer note pad (PAD screen)Clear all flagsF6F7F8F9F10F11ESCCTRL + SHIFT + NCTRL + SHIFT + SPACEBARDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s 2 | 4 1Review Questions 2Answer the questions below. See page 42 for answers and explanations.1. How do I delete a screen in Drake?A) CTRL + ?B) CTRL + DC) CTRL + CD) CTRL + N2. Can I split a joint return into two married filing separate returns? How?a) Nob) Yes, CTRL + Uc) Yes, CTRL + Pd) Yes, CTRL + S3. How can I create a detailed worksheet for a particular line item on a return?a) With your cursor in the data entry field, press F10.b) You cannot.c) With your cursor in the data entry field, press CTRL + W.d) With your cursor in the data entry field, press ESC.4. How do I save screen information in a return?A) CTRL + OB) CTRL + ENDC) ESCD) ALT + ?5. Press this hot key to clear all flags on a return.A) CTRL + SHIFT + NB) CTRL + EC) CTRL + SHIFT + SPACEBARD) ALT + DCopyrighted MaterialDrake Software Evaluation Guide


4 2 | R e v i e w Q u e s t i o n s 2 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 21. The correct answer is b) CTRL + D. This hot key deletes the current screen.a) is incorrect. CTRL + ? is used to open the Help system.c) is incorrect. CTRL + C is used to calculate a return.d) is incorrect. CTRL + N activates the “Heads Down” method of data entry. The Heads Down methoduses field codes that correspond with proformas you can prepare during an interview. This makes itpossible for a data entry clerk with no tax knowledge to enter basic information into a return.2. The correct answer is d) Yes. CTRL + S. Use this hot key to split an MFJ return into two MFS returns,allowing you to compare the differences.a) is incorrect. With Drake Software, CTRL + S allows you to split the MFJ return.b) is incorrect. CTRL + U is used to reset a data entry screen.c) is incorrect. Use CTRL + P to print a return.3. The correct answer is c) With your cursor in the data entry field on a Drake screen, press CTRL +W. Enter this shortcut in any numeric field to access an unformatted schedule.a) is incorrect. F10 is used to access the pop-up calculator when in a numeric field in data entry.b) is incorrect. With Drake, you can use CTRL + W in any numeric field to access an unformattedschedule.d) is incorrect. ESC is used to save the current screen and exit to the Data Entry Menu.4. The correct answer is c) ESC. This hot key is used to save a data entry screen and return to the DataEntry Menu.a) is incorrect. Use CTRL + O to open an existing return or create a new return.b) is incorrect. Use CTRL + END to jump to the last field on the screen.d) is incorrect. Use ALT + ? in any data entry field to view field-specific information. SHIFT + ?functions the same way.5. The correct answer is c) CTRL + SHIFT + SPACEBAR. This hot key removes all flags, but you can alsoremove then one at a time by pressing F4 in the flagged field or right-clicking the field and selectingRemove Flag.a) is incorrect. CTRL + SHIFT + N is used to open the preparer note pad in data entry.b) is incorrect. CTRL + E returns to data entry from View or Print mode.d) is incorrect. ALT + D inserts the current date in a date field in data entry.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 4 3Return PreparationIn this section, we review:• Opening returns• Navigating fields and forms• Preparing an individual tax return___NOTEWhile there are many ways Drake Software simplifies tax preparation, thesoftware cannot replace a fundamental understanding of tax laws.OPENING A RETURNOn the menu bar, go to File > Open/Create Returns, or click Open/New from the toolbar. TheOpen/Create a New Return window appears. See Figure 11 below. Here, you can create a newreturn or open an existing one.Figure 11: Open/Create a New Return___NOTEReturns are created by entering either a Social Security Number (SSN) or,in the case of a business return, an Employer Identification Number (EIN).Copyrighted MaterialDrake Software Evaluation Guide


4 4 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R ETo create a new return, click Open/New from the toolbar, or go to File > Open/Create Returnsand complete the following steps:1. Type the client SSN or EIN in the top box. Then click OK, or press ENTER.2. If the program does not find the SSN or EIN, you are prompted to create a new return. ClickYes to continue or press ENTER. See Figure 12 below.Figure 12: New Return Prompt3. The New Return dialog box varies according to the following options (See Figure 13 below):• SSN Verification — This section is displayed when running a Pay Per Return package orwhen this option is selected on the Data Entry tab under Setup > Options. (PPR clientscannot disable this selection.) Re-enter the SSN or EIN.• Return Type — Select the type of return to create: Individual - 1040, C Corp - 1120, SCorp - 1120S, Partnership - 1065, Fiduciary - 1041, Tax Exempt - 990, or Estate - 706.• Name Entry — This section is displayed if the Drake Document Manager is integratedwith Drake Software (Setup > Printing > Document Manager). Entering the client’sname creates a client folder in the DDM.Figure 13: New Return4. Click OK to continue. or press ENTER.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 4 55. The return is opened to screen 1 (Demographics). Enter the new client’s name and address.Press ESC to save and close screen 1 and go to the Data Entry Menu for the return.To open an existing return, choose either of the following methods:• From the Home screen, if it is a recently-opened file (the last nine are listed), select it from theRecent Files list or press 1 through 9.• Click the Open/New button on the top left of the screen and take one of the following steps:• Type the SSN or EIN in the top field with no dashes, spaces, or other characters. (Numbersonly.) Click OK or press ENTER.• Select the desired return from those returns displayed in the lower box. Use the filters tothe right to narrow your search to return types.• Clear the top field and click OK or press ENTER. Scroll through the resulting list to selecta return. Click the headers to sort by name or SSN.• Type an individual’s name or company name in the text box and press ENTER.TEST RETURNSTest returns are located in the software and consist of various forms and schedules. View thesereturns to see how different return scenarios are prepared in Drake. Test returns are identifiedby SSNs that begin with 400-00 and end with 0001 through 0010. Use these returns to practiceelectronic filing.To open a test return, click the Open/New button, type a test SSN on the Open/Create a NewReturn screen, and press ENTER. Once the return is opened, it appears in your return list.___NOTEBefore accessing the test returns in the program, go to Tools > RepairIndex Files and Repair All, then choose Scan Current Files and click OK.Copyrighted MaterialDrake Software Evaluation Guide


4 6 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EDATA ENTRYWorking within a return is known as “data entry.” The screens, in almost every instance, resemblethe corresponding tax form.The following sections are specific to data entry navigation and features.DATA ENTRY MENUNewly-created returns open to screen 1 (Demographics). Close screen 1 and you are taken tothe Data Entry Menu.Existing returns open to the Data Entry Menu.To access a form for data entry, double-click the form description or type the screen code intothe selector field at the bottom of the Data Entry Menu. See Figure 14 below.Figure 14: Data Entry MenuDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 4 7ToolbarDrake Software offers several data entry shortcuts that can help make return preparationquicker and easier. See Figure 15 below.Figure 15: Data entry speed buttons.Calculate calculates the returnView opens the return in View modePrint opens Print mode for the returnSplit splits a MFJ return into two MFS returnsDoc Mgr opens the Drake Document ManagerTax Planner opens the Tax PlannerImport imports Sch D and W-2 data into DrakeCSM opens the Client Status Manager statusselection listEmail opens Drake E-mail with the client fileattachedHelp opens the Drake Help SystemExit exits the returnTabsThe forms and worksheets available for data entry are divided into categories and listedunder different “tabs.” Categories vary depending on the tax package. Click a tab to accessits categories. To select a tab using your keyboard, use TAB, the arrow keys, PAGE UP, orPAGE DOWN.Form Codes and Selector FieldForm codes are listed to the left of each screen name on the Data Entry Menu. Theselector field at the bottom displays a blinking cursor. To access a screen using yourkeyboard, type its form code in the selector field and press ENTER.Status BarThe status bar displays the Return Status (see “Client Status Manager” on page 169), theReturn Type, and the Current Package.Copyrighted MaterialDrake Software Evaluation Guide


4 8 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EWORK IN A TAX RETURNThe data entry process varies little from package to package. The following section coversnavigation and data entry features.Add, Modify, and Delete DataTax returns are prepared in Drake by entering pertinent information on specific data entryscreens. Entries are used to calculate the federal and state tax return forms. To open a dataentry screen, use one of the following methods:• Keyboard — From any tab, type the form code in the selector field and press ENTER.• Mouse — Select a tab and click the screen name.Save and Exit Data Entry ScreensPress ESC to exit a screen. Information on that screen is saved. Press ESC on the Homescreen or click the X in the top right corner of the screen to exit the Drake program.ResetPress CTRL + U to reset a data entry screen to the state it was in when you opened it.Exit Without SavingPress SHIFT + ESC to exit the screen without saving. This resets the screen and returnsyou to the Data Entry Menu.Delete a ScreenTo delete a screen, use one of the following methods:• Press CTRL + D from within the screen. At the prompt, click OK.• Right-click within the screen (but not within a field) and select Delete Screen.• Multiple occurrences of a screen (for example, if you have entered two 1099s) aredisplayed in an Existing Forms List. See “Existing Forms List” on page 50.Select the appropriate screens to open and delete.___NOTEIf a data entry screen has data, the screen name appears as colored texton the Data Entry Menu. Removing all data from the screen does notdelete the screen. If a screen name is colored but contains no data, it mustbe deleted to prevent electronic filing errors.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 4 9Navigating Data Entry FieldsA blinking cursor indicates the active field. Click inside a field to activate it. The variousmethods of navigating fields include the following:Desired ActionMove cursor forward one fieldMove cursor back one fieldDelete character behind the cursorDelete character in front of the cursorMove to last field on the screenMove to first field on the screenBring up additional data entry screensReturn to previous screenGo to first position in a data entry fieldGo to last position in a data entry fieldNavigate through data entry fieldAccess View modeAccess Print modeAccess data entry from View/Print modeOpen a worksheet for the current formDelete a form or scheduleKeyboard KeysTAB, ENTER, or Down ArrowSHIFT + TAB or SHIFT + ENTERBACKSPACEDELETECTRL + ENDCTRL + HOMEPAGE DOWNESCHOMEENDLEFT ARROW, RIGHT ARROW, or CTRL + LEFT ARROW orCTRL + RIGHT ARROWCTRL + VCTRL + PCTRL + ECTRL + WCTRL + DAccess States and Cities In Data EntryIn data entry, click the States tab to view a list of states with individual tax programs.Click any state from the list to enter data entry for that state. Press ESC to return to theStates list. You can also enter the two-letter state code in the selector field to display stateand city screen menus. To access another state, enter another state code or go the Statestab and click the selected state. It is not necessary to return to the main federal formsscreen of the Data Entry Menu to enter a new state code.For states with city tax, the city forms for that state are listed on the City tab of that state’sData Entry Menu. Click the form to open the data entry screen or type the correspondingcode into the selector field.Copyrighted MaterialDrake Software Evaluation Guide


5 0 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EGrid Data EntryThis feature allows faster data entry and is available for the Dependents screen (screen 2),Interest Income (INT screen), Dividend Income (DIV), and Depreciation Detail(4562). Only the most commonly-used fields are displayed in grid data entry. SeeFigure 16 below.Figure 16: Grid Data EntryTo turn grid data entry on or off, from the Home screen, go to Setup > Options > DataEntry tab and click Use grid data entry format for... (select screens). Once in data entry,press F3 to move back and forth from full screen to the grid data entry screen. You do nothave to activate grid data entry in Setup > Options to use the F3 feature.Page Down for Additional FormsPress PAGE DOWN to open an additional (blank) data entry screen. Each time a new screenis produced, the record number is indicated on the status bar.Use PAGE DOWN in the following circumstances:• To open another form or schedule. For instance, if you have completed one W2 screenand need to fill out a second one, press PAGE DOWN.• To move to the next data entry screen. For example, instead of returning to the DataEntry Menu to move from screen 1 to screen 2, press PAGE DOWN.___NOTEThe properties of the PAGE DOWN feature vary depending upon whichscreen is open. If PAGE DOWN moves to the next data entry screen but youneed a duplicate blank screen, press CTRL + PAGE DOWN.Existing Forms ListIf there are multiple occurrences of a form in data entry, the number of forms enteredappears in parentheses next to the screen name on the Data Entry Menu. If, for instance,three W-2s are entered, a (3) appears beside W2 - Wages on the Data Entry Screen.When the W2 screen is accessed, an Existing Forms List - W2: Wages appears. SeeFigure 17 on page 51.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 5 1Figure 17: Existing Forms List: WagesTo open a screen from the list, double-click a row, or select a row and click Open. To opena new, blank screen, double-click New Record or select New Record and click Open.Field FlagsUse field flags to set certain fields apart for review. Flagged fields require verificationbefore the return can be filed. You can “flag” fields as you go or set flags globally for allnew returns.To flags fields as you go, press F2 in a field or right click the field and choose Flag forReview. The field is displayed with a shaded background (default is green). See Figure 18below.Figure 18: Flagged FieldOnce you have verified the field, clear the flag by clicking the field and pressing F4, orright-clicking the field and selecting Remove Flag. A return with unverified fieldsgenerates an UNVER message page when the return is calculated. Clear all flags toremove the message.___TIPTo clear all return flags at once, press CTRL + SHIFT + SPACEBAR from theData Entry Menu of a return.Flagging Fields For All Returns (Globally)Flagged fields can be selected globally. Only the ADMIN login can access the globalflagging feature at Setup > Options > Administrative Options tab. Global flags canbe one of two types: for screens, or for new returns.Flag a field for a screen — Each time a new screen with a global flag is created in dataentry, the flag is present. An unverified flag produces an EF message page only if thescreen exists for the return.Copyrighted MaterialDrake Software Evaluation Guide


5 2 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EFlag a field for new returns — When a field is flagged for all new returns, anunverified flag produces an EF message page whether or not the screen has beenopened for the return.Magnifying FieldsData entry fields can be magnified for easier viewing. When this feature is activated, theactive field in data entry is displayed with large text in a yellow background. SeeFigure 19 below.Figure 19: Magnified Field___TIPActivate or disable this feature from Setup > Options. Under the DataEntry tab, select (or clear) Magnify data entry, then click OK.Overrides and AdjustmentsOverride fields and adjustment fields can be found throughout data entry.• Override fields — Data entry fields that allow overrides are preceded by an equalsign (=) and appear in red by default. Data entered in these fields replaces, oroverrides, program calculations.• Adjustment fields — Data entry fields that allow adjustments are preceded by a plusand a minus sign (+/-) and appear in blue (default). Data entered in these fields adjustprogram calculations by the amount entered. Enter a negative number to subtract anamount. See Figure 20 below.Figure 20: Override and Adjustment Fields___NOTEFormatting options for these fields are available in Setup > Options. On theData Entry tab, select from the list under Override field indicators andAdjustment field indicators.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 5 3ZIP Code DatabaseFor quicker data entry on screens requiring ZIP codes, enter the ZIP code before enteringcity or state information. City and state fields automatically fill from the system database.EIN DatabaseEach time an EIN is entered from forms W-2, W-2G, 1099-R, 2441, 8283, or 1099-G, thenumber and the corresponding business name and address are stored in the EIN database.An EIN stored in the database helps you enter data more quickly. The next time the EIN isentered on a W2, 1099, or 2441 screen, the business name and address automaticallyappear in the appropriate fields.Auto-Complete DatabaseThroughout data entry, bank name and financial institution fields automatically fill oncethey’ve been entered. For example, enter First Bank in the Name of Payer field onthe DIV screen and the next time that bank name must be entered in that field, typing Ffills the entire bank name from the Auto-Complete database. The Name of Payer fields onthe DIV and INT screens and the Name of financial institution fields on the BANK, DD,and PMT screens activate this feature.Add, edit, or remove auto-complete entries or change the order of your auto-complete list.To designate priority entries, right-click a field that uses the auto-complete feature andselect Edit Auto-Complete Data.Search FieldTo search the list of valid entries for the Resident City and School Dist. code fields onscreen 1 and the Business Code field on schedule C, use the data entry search function.To access the search feature in a field, press CTRL + SHIFT + S to open Data Entry-Search.Commonly Used CodesThroughout return data entry, codes TS, F, ST, and C are used to indicate whether the datais applicable to the taxpayer or spouse, or to federal, state, or city returns.• TS (or TSJ) — Select T if a data entry screen applies to the primary taxpayer, S if itapplies to the spouse, or J if it belongs to each spouse equally. (Default is T.)• F — Indicates whether the data should be used in calculating the federal return. Datais not carried to the federal return if a zero is entered in this box.• ST — The two-digit state code indicates whether the data should be used on a specificstate return. The items are included on the state form if the software is preparing thatstate return. If this field is left blank, the software uses the resident state by default.The data is not carried to any state or city if a zero is entered in this box.• City — The code entered indicates the source of the income on city returns.Copyrighted MaterialDrake Software Evaluation Guide


5 4 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EFigure 21: Form CodesMFJ to MFS SplitThe MFJ to MFS function splits a joint return into two separate returns.Before splitting a return, use the TS or TSJ fields to identify each item (such as W-2s) asapplying to the taxpayer or the spouse. Also, to force either the standard or itemizeddeduction, select the applicable field on Schedule A - Itemized Deductions.To split a return, complete the following steps:1. Press CTRL + S or click Split while in the joint return. The software calculates the splitand displays a calculation summary of the three returns. See “Calculating the Return”on page 89 for more information on reading calculation results.2. Press ENTER to close each Calculation Results screen and open the Return Selector.Three return results are displayed: the joint return and two separate returns. Details foreach return are listed. See Figure 22 on page 55.3. Select returns to print, view, or save. Click the applicable button at the bottom of thewindow.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 5 5Figure 22: Return Selector___NOTEDo not save all three returns if the joint return will be filed rather than theseparate returns. The separate returns can be viewed without being saved.4. Click Exit.If the split has been saved, the MFJ and both MFS returns can be opened for additionaldata entry. When you open the return, select a version to open at the prompt. To access thetaxpayer’s MFS return, enter the SSN and choose the split file. To access the spouse’sMFS return, enter the spouse’s SSN.Detail WorksheetA detail worksheet is available in every numerical field in data entry. Worksheets allow upto 30 lines of descriptions and amounts. When the worksheet is saved, the amounts enteredare totaled in the data entry field. Detail worksheets are not electronically filed with areturn.To use a worksheet, complete the following steps:1. Press CTRL + W or double-click a numeric field to open a Detail Worksheet for thefield.See Figure 23 on page 56.Copyrighted MaterialDrake Software Evaluation Guide


5 6 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EFigure 23: Detail Worksheet2. Enter a worksheet title. If the Title field is left blank, Drake automatically prints a titlein most instances.3. Enter a Description and Amount for each item.4. Press ESC to save and close the worksheet and total the amounts.• Open an existing worksheet — Activate a shaded (worksheet-present) field andpress CTRL + W or double-click the field.• Sort items in a worksheet — Click inside the column to sort. Follow the SortOptions instructions at the top of the Detail Worksheet screen.• Delete a worksheet — Open the worksheet and press CTRL + D. Click Yes toconfirm.The data entry field is shaded to indicate a worksheet is present. See Figure 24 below.Figure 24: Field with worksheetWhen the return is printed, the worksheet appears in View or Print mode as OVERFLOW.See Figure 25 on page 57. See “Viewing and Printing the Return” on page 91 for more onView and Print modes.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 5 7Figure 25: Overflow WorksheetMacrosMacros can make data entry quicker and easier, entering frequently-used data entry itemswith just a few keystrokes.To use a macro, place the cursor in the appropriate field and press the shortcut keycombination that identifies the macro.Press CTRL + SHIFT + M in a data entry field to view a list of available macros.Heads-Down Data EntryHeads-down data entry is an efficient method of data entry when working from a proformainterview sheet. See “Producing Letters” on page 163 for more on proformas. To activateHeads-Down data entry, press CTRL + N while in a data-entry screen. See Figure 26below.Figure 26: Heads Down data entryCopyrighted MaterialDrake Software Evaluation Guide


5 8 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R ERight-Click MenusTo access several useful functions in data entry, right-click the screen, or right-clickwithin a field to view a right-click menu.CalculatorA calculator is available in every numeric field in data entry. To access the calculator,press F10 from within the field. Press F1 to insert the calculated results into the data entryfield. When the calculator is active, the NUM-LOCK status is activated and cannot bedisabled. NUM-LOCK is disabled when the calculator is closed.ImportsImporting features are accessed from the data entry toolbar.Schedule D ImportImport capital gain and loss transactions into Drake using the Schedule D Importtool. Import transaction information from Excel 2008, Excel 97-2003, TAB (tabdelimited), or CSV (comma delimited) files. For the data to import correctly, theworksheet must contain specific columns of information. Details about the requiredspreadsheet format are available from the Schedule D Import window.W-2 ImportIf your client is an employee of a company that uses Talx W-2 eXpress, that client’sW-2 can be downloaded directly into Drake. See the Drake Support site,Support.Drakesoftware.com, for information on purchasing W-2 downloads and for alist of companies that supply employee W-2s using this service.DATA ENTRY RESOURCESAnswers to most data entry questions are just a few key strokes away. To access help in dataentry:• For field specific help, press F1, SHIFT + ?, or right-click in any data entry field and clickView Help.• Click one of the various Screen Help buttons on the screen title bar for help within aparticular screen.Field Help (F1)Field help provides specifics — such as explanations and lists of accepted entries – abouteach field in data entry. To access field help, place the cursor in the field and press F1 orright-click the field and select View Help. The Data Entry - Help window is opened. SeeFigure 27 on page 59.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 5 9Figure 27: Field HelpScreen HelpVarious screens in data entry offer screen-level help with detailed explanations of thescreen and associated form. To open Screen Help, click Screen Help located at the topright of the screen. See Figure 28 below.___NOTEScreen help is available only for screens with Screen Help buttons.Figure 28: Screen HelpRIA Form/Line FinderClick Screen Help to access to the RIA Form/Line Finder. (An Internet connection isrequired.) Enter a line number in the Input Line # text box and click Go to accessline-specific instructions from RIA’s online tax return guides. Line numbers for fieldsare indicated in data entry. See Figure 29 on page 60.Copyrighted MaterialDrake Software Evaluation Guide


6 0 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EFigure 29: RIA Form/Line FinderFigure 30: RIA Checkpoint___NOTETo access the complete RIA Checkpoint resource, click Research from theHome window toolbar. See Figure 30.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 6 1PREPARING THE 1040 EVALUATION RETURNThe following sections provide step-by-step instructions for creating a basic individual return.As you read this section, create a return and work through various data entry screens to becomecomfortable with Drake Software. To view a completed version of the evaluation return, openreturn 400005554.1. On the menu bar, select File > Open/Create Returns or click the Open/New speed button.2. In the Open/Create A New Return dialog box, type the following SSN (without dashes) inthe blank field: 400005555. Click OK.3. A message prompts you to create a new return. Click Yes.4. Next, select the type of return to create. (If you activated the Verify SSN/EIN option inSetup > Options, re-enter the SSN.) Our sample is an Individual return. Since this is thedefault return, type the name George Adams in the corresponding fields and then pressENTER or click OK.NAME AND ADDRESS SCREENEach time you create a new client, the return is opened to screen 1 – the Name and Address(or Demographics) – screen. See Figure 31 on page 63. The information provided on thisscreen flows to each of the forms for this client.Our Evaluation Guide taxpayers are George and Kaye Adams from Atlanta, GA:• They are filing a joint return• They have three children, Kimberly, Kenneth, and Michael• George receives a salary from two maintenance jobs• Kaye is a seamstress and is the sole proprietor of an alterations shop• George is in the National Guard and received combat payCopyrighted MaterialDrake Software Evaluation Guide


6 2 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EEnter the following data in the fields:Fields Taxpayer (TP) Data Spouse DataFiling Status 2SSN* 400-00-5555 400-003344First Name George KayeLast Name Adams AdamsDate of Birth* 08-13-1967 06-18-1970Occupation Maintenance Technician SeamstressDaytime Phone* 514-443-5665Evening Phone* 514-4437766Special Processing Code forActive MilitaryAddressZIP Code 30310Resident stateC42 Peach Tree CourtGA* Enter numbers with no formatting (dashes, dots, or spaces) and the program automaticallyformats the information for SSN, EIN, Date, Phone, and Zip fields. These formats are for viewingpurposes only and can be turned off in the Data Entry tab under Setup > Options.___NOTE• Press F1 in the Filing Status field to view a list of valid entries.• Pressing F1 (or SHIFT + ?) in a completed Social Security Number fieldproduces information about the validity of the entered SSN.• If you leave the spouse Last Name, Address, and Phone Number fieldsblank, Drake uses the primary taxpayer’s information.• Drake includes an integrated ZIP Code database. To make data entryquicker and easier on screens 1, W2, W2G, 1099, 1099G, or Schedule C,enter the ZIP code before entering data in the City and State fields. Typingthe ZIP code fills the City, State, County, and Resident State fieldsautomatically.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 6 3Figure 31: Name and Address screen, DemographicsCopyrighted MaterialDrake Software Evaluation Guide


6 4 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EPress ESC to save data on screen 1 and go to the Data Entry Menu. Notice the Name andAddress selection is highlighted on the Data Entry Menu, indicating that data has been enteredon this screen.___NOTEIf a screen is highlighted but contains no data, it must be deleted or it cancause electronic filing errors. Open the screen and press CTRL + D todelete it.DEPENDENT INFORMATIONGeorge and Kaye have three dependents. To access the dependent screen, type 2 in theselector field to open the Dependent Information screen. If you prefer the full screen mode,press F3 to toggle between the complete data entry screen and grid data entry. See Figure 32.___NOTEGrid data entry allows easier and faster data entry. It is available for theDependent Information (screen 2), dividend (DIV), interest (INT), and4562 data entry screens. To activate grid data entry, go to Setup > Options> Data Entry tab. In the Use grid data entry format for section, select thescreens on which you wish to use grid data entry: Dependent, DIV andINT, and 4562. In the return, press TAB or ENTER to move through the fieldsand press ENTER to create additional entries. Press F3 to toggle betweenthe complete data entry screen and grid data entry.Figure 32: Grid Data Entry for screen 2, Dependent InformationDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 6 5Enter dependents’ information from the following table. After entering information on bothchildren, press F3 to exit grid data entry and open the detailed data entry screen. Enter the HopeCredit Expenses.Fields First Dependent Second Dependent Third DependentFirst Name Kimberly Kenneth MichaelSSN 400-00-7744 400-00-6677 400-00-8890Relationship Daughter Son SonMonths in Home 12 12 12Date of Birth 04-16-1999 06-20-1990 12-04-1995Qualifying Child CareExpense*2250Hope Credit Expenses 5200If Over 18 and aXStudent* Child care expenses must also be entered on the 2441 screen. See thefollowing section, “Child & Dependent Care Expenses”.___NOTEIf you leave the dependent’s Last Name field blank, Drake uses the primarytaxpayer’s information.If you leave the Months in Home field blank, Drake assumes the child wasin the home for 12 months.When you are entering information on the dependent’s relationship to thetaxpayer, it is necessary to type only D to fill the field with the word“daughter.” Similar features are available on other screens in data entry.Taxpayers with a qualifying child for Earned Income Credit (EIC) must also complete the EICDue Diligence questions found on screen 2. All three of the Adams’ dependents are unmarried,lived in the home for the full year, and do not have another person who could claim them as anexemption. Answer Yes or No to the EIC questions 10, 11 and 13a for the Adams’ dependents.Press ESC to return to the Data Entry Menu.CHILD & DEPENDENT CARE EXPENSESInformation on child care costs is entered in the Form 2441 — Child & Dependent CareExpenses screen. See Figure 33 on page 66. To open this screen, type 2441 in the selectorfield and press ENTER. Enter the following taxpayer information and the amount of theexpenses.FieldsSSN/EIN 587999556EIN Provider’s NameKids AcademyDataCopyrighted MaterialDrake Software Evaluation Guide


6 6 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EAddress485 Gateway Blvd.ZIP code 30311Amount 2250Telephone number 514-443-5775Figure 33: 2441, Child & Dependent Care Expenses___NOTE• When entering child care expenses, make sure the expense amounts arelisted on both the Dependent screen and the 2441 screen.• To place a check mark in a box, left-click with your mouse, use the spacebar, or use the X key.Press ESC to return to the Data Entry Menu.WAGESTo open the W2 screen, type W2 in the selector field and press ENTER. See Figure 34 on page 67.In the first field of the W2 screen, enter T for taxpayer or S for spouse, depending on the W-2being entered. After you press TAB to move to the next field, the corresponding taxpayer or spouseinformation fills the Employee’s name/address fields.While entering wages, notice that Drake fills boxes 3-6 and 16, based upon the wages enteredin box 1. Because there are three W-2s included in this return, press PAGE DOWN to save thecurrent screen and produce a new W2 screen.Enter the following information:TSFieldsFederal ID 75-1234567Employer’s NameEmployer’s AddressEmployer ZIP Code 30309Wages 28452Federal Tax Withheld 4255StateTDataMaintenance Corp72 Office Suite ParkGADrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 6 7State ID 34123456State Tax Withheld 1648Figure 34: W2 - Wage and Tax Statement___NOTE• When multiple screens are needed — for example, when you have multipleW-2s, 1099s, dependents — press PAGE DOWN to save the current screenand produce an additional blank data entry screen.• The bottom portion of the W2 screen allows entry of state wageinformation.Copyrighted MaterialDrake Software Evaluation Guide


6 8 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R ETSEnter the following information from the second W2 screen.FieldsFederal ID 75-2345678Employer’s NameEmployer’s AddressEmployer ZIP Code 30310Wages 24780Federal Tax Withheld 3682StateBecause George was also in the National Guard and received combat pay, enter his militarypay on a third W2 screen.Press ESC to return to the Data Entry Menu.TOffice HelpersData903 Commerce AveGAState ID 46123456State Tax Withheld 1285TSFFieldsFederal ID 555555551Employer’s NameEmployer’s AddressEmployer ZIP Code 28734Wages 15000Federal Tax Withheld 213112 - Other (first box) Q12 - Other (second box) 7000TDataM to indicate military wagesUnited States Army1876 We Want You Drive___NOTEBecause there are three W-2s entered, a (3) appears in parentheses next tothe screen name on the Data Entry Menu. When a W2 screen is accessed,an Existing Forms List - W2: Wages appears. See Figure 35 below.Figure 35: Data Entry Menu - WagesPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 6 9INTEREST INCOMETo open the Schedule B — Interest Income screen, type INT in the selector field and pressENTER. The Schedule B is opened in grid data entry. Click Item Detail or press F3 to accessthe detail screen. See Figure 36 below.___NOTE• After the name of a financial institution has been entered once, theprogram automatically fills the name field the next time the first letters aretyped.• Dividend income is entered in the same manner as interest. To open theSchedule B - Dividend Income screen, select 1099-DIV DividendIncome on the General tab or enter DIV in the selector field.Enter the following account interest for the Adams’ return:FieldsTS FieldJName of PayerNBTInterest Income 897DataFigure 36: INT, Interest IncomePress ESC to return to the Data Entry Menu.Copyrighted MaterialDrake Software Evaluation Guide


7 0 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EITEMIZED DEDUCTIONSTo open the Itemized Deductions Schedule screen, type A in the selector field and pressENTER. This screen has the same lines and fields as the IRS Schedule A. See Figure 37 onpage 71.Enter the information from the following chart for the Adams’ itemized deductions.TSJFieldsOther medical and dental expenses 635Income taxes 752Real estate 1238Personal property taxes 434Total gifts by cash or checkOther than by cash or check 230Tax preparation fees 125JDataUse a worksheet - Press Ctrl + WTitle: Gifts by Cash or CheckAmerican Red Cross 100Fulton Humane Society 100ATL Children’s Hospital 250___NOTEThe amount entered in the Income taxes field is an adjustment, indicatedby the blue +/- sign to the left of the field. Amounts in adjustment fields addto or are subtracted from a calculated amount. In this instance, $752 isadded to the amount of income tax calculated by the program.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 7 1Figure 37: Schedule A - Itemized DeductionsPROFITS OR LOSSES FROM BUSINESSTo open the Self Employed Income screen, type C in the selector field and press ENTER. SeeFigure 38 on page 72. Enter the following information in the Adams’ return:TSFieldsProfession/ProductSSeamstressBusiness Code 451130Business NameStreet AddressZIP Code 30310Accounting MethodMaterially Participated in 2008Gross Receipts or Sales 56743DataAlterations by Kaye256 Eastgate PlazaCash (no entry necessary)Yes (no entry necessary)Copyrighted MaterialDrake Software Evaluation Guide


7 2 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R E___NOTETo search for business codes, on line B, press CTRL + SHIFT + S to open adata entry search, then type sewing in the Please input search data fieldto locate the code number for related businesses.Enter the following additional information on the Schedule C for Alterations by Kaye:Expenses Data Cost of Goods Sold DataAdvertising 650 Inventory Valuation Method CostInsurance 400 Beginning Inventory 2565Rent – Other 7200 Purchases - Personal 457Taxes and licenses 125 Cost of Labor 5400Utilities 3320 Materials/Supplies 9640Ending Inventory 2145Figure 38: Schedule CPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 7 3DEPRECIATIONDrake Software provides seven data entry screens for depreciation. On the Income tab of theData Entry Menu, the seven screens are grouped in a box labeled Depreciable Assets.Selection options are clearly marked and include Form 4562 - Depreciation Detail, and sixadditional screens offering additional parts of Form 4562. The 4562 screen is usually the onlyscreen needed for entering depreciation; screens 6-10 are used only when you are entering newinformation into an existing return. The GO screen contains the GO Zone Elections. You canalso access depreciation screens from the depreciation fields on schedules C, F, and E bysimply double-clicking the field. See Figure 39 below.Figure 39: Schedule C: DepreciationTo create a Form 4797 from within the 4562, complete the If Sold section on the bottom rightof the 4562. The only required fields are Date sold, Property type, and Sales price.For the Adams’ return, there are two depreciable assets: Kaye’s mending machine and abusiness vehicle.___NOTEIf there is an entry on the Auto screen in the Business, Commuting, orOther mileage fields, Drake figures the business use percentage for thevehicle on the 4562 screen.To open the depreciation data entry screen, type 4562 in the selector field and press ENTER.See Figure 40 on page 74.Enter the following information on the 4562 grid data entry screen:Fields Data DataFor AUTO CMulti Form Code (MFC) 1 1Description Delivery Van Mending MachineDate Acquired 01-01-2008 06-30-2008Cost 13500 4500Business % Use 100 100Listed Property Type VMethod M MLife 5 7Copyrighted MaterialDrake Software Evaluation Guide


7 4 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EFigure 40: 4562 in Grid Data EntryAfter entering data on the grid screen, click Item Detail or F3 to view the 4562 detailed dataentry screen. To view all items press PAGE DOWN. See Figure 41 below.Figure 41: 4562, Depreciation DetailPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 7 5AUTO MILEAGE FOR SCHEDULE CInformation on the Adams’ vehicle goes to the Auto screen to determine whether to takeexpenses or mileage on this asset, and then to the Schedule C. Type AUTO in the selector fieldand enter mileage information on the Auto Expense Worksheet for Schedule C screen. SeeFigure 42 below.The vehicle was used primarily by the owner and was not available for personal use. Kayemaintains a policy prohibiting personal use of the vehicles. Choose to let the softwaredetermine the mileage rate.ForDescriptionFieldsCDelivery VanDate Placed in Service 01-01-2008Business Miles Before 07/01 6541Business Miles After 06/30 5874Delivery VanAnswer the Yes or No questions on this screen to ensure acceptance by the IRS. These fieldsare required.Figure 42: Auto Expense worksheet for Schedule CPress ESC to return to the Data Entry Menu.Copyrighted MaterialDrake Software Evaluation Guide


7 6 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EMOVING EXPENSESDuring the last year, the Adams moved to a new home — the first home they have everpurchased. To open the Moving Expenses screen, type 3903. See Figure 43 below. Enter thefollowing moving expenses on the 3903 screen:FieldsTSJJMiles from Old to New 25Miles from Old to Old 12Transportation & Storage 1850Travel & Lodging 85DataFigure 43: 3903, Moving ExpensesPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 7 7FIRST TIME HOMEBUYER CREDITIf the taxpayer qualifies for the First Time Homebuyer Creidt, use the 5405 screen, accessiblefrom the Credits tab, to enter the purchase price and date of purchase of the home. TheAdams’ purchased their first home on October 25, 2008, for a price of $205,000.___NOTEThe fields on screen 5405 for the home address are overrides. Entries herewill override the default address from screen 1. See Figure 44 below.Figure 44: 5405 - First Time Homebuyer CreditPress ESC to return to the Data Entry Menu.___NOTEFor more information on tax law changes for 2008-09, see the 2008 TaxLaw document on the Drake Software Electronic Training Center Web site,www.DrakeETC.com.Copyrighted MaterialDrake Software Evaluation Guide


7 8 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R ERECOVERY REBATE CREDITUse the RRC screen, accessible from the General tab, to enter data for the “Recovery RebateCredit” line of Form 1040. The RRC screen has three fields:• Economic Stimulus payment received as shown on Notice 1378• Nontaxable veteran’s disability/death benefits received in 2008• Bypass the recovery rebate credit calculation (check box)___NOTEBefore you enter an amount in the Economic Stimulus payment receivedfield, the taxpayer must confirm the exact amount received from the IRS.Verify the 2008 Stimulus Payment amount online at www.irs.gov.If no verification is available, bypass the recovery rebate credit calculationon the RRC screen to allow the IRS to make the calculation for thetaxpayer. This ensures the accuracy of the taxpayer’s data and preventsdelays in federal return processing.The Adams are not able to verify the amount of Economic Stimulus payment that theyreceived in 2008. Click the By-pass the recovery rebate credit calculation check box. SeeFigure 45 below.Figure 45: Recovery Rebate CreditPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 7 9EIC CHECKLIST AND WORKSHEETSThe Earned Income Credit Checklist is entered on the Form 8867 — EIC - Paid Preparer’sChecklist. To open this screen, type 8867 in the selector field and press ENTER. Select Yes orNo for Part I - All Taxpayers and complete the Part IV - Due Diligence Requirements.Part I - 5aPart I - 7Part IV - 20Part IV - 22Part IV - 23FieldsNoNoYesYesYesData*Part II - Taxpayers With a Child - questions must be answeredfor each dependent on screen 2, Dependents.Drake Software offers supplemental EIC Worksheets to assist preparers in Due DiligenceRequirements as specified in IRS Rule 6695. Preparers have the option to complete the EICscreens to answer and record responses to important Due Diligence questions. To open thesescreens, type EIC1, EIC2, EIC3, or EIC4 in the selector field and press ENTER.For the Adams’ return, complete EIC1 - Qualifying Child and EIC2 - Income.Screen - FieldEIC1 - 1a (Child 1)EIC1 - 1b (Child 1)EIC1 - 2 (Child 1)EIC2 - IncomeEIC2 - 1EIC2 - 1aEIC2 - 2aEIC2 - 2bEIC2 - 3EIC2 - 4EIC2 - 5DataHigh UniversityYesCheck Not DisabledYesYesBooks, ReceiptsNoYesYesYesNo___NOTEView the EIC calculations by reviewing the EIC worksheet, WK_EIC,produced automatically by Drake.Remember that the software does not replace knowledge. It is thepreparer’s responsibility to read and understand the EIC requirements andmake and record inquiries as appropriate.Press ESC to return to the Data Entry Menu.Copyrighted MaterialDrake Software Evaluation Guide


8 0 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R ESTATE AND CITY DATAState returns are easy to generate in Drake Software. First, either install the state software onyour computer or simply put the Evaluation CD in the CD drive. See “State and CityPrograms” on page 7 on for installation instructions.___NOTETo run state programs from the CD, go to Setup > Directories/Paths andfor the Drive letter for State Programs, select the drive letter of your CDdrive.State forms are generated automatically, based on data entered on the federal return.Calculation is based on the state entered on screen 1 for Resident State, and on the state codesindicated on the screens for W2, Schedule C, 1099, Schedule B, etc.Since the Adams live in GA year-round, screen 1 indicates that GA is their Resident State.The GA forms are produced automatically according to the state info entered on the federalscreens such as W2. If no state code is indicated on a screen, (for instance the Schedule C inthe Adams’ return) Drake assumes that this information flows to the Resident State.For specific information pertaining to the states, state data entry screens are available. Toaccess state data entry screens, select a state from the States tab, or on the Data Entry Menu,type the two-letter state code for the desired state and press ENTER. See Figure 46 on page 81.For states with city tax, indicate a city from the Resident City field on federal screen 1. Dataentry screens are located on the City tab. To access a city form, click it or type thecorresponding screen code in the selector field.Review the state data entry screens. It is not necessary to enter state-specific data for theAdams’ return.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 8 1Figure 46: Data Entry Menu, State ReturnsAs indicated by the circles in Figure 46, the bottom of each data entry screensupplies you with return specific information. These details include:(1) Return Status — The status displayed is the return’s current status in theClient Status Manager.(2) Return Type — Displays the type of return.(3) Current Package — Displays which package you are currently viewing(Federal, Partnership, State, etc.)PART-YEAR RETURNIn the Resident State field of screen 1, enter PY for a part-year return. If questions arise aboutwhich options are available for a specific field, press F1 or SHIFT + ?.If the taxpayers are filing a part-year return, it is necessary to enter PY residency dates on thestate screens.For those forms corresponding to a particular state (2106, 2441, W-2, etc.), enter theappropriate state in the ST field at the top of the screen. This causes the state information to beprinted on the appropriate state form.Review this information. It isn’t necessary to enter any part-year information for the Adams.Copyrighted MaterialDrake Software Evaluation Guide


8 2 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EPARTNERSHIP INFORMATIONEnter partnership information on the Schedule K-1. To open the Partnership K1, enter K1 inthe selector field.If either George or Kaye Adams were a partner in a business, their K-1 information could beimported from an existing 1065 (partnership) return or an 1120s (S-corporation) return. Sinceneither George nor Kaye is a partner, no information is needed here.ESTIMATED TAXESTo override the system’s automatic calculations and enter estimated taxes, type ES in theselector field to open the Estimated Taxes screen. This screen is divided into columns, one forEstimated Taxes Paid in 2008 and one for Estimated Taxes Due in 2009.Review the screen. It is not necessary to enter estimated tax data for the Adams’ return.FAQ SCREENThe FAQ screen is a great resource for federal and state-specific information. On the DataEntry Menu for federal or state, type FAQ in the selector field. Click to view the desiredtopic.DIRECT DEPOSITUse the DD screen for direct deposits of IRS refunds into the taxpayer’s checking or savingsaccount. Taxpayers can elect to deposit their federal refund directly into up to three checkingor savings accounts. If the federal refund is to be deposited into more than one account, theprogram produces Form 8888 - Direct Deposit of Refund. This form can be paper filed orelectronically filed. If only one account is entered, direct deposit information for the singleaccount is printed on lines 74b and 74d of the 1040.State refund direct deposits are also entered on the DD screen. Not all states provide directdeposit of refunds, nor do all states offer splitting the refund deposit into separate accounts.Only eligible states and cities are available from the State/City selection fields on the DDscreen.___NOTEDo not use this screen to enter direct deposit information related to bankproducts. Use the BANK screen to apply for bank products.To access the Direct Deposit Information screen, type DD in the selector field and pressENTER. Review the screen. It is not necessary to enter direct deposit data for the Adams’return.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 8 3PAYMENTUse the PMT screen to pay federal and state taxes due through electronic withdrawal from thetaxpayer’s bank account. Separate accounts can be designated for federal and state payments.To access the Electronic Funds Withdrawal Information screen, type PMT in the selectorfield and press ENTER. Review the screen. See Figure 47 below. If no payment date is entered,the default is April 15. It is not necessary to enter payment data for the Adams’ return.Figure 47: PMT screen for Electronic Payments.___NOTEThe PMT screen is divided into three sections, with the Account #1 sectiondesigned to accommodate electronic fund withdrawal of federal and statepayments from the same account, and to accommodate federal and stateestimated payments. The Account #2 and Account #3 sections arerequired only to designate payment for an additional state or if theelectronic funds withdrawal of the state payment is from a different accountthan the account chosen for the federal payment.Copyrighted MaterialDrake Software Evaluation Guide


8 4 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R E8879 E-FILE SIGNATUREForm 8879, an electronic signature document used to authorize e-filing, allows taxpayers toselect a PIN signature. It also authorizes the ERO to enter the taxpayer’s PIN signaturesauthorizing electronic debit for tax payments. Use the PIN screen to electronically sign thereturn and produce Form 8879. See “Signing the Return Electronically” on page 102 forinstructions on completing the PIN signatures for the Adams’ return.EF OPTIONS OVERRIDEBy default, Drake transmits the 1040 and all state returns eligible for electronic filing. Use theEF screen to select various electronic filing options and overrides. If you wish to practiceelectronic filing with the Adam’s return, see “Designating EF Options” on page 103 forinstructions on setting transmissions options for the Adams’ return.USE AND DISCLOSURE SCREENSNew for 2008, if tax return information will be disclosed to parties outside of the taxpreparer’s firm, IRS Regulation 7216 requires that you obtain client’s signed consents for theuse and disclosure of their tax information.See IRS Reg. 7216 for guidance regarding the use and disclosure of clients’ tax information toparties outside of the tax preparer’s firm. The Consent to Use of Tax Information must besigned and dated by the taxpayer (and spouse, if married filing jointly) before the return isprepared. The Consent to Disclosure of Tax Information must be signed and dated by thetaxpayers before the return is e-filed and the information is submitted to a third party (forexample, to a bank).Drake offers several options for making these forms available to your clients, includingprinting forms in bulk to be signed manually and having clients provide their signatureselectronically.___NOTEWhile a preparer is required to have each client sign these documents inorder to use or disclose his or her tax information, clients are not required tosign them. If a client declines to sign one or both of the documents, youmust recognize that using or disclosing the tax information could result incertain criminal penalties. As a preparer, you cannot make your servicesconditional on your client’s consent.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 8 5Access the USE screen to allow the taxpayer to electronically sign the Consent to Use of TaxInformation before the return is prepared. Access the DISC screen to allow the taxpayer toelectronically sign the Consent to Disclosure of Tax Information before the return is e-filedand the information is submitted to a third party.___NOTEIf a return is prepared by a service bureau or franchisor, the Consent toDisclosure of Tax Information accessed on the CONS screen.BANK PRODUCTSBank products are available through Chase, Republic Bank, River City Bank, and SantaBarbara Bank & Trust. Indicate the bank you use for bank products in Setup > Firm. SeeFigure 48 below.Figure 48: Setup > Firm(s) Banking InformationOnce you select a bank, the corresponding screen is activated. Enter bank information on theChase (enter CHAS in the selector field), Republic (RB), River City (RC) or Santa Barbara(SB) screens. Once you select a bank in Setup > Firm, you can access your default bank usingthe BANK screen. See Figure 49 on page 86. Review the screen. It is not necessary to enterbank data for the Adams’ return.Copyrighted MaterialDrake Software Evaluation Guide


8 6 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EFigure 49: Sample Bank ScreenFILING AN AMENDED RETURNThe 1040X form cannot be electronically filed but can be filled with data from the originalform. Calculate the return then enter X in the selector field to open the form. When you areprompted, click Yes to fill the 1040X with information from the original return. Then changethe data in the original return to reflect your amendments to the return. Print the return andcheck for accuracy. An amended return must be mailed to the IRS.See Figure 50 on page 87. Review the screen. It is not necessary to enter amended data for theAdams’ return.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e t u r n P r e p a r a t i o n | 8 7Figure 50: Form 1040X, AmendedFILING AN EXTENSIONUse the EXT screen to file an extension. Only one extension can be generated at a time. IfForm 4868 is filed in April, remove the X from that field and place an X in the 2350 box togenerate a later extension.Review the screen. It is not necessary to enter extension data for the Adams’ return.Copyrighted MaterialDrake Software Evaluation Guide


8 8 | R e t u r n P r e p a r a t i o n 2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C a l c u l a t e a n d P r i n t t h e R e t u r n | 8 9Calculate and Print the ReturnBefore a return can be printed or filed, the results must be calculated. A return can be changed, viewed, orcalculated repeatedly before it is finally submitted. This chapter covers the basics of calculating, viewing andprinting a return in Drake.RETURN CALCULATIONSDrake Software automatically saves all data as it is entered; it does not, however, automaticallycalculate the return. A return can be calculated or viewed at any time during data entry and fromanywhere within the return.___NOTEHow the software functions when calculating and viewing returns can becustomized in Setup > Options, Calculate & View/Print tab.CALCULATING THE RETURNClick Calculate from the Data Entry Menu toolbar, or press CTRL + C from anywhere in thereturn to calculate the return and view the Calculation Results screen. See Figure 51 onpage 90.The Calculation Results screen consists of two tabs of information. The Summary tab listsfederal and state figures and fee details. EF Messages are also listed. Double-click a messageto jump directly to the faulty field in data entry to correct and clear the EF Message, orright-click the message to view a full description of why electronic filing is being prevented.The Details tab displays a printable summary of return figures.___NOTEWhen you calculate the Adams’ return, an EF MESSAGES page will bepresent regarding the PIN signature for the return. The next chapterreviews the process for clearing this message.Click Continue to return to the Data Entry Menu.Copyrighted MaterialDrake Software Evaluation Guide


9 0 | C a l c u l a t e a n d P r i n t t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 51: Calculation ResultsDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C a l c u l a t e a n d P r i n t t h e R e t u r n | 9 1VIEWING AND PRINTING THE RETURNView or print tax forms generated for the return from the Home window or from data entry withina return.To View or Print a return anytime from the Data Entry Menu, click View or press CTRL + V tocalculate the return and view. To print the return, click Print or press CTRL + P.To View or Print a return outside of data entry, click View or Print from the toolbar on the Homewindow.ENHANCED VIEW/PRINT MODEEnhanced mode allows viewing and printing from the same window and makes it easier to seehow the printed return will look. Enhanced View/Print mode is the default view/print modein Drake. It consists of five main components, described next and labeled in Figure 52 onpage 92:1. A toolbar with the following options:• Data Entry — Leave View/Print mode and return to the Data Entry Menu• Print — Select options to print sets, the whole return or specific pages• Setup — Choose View/Print setup options such as form properties, color and order• Archive — Create archives of different return scenarios that can be reviewed,restored, or deleted at a later time (“Archive Manager” on page 95)• Refresh — Update the viewed return to reflect any changes made by another preparerworking in the open return• Basic View — Switch to the cascade view or “Classic” mode from prior years• 8615 Export — 8615 Export Utility - this option is available only to specific returns• Help — Access Drake Help• Exit — Exit View/Print Mode2. A viewing tool that allows zooming and scrolling. Click arrows to move through thereturn; click the Zoom icon to zoom in or out.3. Category tabs group documents within a return; select a tab to view all documents withinthe category on the tab.4. A tree view showing all documents in a return that can be expanded or collapsed. Click theplus sign (+) to expand the list of forms. Click the minus sign (-)l to collapse the list.5. A viewing panel that displays a preview of the selected document.Copyrighted MaterialDrake Software Evaluation Guide


9 2 | C a l c u l a t e a n d P r i n t t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 52: Enhanced View/Print modeViewing in Enhanced View/Print ModeTo view a document in Enhanced View/Print mode:1. Open Enhanced View/Print for a return. The All Forms tab is shown by default.2. Expand the tree view as needed and click the name of a form to view. Or use the arrowkeys to navigate the forms list.___NOTETo view a form, click the form name; do not select the box next to the form.This is a printing function and is described in “Print from EnhancedView/Print Mode,” following.Message and Notes PagesWhen you view a return, a red EF MESSAGES page may be present. These pages arecreated when a return has certain issues that would cause an IRS or state rejection. Eachpage lists the error code and a brief description to help you resolve the issue. When theseissues are resolved, the return is ready for electronic filing. You cannot select a return forelectronic filing that has a red EF MESSAGES page in the forms list of a return.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C a l c u l a t e a n d P r i n t t h e R e t u r n | 9 3Similarly, the yellow NOTES page provides reminders or tips about the tax return but itdoes not prevent electronic filing of a return. Please read the notes pages for pertinentinformation. While Drake recommends allowing the software to generate these notespages, they can be turned off in Setup > Options. On the Optional Documents tab,remove the check mark from the Generate notes page when applicable box.Print from Enhanced View/Print Mode:You can print selected forms, selected sets of forms, or quick print forms in a return.Print Selected FormsTo print selected forms and other documents from Enhanced View/Print mode:1. Open Enhanced View/Print for a return. The All Forms tab is shown by default.2. Collapse or Expand the tree view as needed, then select the forms to be printed byselecting the box next to the form. To print all forms in a set, select all of theboxes in the tree view under All Forms. See Figure 53 below.Figure 53: Tree View with print selections___NOTEIf the main box of a set is selected, all sub-boxes are automaticallyselected.3. Press CTRL + P or click Print to open the Print Selection dialog box. SeeFigure 54 on page 94. (If you click the arrow next to the Print icon, select PrintSelected Forms.)4. Select any printing options, as appropriate, shown in the Print dialog box.Copyrighted MaterialDrake Software Evaluation Guide


9 4 | C a l c u l a t e a n d P r i n t t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R E5. Click Print again to print all of the selected items.Figure 54: Print Selection windowPrint Sets of FormsTo print specific sets of a return from Enhanced View/Print mode:1. Open Enhanced View/Print mode for the return. The All Forms tab is displayedby default. (See Figure 53 on page 93.)2. Select the Sets tab. All applicable sets in the return are displayed in the tree view.3. Select the sets to print.4. Click Print to open the Print Selection dialog box. See Figure 54. (If you clickthe arrow next to the Print icon, select Print Selected Forms.)5. Select any printing options, as appropriate, shown in the Print dialog box.6. Click Print again. All of the selected items are printed.___NOTEDefault printer sets are established in Setup > Printing > Printer Setup.See “Printing Sets and Print Order” on page 35 for more information.Quick Print a Single FormEnhanced mode allows you to print whatever document is currently in view. Printing asingle form in this manner is referred to as quick printing.To Quick Print a form from Enhanced View/Print mode, press CTRL + Q or selectPrint > Quick Print.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C a l c u l a t e a n d P r i n t t h e R e t u r n | 9 5VIEW AND PRINT IN BASIC MODEBasic mode is a View and Print mode that displays a color-coded cascade of forms. Many ofthe same functions that are available in Enhanced View/Print mode are available in BasicMode, just with a different type of interface. To view a form in Basic mode, double-click theform. To print a form in Basic mode, click Print Mode on the Basic Mode toolbar and use theUP ARROW, DOWN ARROW or SPACEBAR to select forms to print.Switch From Enhanced Mode to Basic ModeClick the Basic View button on the toolbar in Enhanced View/Print mode to switch tothe cascade of forms known as Basic mode. From Basic mode, click the Enhanced buttonon the toolbar to view or print in Enhanced mode. See Figure 55 below.Figure 55: Basic and Enhanced Toolbar ButtonsARCHIVE MANAGERThe Archive Manger allows you to archive returns and to review, restore, or delete thearchived returns. This means you can save various versions of a return, such as an amendedand the original return. The Archive Manager is accessible from both Basic and Enhancedmodes.___NOTEArchives are saved as PDF files and can be accessed and viewed from theDrake Document Manager (DDM). Select Archive > Document Managerto access the DDM.Creating an ArchiveTo create an archive of an open return:1. From Enhanced View/Print mode, select Archive > Archive Client Return. SeeFigure 56.2. In the Archive Client Return dialog box, enter a description of the archived file, andclick OK.See Figure 57 on page 96.3. After the program has created the archive, click OK. The program adds the archivedreturn to the Archive Manager list.4. To view the PDF of the archive, access the client folder in the Drake DocumentManager. See “Working in the Document Manager” on page 196.Copyrighted MaterialDrake Software Evaluation Guide


9 6 | C a l c u l a t e a n d P r i n t t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 56: Archive Speed ButtonFigure 57: Archive Client Return dialog boxRestoring an ArchiveWhen you restore an archive, you replace the open version of a return with an archivedversion. Drake recommends that you preserve the existing client data before restoring anolder version of a return. A prompt will suggest that you archive the latest version of areturn before restoring an older version.To restore an archive:1. From Enhanced View/Print mode, select Archive > Archive Manager.2. Click the row of the archive to restore. See Figure 58 on page 97.3. Click Restore. A program prompt suggests that you create a new archive of thecurrent version of the return.4. Click Yes. The Archive Client Return dialog box is opened so you can name andsave the new archive. See “Creating an Archive” on page 95.5. When the restoration is complete, click OK.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C a l c u l a t e a n d P r i n t t h e R e t u r n | 9 7Figure 58: Archive ManagerCopyrighted MaterialDrake Software Evaluation Guide


9 8 | C a l c u l a t e a n d P r i n t t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s 3 | 9 9Review Questions 3Answer the following questions. See the next page for answers and explanations.1. In W-2 data entry, to save the current W-2 information and produce an additional W-2 screen, press:A) ALT + DB) ENTERC) SHIFT + ESCD) PAGE DOWN2. Data entered is this type of field, preceded by the equal sign (=), appears in red by default and replacesprogram calculations:a) Adjustment fieldb) Override fieldc) Direct Entry fieldd) Flagged field3. Which view and print mode allows viewing and printing from the same window?a) Enhanced modeb) Basic modec) Classic moded) PDF mode4. Which of the following is true about NOTES pages?a) NOTES pages appear in yellow when you are viewing a return.b) NOTES pages provide electronic filing warnings.c) NOTES pages prevent electronic filing.d) NOTES pages cannot be turned off.5. What two screens in the software must contain the child care expenses?a) Screen 1 and 2441 screenb) Screen 2 and 2441 screenc) Screen 3 and the MISC screend) Screen 4 and screen 2Copyrighted MaterialDrake Software Evaluation Guide


1 0 0 | R e v i e w Q u e s t i o n s 3 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 31. The correct answer is d) PAGE DOWN. When multiple screens are needed - for example, when youhave multiple W-2s, 1099s, dependents - press PAGE DOWN to save the current screen and produceadditional blank data entry screens.a) is incorrect. ALT + D inserts today’s date in any date field.b) is incorrect. ENTER moves the cursor forward one field in data entry.c) is incorrect. SHIFT + ESC exits a screen without saving changes.2. The correct answer is b) Override field. Data entered in these fields replaces, or overrides, programcalculations.a) is incorrect. Adjustment fields are preceded by the (+/-) symbol and adjust program calculations bythe amount entered.c) is incorrect. Direct Entry fields carry the amount entered to the specific line number or formspecified next to the field.d) is incorrect. Flagged fields require verification before the return can be filed and are set by thepreparer within a single return or globally for all new returns.3. The correct answer is a) Enhanced mode. Enhanced mode allows viewing and printing from the samewindow and makes it easier to see how the printed return will look. It is the default view/print mode.b) is incorrect. Basic mode displays a color-coded cascade of forms that you must view and print fromseparate windows by clicking the View Mode and Print Mode buttons on the Basic mode toolbar.c) is incorrect. Classic Mode is available by clicking the Classic button when in Basic mode. Classicmode is a view/print mode that simulates DOS data entry.d) is incorrect. A preparer may print to PDF while in Print Mode using PDF995 or DrakePDF.4. The correct answer is a) NOTES pages will appear in yellow when you are viewing a return. ANOTES page appears in yellow in View/Print mode, while an EF MESSAGES page appears in red.b) is incorrect. An EF MESSAGES page provides electronic filing warnings. A NOTES page is usedto display reminders or tips.c) is incorrect. An EF MESSAGES page prevents electronic filing when present in a return.d) is incorrect. To turn off NOTES pages, Go to Setup > Options >Optional Documents tab, removethe check mark from the Generate notes page when applicable box.5. The correct answer is b) Screen 2 and 2441 screen. Enter child care expenses on screen 2 (the Dependentsscreen) and on the 2441 screen (Child & Dependent Care Expenses).a) is incorrect. Screen 1 is the Name and Address screen, and child care expenses are not entered here.c) is incorrect. Screen 3 is the Income screen and the MISC screen is used to enter miscellaneouscodes and notes.d) is incorrect. Screen 2 is correct but screen 4 (Adjustments) is not used to enter child care expenses.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E E l e c t r o n i c a l l y F i l e t h e R e t u r n | 1 0 1Electronically File the ReturnElectronic Return Originators (EROs) can file federal and state tax returns electronically through Drake.Becoming an ERO requires some preseason planning but pays off when tax season arrives.APPLYING FOR AN EFINIf you do not have an Electronic Filing Identification Number (EFIN), Drake assigns you atemporary EFIN assigned by Drake. A temporary EFIN allows you to electronically file testreturns and gives you access to Drake Internet tools. If you have not already received a temporaryEFIN, go to www.DrakeSoftware.com and register your 2008 Evaluation software. A temporaryEFIN and password is sent to you via e-mail.To transmit live returns, you must become an ERO and obtain an EFIN. Complete and submitForm 8633, Application to Participate in the IRS E-File Program. Preparers who are not CPAs orEAs must include a fingerprint card with their application. Established EROs do not need to fileForm 8633 except to change the original information in the application.You can obtain a Form 8633 from Drake Software or from the IRS:• From the menu bar in Drake, select Tools > Blank Forms. From the Individual tab, print the8633 and 8633, page 2.• Log on to the IRS web site at www.irs.gov.You can obtain fingerprint cards to submit with Form 8633 from Drake Software or from the IRS:• Call Drake Support at (828) 524-8020.• Contact the IRS.Applications to become an authorized electronic filer are accepted throughout the year. The IRSencourages all prospective EROs to apply as soon as possible as processing and backgroundchecks can take up to 45 days.___NOTESome states require a separate application for electronic filers. For moreinformation, go to the Drake Support Web site atSupport.DrakeSoftware.com, and from the Resources drop list, clickFederal/State Facts.VERIFYING EF SETTINGSAfter obtaining a temporary or live EFIN, enter it in Setup > ERO along with your Drake accountnumber and password. An Internet connection is also required to electronically file. Makeadjustments to the Connection Settings portion of the screen if necessary.Copyrighted MaterialDrake Software Evaluation Guide


1 0 2 | E l e c t r o n i c a l l y F i l e t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EBefore transmitting live returns, review the Setup > Options, EF tab. These options allow you tocustomize your EF process. See “Setup Options” on page 26.PREPARING THE RETURN FOR ELECTRONIC FILINGBefore you electronically file the Adams’ return, it must be signed electronically and, if necessary,any return transmission overrides must be designated. Also, any remaining EF Messages must becleared.SIGNING THE RETURN ELECTRONICALLYAll electronically filed returns must first be signed by the taxpayer (and spouse if it is a jointreturn) and by the preparer with a Personal Identification Number (PIN). To electronicallysign the return with a PIN and produce Form 8879 – IRS e-File Signature Authorization,complete the PIN screen in data entry. The 8879 generated must be printed and signed by thetaxpayer and then retained in the tax preparer’s office for three years.To complete the PIN screen, first set up a PIN in Preparer Setup. For details on setting up aPIN, see “Return Signature Options” on page 23.By default, the software generates the PIN for the taxpayer and spouse. If you prefer thetaxpayers to determine their own five-digit PIN, go to Setup > Options, EF tab to disable theAuto-generate taxpayer(s) PIN feature.To electronically sign the Adams’ return and remove the PIN signature EF Message page,complete the following steps:1. From the Data Entry Menu, type PIN into the selector field and press ENTER, or clickPIN 8879/8878 e-file Signature on the right side of the screen.2. Enter today’s date in the PIN Signature Date field or press ALT + D to insert today’s date.Press TAB.___NOTEAfter entering the date, pressing TAB automatically enters the taxpayer’sPIN, and on a joint return, the spouse’s PIN.3. Enter the ERO’s PIN Signature. The PIN entered must match the PIN entered for thepreparer selected on screen 1 in data entry, Preparer # field. Press TAB.4. Press ESC to save and exit the PIN screen.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E E l e c t r o n i c a l l y F i l e t h e R e t u r n | 1 0 3DESIGNATING EF OPTIONSBy default, Drake transmits the 1040 and all state returns eligible for electronically filing. TheEF Options Override screen allows you to make specific transmission choices for eachreturn.Open the Adams’ return, type EF into the selector field, press ENTER, and review this screen.With your cursor in any field, press F1 for field-specific information.To customize the electronic filing process for a return, make one of the following selections(these options may also be changed during the electronic transmission process):• In the Ready for EF field, enter X when the return is ready for electronic filing. (If thisfeature is activated in Setup > Options, EF tab, select Require ‘Ready for EF’ indicatoron EF screen.)• In the Federal E-file Override section, enter X in the appropriate federal return or form totransmit. To transmit state returns only, select Do NOT send Federal.___NOTETo exclude the federal return from electronic filing, you must select the DoNOT send Federal box; otherwise, the federal return is included fortransmission, if eligible.• In the State E-File Override section, select the state to transmit as a piggyback returnfrom the Select state for piggyback e-file drop list. Leave these fields blank if you are nottransmitting a piggyback state.• Select any additional states to be transmitted with the return.• In the Suppress All E-File section, select the box to Suppress Federal/State EF and allBank Products to suppress electronic filing and bank products for the return.___NOTETo exclude state returns from electronic filing, you must select Do NOTsend any states; otherwise, all eligible states are transmitted, if eligible.In the case of the Adams’ return, it is necessary to override only the statetransmission settings, by clicking the Do NOT send any states box. SeeFigure 59 on page 104.Review the Additional Options.Copyrighted MaterialDrake Software Evaluation Guide


1 0 4 | E l e c t r o n i c a l l y F i l e t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 59: EF Options OverridePress ESC to return to the Data Entry Menu.CLEARING EF MESSAGESFinally, before a return is eligible for electronic filing, all EF Messages must be cleared. Fordetails on EF Messages, see “Message and Notes Pages” on page 92. For the Adams’ return,verify that all messages are cleared and that the return is eligible for electronic filing on theCalculation Results screen. See Figure 60 on page 105.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E E l e c t r o n i c a l l y F i l e t h e R e t u r n | 1 0 5Figure 60: Eligible for Electronic FilingELECTRONICALLY FILING RETURNSThe following section covers the steps required to file returns electronically in Drake: selectingreturns, transmitting returns, and processing acks (acknowledgements).SELECTING RETURNS FOR EF1. From the menu bar, go to EF > Select Returns for EF or press CTRL + S.2. The EF Return Selector is displayed. See Figure 61 on page 106. A selection windowlists all recently-calculated files that are eligible for electronic filing. Use the arrow keysto scroll through the list of returns.3. Click the check box to select the desired returns. (If there is no check box, then the returnis not eligible for e-filing.)4. After selecting the returns, click Continue. A report lists all returns included in thetransmission. Select Print to print the report. Click Exit to close.___NOTEDouble-click a return to view the EF Transmission Detail screen, whereelectronic filing specifics can be finalized.The Calculation Results screen includes an EF Select button that allowsyou to place a return directly into the queue for transmission. Go to Setup >Options > EF tab, select Allow selection for EF from the Calculationsresults screen.Copyrighted MaterialDrake Software Evaluation Guide


1 0 6 | E l e c t r o n i c a l l y F i l e t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 61: EF Return SelectorTRANSMITTING RETURNSTransmitting tax returns and receiving acknowledgments (also known as “acks”) is a simpleprocess. It takes just a few clicks to electronically file returns to the IRS and the states.All returns transmitted through Drake are forwarded to the correct IRS Service Center. Drakesends an immediate “P” ack, acknowledging a successful transmission. (The “P” also indicatesthat the transmission is being “processed.”) After the IRS (or a state) receives and processesthe forwarded return, Drake receives acknowledgements indicating the return was accepted(A) or rejected (R). The acknowledgements are then forwarded to the ERO to pick up the nexttime the ERO makes a connection to Drake.To transmit returns:1. Select EF > Transmit/Receive or press CTRL + T.2. The Transmit/Receive Files dialog box is opened (see Figure 62 on page 107), providingfive options: Review, Send/Receive, Acks Only, Help, and Cancel.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E E l e c t r o n i c a l l y F i l e t h e R e t u r n | 1 0 7Figure 62: Transmit/Receive FilesReviewUse this option to review the transmission file and remove any returns before connectingto Drake.1. To review the manifest, click Review. See Figure 63 on page 108.2. To remove all returns from the transmission file, click Select All and Remove.Selected returns are removed from the transmission file. To transmit all the returns,click UnSelect All. Click to choose single returns for transmission (or omission).3. Click Cancel to return to the Transmit/Receive dialog box.Copyrighted MaterialDrake Software Evaluation Guide


1 0 8 | E l e c t r o n i c a l l y F i l e t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 63: Transmit File EditorSend/ReceiveUse this option to connect and transmit the file and to pick up federal and stateacknowledgments, bank product acknowledgments, check authorizations, and e-mail.1. Click Send/Receive.2. The Declaration Control Record is opened. Click Print.3. Click Continue.4. The program connects to Drake, completes the transmission, and automaticallydisconnects from Drake after the transmission is complete. See Figure 64 onpage 109.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E E l e c t r o n i c a l l y F i l e t h e R e t u r n | 1 0 9Figure 64: Transmit SuccessAcks OnlyUse this option to pick up federal and state acknowledgements, bank productacknowledgements, check authorizations, and e-mail. No files are transmitted to Drake.1. Click Acks Only.2. The program connects and retrieves the acknowledgements.PROCESSING ACKNOWLEDGEMENTSEvery successfully transmitted tax return receives an acknowledgement. EROs transmittingthrough Drake receive:• Process acknowledgements to indicate the transmission was received: (T) for testtransmissions and (P) for live transmissions• Federal acceptance or rejection acknowledgements• State acceptance or rejection acknowledgements (when a state return is electronicallyfiled)• Bank acknowledgements to indicate when a bank product has been accepted or rejectedAny available acknowledgements are received when the ERO connects to Drake, whether ornot the ERO is transmitting files. To process and print acknowledgements, select EF >Process Acks on the menu bar.Copyrighted MaterialDrake Software Evaluation Guide


1 1 0 | E l e c t r o n i c a l l y F i l e t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R EThe acknowledgement report displays:• Social Security Number of primary taxpayer• Declaration Control Number (DCN) of the transmitted return• Refund due on the return• Acceptance or rejection code• Number of errors recorded• Two-letter state code for the state returnWhen the acknowledgements are processed, they move to the EF Database for futurereference. EF Reports can pull information from this database. (See Reports > ReportManager.)PRACTICING ELECTRONIC FILINGPractice filing electronically by sending a few more returns. Open and calculate the first five testreturns provided in the software (400-00-1001 through 400-00-1005). View the returns for EFMESSAGES pages. If there is a message, correct the error before calculating the return again.Additional EF practice returns are available on the Drake Evaluation CD. Insert the CD into yourcomputer’s CD drive, select Practice and Test Returns, and choose Electronic Filing andBanking Practice.WARNING!Do not transmit any test returns that contain Social Security Numbers otherthan those in the 400-00 and 500-00 series included in the software. Anyother returns are processed as actual tax returns and the ERO could becharged with filing fraudulent tax returns.SEARCHING THE EF DATABASEThe EF Database contains information about all returns that have been electronically filed.To view your EF Database, select EF > Search EF Database on the menu bar. Use one of thefollowing methods to search:• Type the SSN, EIN, or name of the primary taxpayer (without spaces, dashes, or additionalcharacters). Press ENTER or click OK.• Leave the SSN/EIN/Name to search for field blank and click Go. Press PAGE UP orPAGE DOWN to browse the EF records.___NOTEIf there are multiple records for a SSN or EIN, the additional records arelisted in the box at the bottom of the window.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E E l e c t r o n i c a l l y F i l e t h e R e t u r n | 1 1 1There are four tabs available for viewing with the following information available:General Information tab — (F1)• Taxpayer information• Federal and state acknowledgement codes• Acknowledgement dates• Transaction date• Filing status• Refund amount or balance due• Reject codes• Bank codes and loan status• Bank check informationBank/Direct Deposit Info tab — (F2)• Detailed loan information• Direct deposit information• Document Control NumberFees/Miscellaneous Info tab — (F3)• Earned Income Credit (EIC)• Adjusted Gross Income (AGI)• PINs, firm number, preparer number, ERO number• Bank distribution feesReject Code Lookup tab — (F4) Enter and view the reject code description and solution.Also available from the Search EF Database dialog box:F10 - Online DB — Automatically logs into your Online EF Database and opens the detailed EFinformation page for the current SSN or EIN.F5 - Data Entry — Opens the data entry screen for the SSN/EIN displayed. To go back to the EFdatabase from the return, press F9.VIEWING YOUR ONLINE EF DATABASEThe Online EF Database displays information about electronically filed returns in real time. Runreports on returns, loans, and checks, or search for electronic filing information for a single SSN orEIN. Access the Multi-Office Manager (MOM) and view Client Status Manager data for one ormultiple offices.To access your Online EF Database from within the software:Copyrighted MaterialDrake Software Evaluation Guide


1 1 2 | E l e c t r o n i c a l l y F i l e t h e R e t u r n 2 0 0 8 D R A K E S O F T W A R E1. From the toolbar, click Support. Log on to Drake Support at Support.Drakesoftware.com.2. Go to My Account > EF Database.To access your Online EF Database from your EF Database in the software:1. Go to EF > Search EF Database.2. Press F10, or click F10 - Online DB.INCLUDING BANK PRODUCTSBank products work seamlessly with Drake Software electronic filing and allow the taxpayer toreceive a refund faster and can also assist in paying for tax preparation services. Not all productsare offered by all banks. Variations of the following products are offered:• Instant Loan — This loan is approved or denied on the spot, so a check can be printed withinmoments of applying. If the loan application is accepted by the bank, the return is sent directlyto the IRS. If the application is declined, the taxpayer has the opportunity to select a differentbank product.• RAL — A Refund Anticipation Loan is a loan to a taxpayer based upon the taxpayer'santicipated federal tax refund.• Refund Transfer/Bonus — This is not a loan. The money is available after the bank hasreceived the direct deposit of the taxpayer’s refund from the IRS.• State Refund Add-On — A state refund is available only as a Transfer/Bonus.• Balance Due Loans — For clients who have a balance due on their return, this is an option foryour client to pay off a debt to the IRS. For details, contact your bank.There are also various distribution methods for bank products. Not all methods are offered by allbanks:• Direct Deposit — A direct deposit is available for most of the products described above.• Cashier’s Check — The most frequent method for delivery of bank products is a cashier’scheck printed in the tax preparer’s office.• Stored Value/Debit Cards — The card operates with a PIN and can be reloaded with otherproducts.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s 4 | 1 1 3Review Questions 4Answer the following questions. See page 114 for answers and explanations.1. Which of the following is true about EROs?a) To become an ERO, contact the IRS at (866) 255-0654 and ask to be added to the ERO list.b) EROs must request a temporary EFIN from Drake.c) EROs do not need to file Form 8633 except to change the original information in theapplication.d) ERO applicants must submit an 8633 within 90 days of tax season.2. The easiest way to learn the electronic filing requirements for the state of Wisconsin:a) From the software, go to Setup > Options > States tab and click WI > EF Optionsb) With the Evaluation disc in the CD drive, click States > Wisconsin > EF Requirementsc) Go to Support.DrakeSoftware.com, and from the Resources list, choose Fed/State Facts andfrom the map, click Wisconsin.d) Call the Wisconsin DOR and request to be placed on its approved ERO mailing list3. How is a federal and state return excluded from electronic filing on the EF screen in data entry?a) Click the box to Suppress federal/state and all bank productsb) Click to clear the 1040 and state boxesc) Click the Do NOT send Federal boxd) Remove the X from the Ready for EF box4. Which of the following statements is not true?a) All returns listed on the EF Return Selector are eligible for electronic filingb) Select files to remove from the queue with the Transmit File Editorc) Send returns to the queue from the Calculation Results screend) Drake can send you e-mail messages during the e-file transmission process5. What is the best place to get information on transmission, bank, direct deposit, fees, and reject informationon any electronically-filed return?a) Call Drake Supportb) Call your participating bankc) Go online to www.irs.govd) Go to EF > Search EF Database from Drake SoftwareCopyrighted MaterialDrake Software Evaluation Guide


1 1 4 | R e v i e w Q u e s t i o n s 4 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 41. The correct answer is c) EROs do not need to file Form 8633 except to change the original informationin the application. For example, if your office has a change of address, file a new 8633 withyour new office address.a) is incorrect. This is not how a preparer becomes an ERO. There is an application process.b) is incorrect. Temporary EFINs are assigned to preparers who have not yet become EROs.d) is incorrect. Applications to become an authorized electronic filer are accepted throughout the year.However, it is recommended that you apply approximately 45 days before tax season to allowadequate time for a background check.2. The correct answer is c) Go to Support.DrakeSoftware.com, and from the Resources list, chooseFed/State Facts and from the map, click Wisconsin. Information under Fed/State Facts includese-filing information, Update Notes, Form Instructions, and any Shipment Letters.a) is incorrect. Setup > Options > States tab is for selecting various form preferences.b) is incorrect. E-filing information is not available on the Evaluation CD.d) is incorrect. You could call the Wisconsin DOR for information, but there is no approved EROmailing list.3. The correct answer is a) Click the box to suppress federal/state and all bank products. This marksthe return as ineligible and ensures it cannot be sent electronically to the IRS.b) is incorrect. The 1040 and state boxes are not selected by default and therefore can’t be cleared witha click.c) is incorrect. Clicking the Do NOT send Federal box suppresses federal electronic filing but unlessthe selection is made to Do NOT send States, all eligible state returns can be sent.d) is incorrect. While this disallows electronic filing, it is not the answer in every case since the Readyfor EF indicator option can be disabled in Setup > Options, EF tab.4. The correct answer is a) All returns listed on the EF Return Selector are eligible for electronic filing.Only returns listed with a check box to the left of the ID number are eligible.b) is incorrect. You can remove returns from the queue with the Transmit File Editor. Simply select areturn and click Remove.c) is incorrect. For any eligible return, simply click the EF Select button from the Calculation Resultsscreen.d) During the e-file transmission process, Drake can send acknowledgements and e-mail. Aftertransmission, look at the Drake Home screen. Any e-mail received is listed in the Message Center.5. The correct answer is d) Go to EF > Search EF Database from Drake Software. Drake Support personnelsee the same information you see in your EF Database: acknowledgement types, acceptanceand rejection dates, bank product information, and reject codes.a) is incorrect. Drake Support can give you transmission information, but there is a resource availablethat can provide you this information around the clock, and save you a phone call.b) is incorrect. The bank has some information, but is not the best resource for this kind of information.c) is incorrect. You can get no transmission information at www.irs.gov, but you can get a lot of usefulinformation, instructions, and form.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 1 5Business ReturnIn addition to the 1040 package, Drake Software includes packages for Corporate, S-Corporations, Fiduciary,Partnership, Tax Exempt, and Estate returns. This chapter summarizes the basic steps to prepare an 1120corporate return. To view the completed return, open 400001815.A complete set of books (a balance statement and income statement) is the key to creating a business return.The information in the following tables comes from the income statement and the balance sheet located at theend of this chapter. See page 133.PREPARING THE 1120 EVALUATION RETURNBegin by creating a new corporate return.1. From the toolbar, click Open/New.2. In the data entry field, type the following EIN: 400001816. Click OK.3. Click Yes to create a new return.4. Select the return type. In this case, select C Corp.5. Type Fireside Flooring,Inc in the Corporation Name field. Click OK.CORPORATION GENERAL INFORMATIONInitially, an 1120 return is opened to screen 1, Corporation General Information. Beginpreparing the return by entering the corporation’s general information. See Figure 65 onpage 116.The client is Fireside Flooring, Inc., which was incorporated in Idaho on February 15, 1997.The calendar year for the corporation ended December 31, 2008. Enter the following fielddata:AddressFieldsZIP code 83713Data2710 Hearth WayPhone number 208-111-2222Date incorporated 02-15-1997State of incorporationIDResident state 0****Because we want only a federal return for thisexample, suppress the state return by entering zero (0)as the Resident State. If this were a regular return, youwould enter ID as Resident State and enter stateinformation on screen 2, General State Information.Copyrighted MaterialDrake Software Evaluation Guide


1 1 6 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 65: Screen 1, Corporation General InformationPress ESC to save the data and go the Data Entry Menu.INCOME AND DEDUCTIONSCorporate income is reported on screen 3, Income & Deductions, and on the Other Income(INC) screen. Deductions are recorded on screen 3, on the Other Deductions (DED) screen,or on the Taxes and Licenses (TAX) screen.To open the Income and Deductions screen, type 3 in the selector field and press ENTER. SeeFigure 66 on page 117. Enter the following income and deduction data:FieldsGross receipts or sales 495,410Returns and allowances 11,300Gross rental income 27,500Salaries and wages 66,400Repairs and maintenance 6,500Bad debts 4,500Advertising 1,500Pension plans 3,500DataDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 1 7Figure 66: Screen 3, Income and DeductionsPress ESC to return to the Data Entry Menu.TAXES AND LICENSESTo open the Taxes and Licenses screen, type TAX into the selector field and press ENTER.See Figure 67 on page 118. Enter the following data:FieldsState income taxes 1,200Local property taxes 5,900Payroll taxes 6,500Licenses 1,500DataCopyrighted MaterialDrake Software Evaluation Guide


1 1 8 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 67: Taxes and Licenses screenPress ESC to return to the Data Entry Menu.DED OTHER DEDUCTIONSType DED into the selector field to open the Other Deductions screen. See Figure 68 onpage 119. Enter the following data:FieldsAccounting 1700Building insurance 2200Liability insurance 1000Workman’s comp insurance 1200Janitorial 9,800Legal and professional 2,300Telephone 1250Utilities 6700DataDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 1 9Figure 68: DED, Other Deductions screen___NOTELosses from a partnership owned by the corporation must include thepartnership name, EIN, and amount of loss on the detail (Ctrl + W)worksheet of the Other field. Enter the loss as a positive amount for thededuction field.Press ESC to return to the Data Entry Menu.Copyrighted MaterialDrake Software Evaluation Guide


1 2 0 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R ESCHEDULE A – COST OF GOODS SOLDTo open the Schedule A - Cost of Goods Sold screen, type A in the selector field and pressENTER. See Figure 69 below. Enter the following data:FieldsInventory at the beginning of the year 55,000Purchases less cost of items withdrawn forpersonal use160,000Cost of labor 9,000Inventory at end of year 7,500Methods used for valuing inventoryDo the rules of section 263A apply to thecorporation?Was there was a change in determininginventories?CostNoNoDataFigure 69: Schedule A - Cost of Goods SoldPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 2 1SCHEDULE E – OFFICER INFORMATIONTo open the Officer Information screen, type E in the selector field and press ENTER. SeeFigure 70 below. A Schedule E is required if the total receipts of the corporation are greaterthan $500,000. Enter the following data:Name of OfficerSigns returnsTitleAddressFieldsJoe WoodDataYes (check mark)CEOZIP code 83713E-mail address111 Carpet Ctjwood@myemail.comTelephone 208-123-4444ID Number 400005999Ownership & Participation 100Stock Percentage - Common 100Stock Percentage - Preferred 100Officer’s deductible compensation 4500Figure 70: E, Officer InformationPress ESC to return to the Data Entry Menu.Copyrighted MaterialDrake Software Evaluation Guide


1 2 2 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R ESCHEDULE K – OTHER INFORMATIONTo open the Schedule K - Other Information screen, type K in the selector field and pressENTER.See Figure 71 below. Enter the following data.Accounting methodFieldsPrinciple business code (Press CTRL + SHIFT+ Sto locate the floor covering stores code)Business activityProduct or serviceEnter the number of shareholders at the end oftax year if 100 or fewerAre the corporation total receipts for the tax yearAND its total assets at the end of the tax yearless than $250,000?Accrual442210FlooringFlooring1NoDataFigure 71: Schedule K - Other Information___NOTEThe Schedule K has lines for both the 1120C and 1120. If the corporation isa cooperative, enter information on the 20C 1120-C CooperativeAssociations screen. The line numbers on the Schedule K screen wouldthen correspond to the 1120C. This return is an 1120 so the line numberscorrespond to an 1120 return.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 2 3Press PAGE DOWN to access the Schedule K4 (Schedule K, Lines 4a and 4b) entry screen.See Figure 72 below. In line 4b, enter:• Name of the Individual — Joe Wood• ID# — 4000005999• Country of Citizenship — US• Percentage owned in voting stock — 100• and indicate that Joe is an individual.Figure 72: Schedule K - Line 4bPress ESC to return to the Data Entry Menu.SCHEDULE L – BALANCE SHEETS – ASSETSTo open the Schedule L - Balance Sheet - Assets screen, type L in the selector field and pressENTER. See Figure 73 on page 124. Enter the following data:Fields Beginning (a) Beginning (b)End of Year(c)Cash 60,145 75344Trade notes & accountsreceivable23,555 94,419Tax-exempt securities 25,471 59,823Loans to shareholders 9,455 5,630End of Year(d)Copyrighted MaterialDrake Software Evaluation Guide


1 2 4 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 73: Schedule L - Balance SheetFrom the L screen, press PAGE DOWN to access the L2 screen, Liabilities and Shareholders’Equity. See Figure 74 on page 125. Enter the following information:Fields Beginning (a) Beginning (b)End of Year(c)Accounts payable 36000 16000Capital stock: common 57,874 58,538End of Year(d)Retained earnings - unapprop 154,800 231,826Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 2 5Figure 74: Schedule L - Liabilities & Shareholders Equity___NOTEDrake uses amounts entered in the Retained Earnings - Unapprop fields,unless the balance sheet does not balance, in which case the systemadjusts the retained earnings account to an amount that forces the balancesheet to balance. In this example, review the NOTES pages in View modeto view the adjustment amounts. To turn off the automatic balance feature,select the Turn off Auto Balance box on the Print screen.Press ESC to return to the Data Entry Menu.SCHEDULE M1 – RECONCILIATION OF INCOMETo open the Schedule M-1 - Reconciliation of Income, type M1 in the selector field and pressENTER. Items entered on these fields require descriptions and amounts, and for those, you needworksheets.Copyrighted MaterialDrake Software Evaluation Guide


1 2 6 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EUSING WORKSHEETSIn our example, we need to enter the amount of “Entertainment Facilities Expense” in the boxon line 5. Since there is no specific field for our expense, use the Other field. As you begintyping in the Other field, a worksheet is opened automatically. Press TAB to go to theDescription field and type ENTERTAINMENT FACILITIES EXPENSE in theDescription field, and enter 690 as the amount. Press ESC to return to the M-1 screen. SeeFigure 75 below.FieldsExpense item descriptionAmount field 690DataEntertainment Facilities Expense___NOTENot all worksheets are generated automatically. When you want to generatea worksheet, right-click in a field and choose Add Worksheet or left-clickand press CTRL + W.Figure 75: Schedule M-1 - Reconciliation of IncomeDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 2 7SCHEDULE M2 – RETAINED EARNINGSTo open the Schedule M-2 - Analysis of Unappropriated Retained Earnings screen, typeM2 in the selector field and press ENTER. Enter the information from the following table. Line5 on this screen has a field for the cash amount. In the following example, enter 31528 inbox (a) Cash Amount. See Figure 76 below.Figure 76: Schedule M2 - Retained EarningsPress ESC to return to the Data Entry Menu.FORM 4562 – DEPRECIATIONTo access the 4562 screen, type 4562 in the selector field. The screen is opened in grid dataentry mode (if that option was selected in Setup > Options.) See Figure 77 below. Enter theinformation from the following tables into the grid. The items listed in these tables are used100% for business, so leave the % Use field blank. (The default is 100%.) The cost anddepreciation basis are the same amount.Figure 77: 4562 in Grid Data Entry modeCopyrighted MaterialDrake Software Evaluation Guide


1 2 8 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R E___NOTEIf the prior depreciation amount is the same for the state and the federal,the state amount does not have to be entered.For this example, assume that the state and federal prior-year depreciation is the same.DescriptionDateAcquiredCost Listed Method Life PriorDepreciationTruck 1 Installation 11-22-2007 56000 T M 5 9375Truck 2 Delivery 07-13-2004 21355 T M 5 15850Computer 02-14-2008 5200 M 5Security system 08-22-2006 12400 SL 7 5313Forklift 09-22-2003 66000 M 7 53029To access the complete 4562 screen, click Item Detail or press F3. See Figure 78 below. Ifyou choose to make your entries on this screen, press PAGE DOWN to access additional 4562screens.Figure 78: 4562 Item Detail screenDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 2 9Screen 10 Additional Depreciation Elections is used to elect out of bonus depreciation for allclasses or by property class. For this return, select To elect out of bonus depreciation for allclasses. See Figure 79 below.Figure 79: Additional Depreciation ElectionsPress ESC to return to the Data Entry Menu.ESTIMATED TAXESType ES in the selector field and press ENTER to open the Estimated Taxes screen. SeeFigure 80 below. Enter the amounts listed in the following table:Quarter Date Paid Amount1st Qtr. 04-15-2008 100002nd Qtr. 06-15-2008 100003rd Qtr. 09-15-2008 100004th Qtr. 01-15-2009 10000Figure 80: 1120 - Estimated Tax PaymentsCopyrighted MaterialDrake Software Evaluation Guide


1 3 0 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EThere are no estimated tax vouchers for corporations. Instead, file form 8109 Federal TaxDeposit Coupon deposit via the Electronic Federal Tax Payment System (EFTPS).In Drake, for estimated taxes due for the next tax year, type W into the selector field and pressENTER. On line 1, enter the taxable income expected for the tax year. Enter any otherapplicable information for the rest of the 1120W screen. See Figure 81 below.FieldsTaxable income expected forthe tax year175000Tax credits 3700Other taxes 4500DataFigure 81: Form 1120W, Corporation Estimated TaxA WK_1120W is generated when the return is viewed.You have just completed a corporate return in Drake. Review the forms, calculations, and anyEF MESSAGES or NOTES pages in View mode.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 3 1REVIEWReview the return for accuracy. Click View at the top of the screen to open View/Print mode.(If you indicated in Setup > Options that the Calculation Results screen be displayed beforeView mode, click Continue on the Calculation Results screen to open View mode.)Click form 1120 from the category tree view. Review the 1120, the Statements, and the listedschedules to check expenses. Compare these to the 1065 income statements on the followingpages.Click form 1120.PG5. Use this page to see if the return is in balance. Line 15 -Total assetsshould be the same as line 28 -Total liabilities and shareholders’ equity. Line 8 of the M-2should equal line 25 end-of-year Retained earnings Unappropriated. See Figure 82 onpage 132.Copyrighted MaterialDrake Software Evaluation Guide


1 3 2 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 82: Schedule L- page 5Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E B u s i n e s s R e t u r n | 1 3 3FINANCIALSUse the following balance sheet and financial statement to complete the business return. SeeFigure 83 below.Figure 83: Balance SheetCopyrighted MaterialDrake Software Evaluation Guide


1 3 4 | B u s i n e s s R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 84: Income StatementDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s P a r t 5 | 1 3 5Review Questions Part 5Answer the questions below. See page 136 for answers and explanations.1. Which account is used to see if the return is balanced?a) Accounts payableb) Retained earningsc) Cash accountd) Capital stock2. In a corporate return, the Principal Business Activity code is entered on which screen?a) Screen 1, Name and Address, General tabb) Taxes and Licensesc) Schedule K, Other Informationd) Schedule J, Tax Computation3. Distribution of cash, stock, or property is entered on which screen?a) M1, Reconciliation of Incomeb) L1 - Assetsc) Income and Deductionsd) M2, Retained Earnings4. On corporate Schedule M2, how can you access the M1 screen?A) CTRL + DB) PAGE UPC) ENDd) ALT + ENDCopyrighted MaterialDrake Software Evaluation Guide


1 3 6 | R e v i e w Q u e s t i o n s P a r t 5 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 51. The correct answer is b) retained earnings. This account acts as a balancing account for the return.a) is incorrect. Accounts payable is an asset account and the program doesn’t use this account tobalance.c) is incorrect. A cash account is an asset account and the program doesn’t use this account to balance.d) is incorrect. Capital stock is a liability account but it doesn’t function as a balancing account for theprogram.2. The correct answer is c) Schedule K, Other Information. The Principal Business Activity Code isentered on Schedule K along with the answers to various questions about the corporation.a) is incorrect. Screen 1 is used for general information about the corporation.b) is incorrect. Amounts for the state and local taxes and licenses are entered on this screen.d) is incorrect. This schedule is used for tax computation.3. The correct answer is d) M2, Retained Earnings. Distributions of cash, stock, and property areentered on the M2 screen.a) is incorrect. The M1 screen is used to reconcile income (or loss) per books with income (or loss) perreturn.b) is incorrect. Assets, not distributions, are entered on the L1.c) is incorrect. The Income and Deductions screens are used to enter income and deductions, notdistributions, for the corporation.4. The correct answer is b) PAGE UP. This takes to you the M1 screen.a) is incorrect. CTRL + D is for deleting a screen.c) is incorrect. END does not move you through the screens.d) is incorrect. ALT + END doesn’t do anything in the program.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 3 7Partnership ReturnThis chapter outlines the basic steps for preparing a Form 1065, or Partnership return, in Drake Software. Toview the completed return, open 400001813.PREPARING THE 1065 EVALUATION RETURNStart with a balanced set of books before attempting to complete a partnership return. Examine thepartnership books on page 157 before preparing the 1065 return.To begin entering data in the partnership evaluation return, create a new return.1. From the toolbar, select Open.2. In the data entry field, type the following EIN: 400001814. Click OK and then Yes to createa new return.3. Select the Partnership - 1065 option.4. Enter GATOR ROOFING in the Partnership Name field and click OK.___NOTEWhen opening and preparing a return, type all numbers without dashes(unless the number is negative), slashes, dollar signs, or commas. Ifselected on the Data Entry tab at Setup > Options, the SSN, EIN, date,phone, and ZIP code fields automatically display formatting in data entry.Toactivate or turn off this feature, go to Setup > Options Data Entry tab.GENERAL INFORMATIONThe Partnership General Information screen is opened. Begin preparing the return byentering the partnership’s general information. See Figure 85 on page 138.NameAddressFieldsZIP code 32611Gator Roofing1234 Lakeside StPhone 904-222-2222Principal business activityPrincipal product or serviceManufacturingRoofing*Principal business code number *238100Business start date 05122000Accounting Method**Resident state **0AccrualDataCopyrighted MaterialDrake Software Evaluation Guide


1 3 8 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R E* To locate the code number for roofing, with your cursor in the field for line C,press CTRL + SHIFT + S to open a field search. Type ROOFING in the Pleaseinput search data field and click Go. Select 238100 Roofing & Siding & SheetMetal Contractors, and click OK.**Because we’re preparing a federal return only and not a state return, enter 0(zero) for the resident state to suppress the state return.Figure 85: Partnership General InformationPress ESC to save the data and go to the Data Entry Menu.STATE GENERAL INFORMATIONTo open the State General Information screen, type 2 in the selector field and press ENTER.Since we are not preparing a state return, there is no need to make entries on this screen.Review the screen and press ESC to return to the Data Entry Menu.___NOTETo open a screen from the Data Entry Menu, click or enter the screenname or code in the selector field. For example, to open the State GeneralInformation screen, either click State General Information, or type 2 inthe selector field and press ENTER.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 3 9INCOME AND DEDUCTIONSPartnership income is reported on the Income & Deductions screen (screen 3), and on theOther Income (INC) screen. Deductions are recorded on screen 3, the Other Deductions(DED) screen, or the Taxes and Licenses (TAX) screen.To open the Income and Deductions screen, type 3 in the selector field and press ENTER. SeeFigure 86 on page 140. Enter the following data from Gator Roofings’ profit and loss sheet.See “Financials” on page 157.FieldsGross receipts or sales 869, 658Returns and allowances 29, 242Salaries and wages 52,000Repairs and maintenance 4,000Rents 36,000Interest expense 8,000Retirement plans 2,000Employee benefit programs 4,000DataSome of the most common entries for Schedule K are entered on screen 3. Amounts entered onthis portion of the screen do not need to be re-entered on the K screens. Enter the followinginformation:FieldsOrdinary dividend 1000Qualified dividends 200DataThese ordinary dividends are distributed by Special Allocations later in the return.Copyrighted MaterialDrake Software Evaluation Guide


1 4 0 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 86: Income and DeductionsPress ESC to return to the Data Entry Menu.TAXES AND LICENSESNext, enter the tax and license data. Type TAX in the selector field and press ENTER to openthe Taxes and Licenses screen. See Figure 87 on page 141. Enter the state and city taxes andthe license fees.FieldsLocal property taxes 4,820Payroll taxes 4,000Licenses 1,520DataDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 4 1Figure 87: Taxes and LicensesPress ESC to return to the Data Entry Menu.OTHER DEDUCTIONSTo open the Other Deductions screen, type DED in the selector field and press ENTER. SeeFigure 88 on page 142. Enter the following from the profit and loss sheet:FieldsAccounting 8,000Insurance - Building &equipment4,000Insurance - Liability 4,000Insurance - Workers’Compensation4,000Janitorial 11250Legal and Professional 6,000Office expense 4,000Postage 2,000Supplies 6,500Telephone 1,000DataCopyrighted MaterialDrake Software Evaluation Guide


1 4 2 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 88: Other DeductionsPress ESC to return to the Data Entry Menu.SCHEDULE B OTHER INFORMATIONOpen the Schedule B screen by typing B in the selector field and pressing ENTER. In the Typeof Entity field, select Domestic general partnership. Select No to questions 2 through 17.See Figure 89 on page 143.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 4 3Figure 89: Schedule B - Other Information___NOTEQuestion 6 was answered No because the partnership did not meet all ofthe requirements for question 6. These requirements are:• The partnership’s total receipts for the tax year were less than $250,000• The partnership’s total assets at the end of the year were less than $1million• Schedules K-1 are filed with the return and furnished to the partners onor before the due date of the partnership return• The partnership is not filing, and is not required to file, Schedule M-3Press PAGE DOWN for screen B3 (Schedule B, line 3a & 3b). Enter information from thefollowing table in the 3b section:Name of IndividualID#Country ofCitizenshipJohn Lake 400001001 - Individual US 50Fred Lake 400001002 - Individual US 50Max.% owned inProfit, Loss, or CapitalCopyrighted MaterialDrake Software Evaluation Guide


1 4 4 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EPress ESC to return to the Data Entry Menu.SCHEDULE K-1 PARTNER INFORMATIONThe partner’s information goes on the Schedule K-1 - Partner’s Share of Income, Credits,Deductions, etc. screen. Type K1 in the selector field, press ENTER, then enter the partners’information from the following table. Press CTRL + PAGE DOWN to enter the next partner.SSN 400001001NameAddressJohn LakeZIP 32611888 Vinyl RdSSN 400001002NameAddressFred LakeZIP 326111014 Siding WayThe partnership is a domestic general partnership and each partner is a general and domesticpartner. Each partner is an Individual entity (line I). Each partner’s percentage of profit, loss,and capital is 50% Before Change and 50% at Year End. Each beginning capital account is$156,596. There is no debt and no other entries for the K-1.The amounts carry to the K-1 foreach partner when ordinary dividend income is entered. See Figure 90 on page 145.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 4 5Figure 90: Schedule K-1, Partner’s SharePress ESC to return to the Data Entry Menu.PARTNER SPECIAL ALLOCATIONSGeneral allocations for profit, loss, and capital are assigned on the Schedule K-1. Specialallocations such as interest income, guaranteed payments, or ordinary dividends are entered onthe SA Partner Special Allocations screen. Type SA into the selector field and press ENTERor click SA Partner Special Allocations on the Data Entry Menu and click ENTER. SeeFigure 91 on page 146.Select an allocation type from the Allocation Type list. Next, select either the Percentageallocation or Dollar allocation option. Select a partner from the Partner’s ID Number andName field. Enter an Allocation Percentage or Amount.Copyrighted MaterialDrake Software Evaluation Guide


1 4 6 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EThe allocation for all partners must total 100%. In the following example, John Lake gets a60% allocation and Fred Lake gets a 40% allocation of the allocation type, OrdinaryDividends.Allocation TypeAllocation MethodFieldsDataOrdinary DividendsPercentagePartner SSN/EIN 400001001 400001002Partner Name John Lake Fred LakeAllocation percentage or amount 60 40___NOTETo help sort through the list of allocation types, click the Allocation Typetext box and press F1. In the resulting window, the types are divided intocategories such as Analysis of capital account, Total liabilities, Income,Other income, Section 179, Deductions, etc.Figure 91: Partner Special AllocationsThe amounts are carried to the K-1 for each partner when ordinary dividend income is entered.___NOTEIn our example, only two partners have been allocated ordinary dividends.The system may generate a Notes page stating “Additional K-1 Overridesmay be needed.”Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 4 7ADJUSTED BASIS WORKSHEETUse the Adjusted Basis Worksheet to calculate a partner’s new basis for income or gain. Apartner’s adjusted basis refers to a partner’s investment in the partnership. The basis isdetermined without considering any amount shown in the partnership books as capital, equity,or similar account. When a partner disposes of an interest in a partnership, the differencebetween the sale price and the adjusted basis is the taxable gain or loss.Some additions to basis include:• Cash contributed• Taxable income of partnership including capital gains• Tax-exempt income of partnership• Partner’s adjusted basis of property transferred to a partnershipDecreases include:• Distributions of cash or property to partners• Separately stated losses and deductions• Nondeductible corporation expenses• Credit adjustmentsTo enter data on the Partner’s Adjusted Basis Worksheet, type K1B in the selector field,press ENTER, then enter the partner’s information from the following table.FieldsPartner’s ID number & nameDebt Basis, Line 15 15,000Press PAGE DOWN. Enter the partner’s information and create a worksheet for line 10h.FieldsPartner’s ID number & namePress ESC to return to the Data Entry Menu.Data400001001 John LakePrinting the Adjusted Basis WorksheetsData400001002 Fred LakeLoss and Deduction Allocation Line 10 h Town Hospital - 3,000Town Food Bank - 3,000Town Shelter - 3,000To print the adjusted basis worksheets, open the PRNT screen (from the Data EntryMenu either click Print Options or type PRNT in the selector field and press ENTER). Inthe K-1 Items to Print section, select Print partner’s adjusted basis worksheet.Calculate the return and the program generates the worksheets based on the K-1information, then compares them to the partners’ K-1s. Change the partners’ informationas necessary.Copyrighted MaterialDrake Software Evaluation Guide


1 4 8 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EAlso, view the return and double-click the WK_PCOMP folder for Schedules K andK-1 comparison worksheets to see how your entered data compares to the calculateddata.BALANCE SHEET INFORMATIONNext, enter balance sheet information on the Schedule L – Balance Sheet – Assets and theSchedule L – Liabilities & Partners’ Capital screens.Type L1 into the selector field and press ENTER to open the Balance Sheet – Assets screen.See Figure 92 below. From the following table, enter the beginning and ending totals.Fields Beginning of Year End of YearCash 102,206 140,168Trade Notes & accountsreceivedLess allowance for baddebts60,744 93,8291,000 1,000Tax exempt securities 100,000 100,000Figure 92: Schedule L1 – Balance Sheet – AssetsPress ESC to return to the Data Entry Menu.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 4 9Type L2 into the selector field and press ENTER. See Figure 93 below. From the followingtable, enter the Beginning of Year and End of Year totals.Fields Beginning of Year End of YearAccounts payable 26,000 19,001Payables less than 1 year 4,000 4,000Payable more than one year 130,000 119,724Partners’ capital accounts 313,192 433,109Figure 93: L2 – Liabilities & Partner’s CapitalPress ESC to return to the Data Entry Menu.Schedules L and M-1 are necessary for this return; however, if they were not required youcould choose to have the software complete and print those forms to help you review. TypePRNT in the selector field and press ENTER to open Print Options. At the top left of thescreen, put a check mark in the FORCE print Schedules L, M-1, M-2 & K-1 Section L box.At the bottom of the screen, under Item L on Sch K-1 (Partner’s cap acct analysis), selectGAAP as an accounting method. Press ESC to return to the Data Entry Menu.___NOTEA partnership is not required to complete schedules L, M-1, M-2, and item Lon Schedule K-1 if the partnership's total receipts for the tax year were lessthan $250,000 and the partnership's total assets at the end of the tax yearwere less than $1,000,000 and Schedules K-1 are filed with the return andfurnished to the partners on or before the due date for partnership returns.Copyrighted MaterialDrake Software Evaluation Guide


1 5 0 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R ESCHEDULE M1 RECONCILIATION OF INCOMEA Schedule M1 entry is required for the Gator Roofing partnership. Type M1 in the selectorfield for data entry and press ENTER. Create a worksheet for line 6 Other for an UnrealizedGain of $4,000. See Figure 94 below.Figure 94: M-1 Reconciliation of IncomeOnly Large and Midsize Business (LMSB) partnership taxpayers reporting gross assets of $10million or more on Schedule L (balance sheet) on Form 1065 at the end of the taxable year arerequired to complete and file Schedule M-3 Net Income (Loss) Reconciliations instead ofSchedule M-1. An M-3 is unnecessary for the preparation of the Gator Roofings’ return;however, you may want to examine the data entry screens for use later.Press ESC to return to the Data Entry Menu.CAPITAL GAIN OR LOSSThere are two capital gain or loss transactions for Gator Roofing. To enter the transactions inthe return, type D in the selector field and press ENTER. See Figure 95 on page 151. Enterinformation from the following table on the D screen.Descriptions Date Acq Date Sold Sales Price CostSale stock 200 ABC 06-12-2007 05-12-2008 53,900 56,000Sales stock XYZ 02-28-2001 08-21-2008 19,500 15,000Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 5 1Figure 95: Schedule DPress ESC to return to the Data Entry Menu.FORM 8825 - RENTAL REAL ESTATEGator Roofing has rental real estate property. The information regarding its warehouse isentered on the 8825 screen. See Figure 96 on page 152. Type 8825 in the selector field indata entry and press ENTER. Select, “Check to include in self employment income”. TypeWarehouse in the Kind of property field, type 222 Roofing Way,Gainesville, FL in the Address of property field. Enter gross rents and expensesfrom the following table:FieldsGross rent 23,000Taxes 1,600Utilities 3,600Wages and salaries 1,200DataCopyrighted MaterialDrake Software Evaluation Guide


1 5 2 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 96: Form 8825 Rental Real EstateDEPRECIATIONDrake provides six data entry screens for depreciation. On the Assets/Sales tab of the DataEntry Menu, the six screens are grouped in a box labeled Depreciable Assets. Selectionoptions are clearly marked and include:• A screen for 4562 Depreciation Detail Items, and six screens offering additional parts ofForm 4562. The 4562 screen is usually the only screen needed for entering depreciation;screens 6-9 are used only when entering depreciation calculated outside of Drake.• A GO screen that contains the GO Zone Depreciation Elections.• A Screen 10 Additional Depreciation Elections screen. Screen 10 is the place to elect outof bonus depreciation for all classes or by property class. For this return, we do not opt outof bonus depreciation. See Figure 97 on page 153.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 5 3Figure 97: Additional Depreciation ElectionsTo create a Form 4797 from within the 4562, complete the If Sold section on the bottom rightof the 4562. The only required fields are Date sold, Sales price, and Property type.For the Gator Roofing’s return, there are four depreciable assets. To enter them in the return,first type 4562 into the selector field and press ENTER or, while on the Assets/Sales tab, click4562 on the right side of the screen.Form Description Date Acquired Cost Method Life Prior Dep1065 Saw 06-15-2004 26,000 SL 7 6,5001065 Truck 05-15-2008 35,000 M 51065 Forklift 11-22-2003 65,000 SL 7 46,4288825 Warehouse 05-15-2002 125,000 SL 39 19,230___NOTEUse grid data entry for quicker data entry. This feature is available forcertain screens, including 4562 screens for all packages. Once in grid dataentry, enter the appropriate information into the grid and press TAB, or usethe UP ARROW or DOWN ARROW keys to navigate the fields. See Figure 98on page 154.To turn grid data entry on or off, go to the Data Entry tab underSetup > Options and click to activate or disable Use grid data entryformat for select screens. (It is activated by default.) Once in data entry,press F3 to move from full screen to the grid data entry screen. Press F3again to return to full screen mode. Grid data entry does not need to beactivated in Setup > Options to use the F3 feature.Copyrighted MaterialDrake Software Evaluation Guide


1 5 4 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 98: 4562 screen in grid data entry modeTo view the individual details of each depreciable asset, click Item Detail at the bottom of thegrid data entry screen.Press ESC to return to the Data Entry Menu.AUTO-BALANCEAuto-balance forces Schedule L to balance for both the beginning and end-of-year amounts.The program adjusts the partners’ capital account on Schedule L by the difference between thetotal assets and the total liabilities plus capital before the adjustment.For example, if a partner’s beginning assets are $1,000 and the liabilities and capital are $900,then the program increases the partner’s capital by $100.The program makes the adjustment due to differences in the balance sheet. These differencescan come from amounts entered incorrectly but are usually the result of:• Assets deleted from the 4562 detail screen instead of indicated as sold• Beginning inventory amounts adjusted on Schedule A or ending inventory amountsentered incorrectly• Amounts erroneously deleted from the Schedule L screensDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 5 5To reconcile the differences, it is best to compare the beginning and ending balance sheetamounts for the partnership for the tax year.If you do not wish to use Auto-Balance for a specific return, it can be turned off on the PrintOptions screen. Enter PRNT in the selector field, press ENTER, and select Turn off Sch LAuto Balance screen.REVIEWReview the return for accuracy. Click View at the top of the screen to open View/Print mode.(If you indicated in Setup > Options that the Calculation Results screen be displayed beforeView mode, click Continue on the Calculation Results screen to open View mode.)Select 1065 from the category tree view. Review the 1065, the Statement, and the listedschedules to check expenses. Compare these to the 1065 income statements on the followingpages.Exit this form and click to view 1065.PG5. Check the balance sheet at the top of the page andthe M-1 in the middle of the page. Schedule L line 14 -Total assets should match Schedule Lline 22 -Total liabilities and capital. See Figure 99 on page 156. The M-1 is used to reconcileyour books to your taxes. Compare these to the 1065 books on the following pages.Copyrighted MaterialDrake Software Evaluation Guide


1 5 6 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 99: Form 1065, page 5Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E P a r t n e r s h i p R e t u r n | 1 5 7FINANCIALSUse the following income statement and balance sheet to complete the partnership return.Figure 100: Income StatementCopyrighted MaterialDrake Software Evaluation Guide


1 5 8 | P a r t n e r s h i p R e t u r n 2 0 0 8 D R A K E S O F T W A R EFigure 101: Balance SheetDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s P a r t 6 | 1 5 9Review Questions Part 6Answer the following questions. See page 160 for answers and explanations.1. Beginning and ending cash should be entered on the:a) M1, Reconciliation of Incomeb) M2, Partners’ Capitalc) L1 - Assetsd) L2 - Liabilities and Capital2. Which schedule has an Auto-Balance feature that can be disabled on the PRNT screen?a) Schedule Ab) Schedule Kc) Schedule Ld) Schedule M3. Questions about a partnership’s total receipts and total assets are answered on which screen?a) Screen 3, Income and Deductionsb) Schedule B - Other Informationc) Schedule K-1 - Partner’s Share of Income, Credits, Deductions, etc.d) L1 - Assets4. Beginning and ending amounts on the partner’s capital account would be entered on:a) Schedule K 1, Partner Share of Income, Credit, Deductions, etc.b) L2 - Liabilities and Capitalc) M2 - Partners’ Capitald) L1 - Assets5. Special Allocations:a) Are entered on each partner’s K1 screenb) Are entered on the Schedule K Partner’s Summary screenc) Are shown on the 1065, Income section, line 7, Other incomed) Can include ordinary dividends, interest income, and guaranteed payments6. Depreciation can be entered on which tab in Drake?a) Generalb) Creditsc) Otherd) Assets/SalesCopyrighted MaterialDrake Software Evaluation Guide


1 6 0 | R e v i e w Q u e s t i o n s P a r t 6 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 61. The correct answer is c) L1 - Assets. Use the L1 screen to enter cash since cash is an asset.a) is incorrect. The M1, Reconciliation of Income screen is for reconciling income or loss from thebooks with income or loss from the return.b) is incorrect. The M2 is used for increases and decreases to partner’s capital.d) is incorrect. The L2 screen is used to enter liabilities.2. The correct answer is c) Schedule L. Balance Sheet.a) is incorrect. Schedule A, Cost of Goods Sold, doesn’t have an auto-balance feature.b) is incorrect. Schedule K is a summary of partner information.d) is incorrect. Schedule M is used to reconcile income or loss.3. The correct answer is b) Schedule B - Other Income.a) is incorrect. Screen 3 is used to enter income and deductions.c) is incorrect. The K-1 is used to enter information about a partner.d) is incorrect. The L1 is used to enter partnership assets.4. The correct answer is b) Liabilities and Capital.a) is incorrect. Beginning capital amounts for each partner are entered on the K1, but not the totalamounts for beginning and ending.c) is incorrect. The M2 is used for reconciling income (or loss) per books with income (or loss) perreturn.d) is incorrect. The L1 is used to enter partnership assets.5. The correct answer is d) Special Allocations. Special Allocations can include ordinary dividends,interest income, and guaranteed payments.a) The K1 is used to enter information about a partner.b) The Partner’s Summary include information on all the partners.c) Special Allocations aren’t included in Other Income.6. The correct answer is d) Assets/Sales.a) is incorrect. The General tab includes demographic information, income and deductions, andpartner’s information.b) is incorrect. Depreciation is not a credit.c) is incorrect. The Other tab contains miscellaneous forms.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E T o o l s | 1 6 1ToolsThe following sections review the various functions and file maintenance tools located in the Tools drop list onthe menu bar.UPDATING THE SOFTWAREBecause tax law is ever-changing and Drake Software is continuously being enhanced, the updateprocess should be part of a daily business routine. Installing updates online with the UpdateManager ensures you are always running the most current version of the software. Before youinstall updates, create an Update Profile. This profile tells the Update Manager what parts of theprogram you would like to update, customizes the update process, and reduces download timeswhere possible. If you have a constant Internet connection such as DSL, you can automate theupdate process in your Update Profile.To create an Update Profile, go to Setup > Update Profile. After creating an Update Profile, goto Tools > Install Updates. From the menu, choose from the following update options:• Check For Updates• Install Updates• Update computers without Internet accessPRINTING BLANK FORMSUse the Blank Forms tool to view or print blank federal and state tax forms and interview sheets.Forms that are not available in data entry may be available as a blank form. Some states prohibitprinting blank state forms; in this case, contact the state revenue office to obtain blank forms.___NOTEThe IRS Revenue Procedure 96-48 requires that a copy of the PaperworkReduction Act Notice be distributed on federal tax forms. When providing ablank copy of a federal tax form to a client, a copy of the notice must beincluded. Print the notice from Tools > Blank Forms > Federal >Individual tab. The notice is entitled, “PAPERWRK.PG”.Copyrighted MaterialDrake Software Evaluation Guide


1 6 2 | T o o l s 2 0 0 8 D R A K E S O F T W A R EREPAIRING INDEX FILESRepair your index files often for general file maintenance. Repair Index Files should be used:• After using the Backup/Restore function to restore files. (In this case, repair the NameIndex.)• After receiving a ‘?’ on a file while processing acks. (Repair the EF Index.)• When the Search EF Database does not function properly. (Repair EF Index.)• When a file for data entry does not open. (Repair the Name Index.)• When adding records to the EIN Database. (Repair EIN Database.)• After deleting a client through Tools > File Maintenance > Delete Client Files to remove theclient from the Open a Return list.• To update the Client Status Manager index.To access Repair Index Files from the Home window, go to Tools > Repair Index Files or pressCTRL + R.___NOTERepairing the Name Index takes approximately one minute for every 2,000clients.MAINTAINING FILESFile maintenance tools provide a means to manage data files within the program. Certain files canbe imported or exported, changed or deleted. Client data files and important configuration files canbe copied to diskettes, CDs, or external media device, then moved to other computers or used as abackup in case of computer malfunction. Returns can be locked and unlocked to preventunauthorized access.To access maintenance tools, go to Tools > File Maintenance. There, you can choose from:• Backup and Restore — Back up files to a media device or other locations and restore files toa hard drive.• Change SSNs on File — Rename a file when the SSN/EIN is changed. (Not available for PPRclients.)• Export Client or EF Data — Convert client data and EF files to a “text” or CSV file forimporting into other programs such as Microsoft Word or Excel.• Password Protect Files — Protect files from unauthorized access.• Unlock Client Files — Unlock a client file that has been locked after electronic filing.• Delete Print Files — Delete the temporary “print” files.• Delete Client Files — Permanently delete client data files.• Change File Type — Change an Individual, Corporation, S-corporation, Fiduciary,Partnership, or Tax Exempt return to another file type.• Quickbooks Import — Import client data from Quickbooks into Drake.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E T o o l s | 1 6 3PRODUCING LETTERSThe Letters function allows you to produce preseason, postseason, estimate, and schedule lettersfor one or multiple clients. You can also produce mailing labels, envelopes, and postcards sorted indozens of different ways, such as by All Clients, All 1040 Clients, All Corporate Clients, even bythe birthdays of the clients’ dependents.To access Letters, go to Tools > Letters > Letters.___NOTEPreseason organizers and proformas print prior-year data on interviewsheets. To access these forms, go to Last Year Data > Organizers orProformas.AMORTIZINGThe Amortization tool prepares loan repayment schedules and provides a variety of loanscenarios. To access this tool from the menu bar, select Tools > Amortization.Complete the following fields on the Amortization Schedule screen:• Schedule Title –– Name your schedule.• Loan Amount –– Enter the original amount of the loan.• Amortization Periods –– Enter the number of payments to be made over the life of the loan.For example, if the loan is for two years and monthly payments are required, enter 24 for thenumber of amortization periods.• Payments Per Year –– Enter the number of payments to be made each calendar year.• Annual Interest –– Enter the annual interest amount for the loan. The interest for eachmonthly period is calculated automatically. If the interest is unknown, and the paymentamount is known, leave the Annual Interest field blank.• Payment Amount –– In most cases, the program calculates the payment amount based on theother information entered. If this field is blank, and the interest amount is entered in theAnnual Interest field, the program calculates the payment and displays it in this field. If theinterest amount is unknown and the payment amount is known, enter the payment amount inthis field. If the Annual Interest field is left blank, the program calculates the interest anddisplays the amount in the Annual Interest field.• Payment Type –– Choose Fixed Payment or Fixed Principal. The default is FixedPayment.• Date of First Payment –– Enter the date that the first payment for the loan is due. This entryis used to determine the dates for the subsequent payments.After the information is entered, click Calculate or press ENTER to create the amortizationschedule. Click Print Schedule to send the schedule to the printer or click Save Schedule to savethe schedule for future viewing through Reports > Report Viewer.Copyrighted MaterialDrake Software Evaluation Guide


1 6 4 | T o o l s 2 0 0 8 D R A K E S O F T W A R EEDIT EIN DATABASEWhen an Employer Identification Number (EIN) is entered in data entry, it is stored in the EINdatabase. Use the Edit EIN Database tool to edit EIN information.1. On the menu bar, go to Tools > Edit EIN Database.2. Enter the desired EIN and click Edit, or press ENTER.3. Select the employer from the list and press ENTER, or double-click the name.4. Once the Edit EIN/Employer Listing window is opened, edit any of the available fields.• Click Cancel to revert to the saved information.• Click Delete on the primary screen to delete the EIN from the database.5. Click Save.SCHEDULING APPOINTMENTSUse the Scheduler to create and manage daily schedules for preparers in a firm. Scheduleappointments and reminders and run reports based on schedule information. Preparers’ schedulesand appointments can be brought forward each tax year.SCHEDULER MODESThe Scheduler can be opened in one of two modes:• Preparer mode — Three calendars are available: Selected Date, Weekly, and Preparer.See Figure 102.• Front Office mode — Designed for the receptionist and other personnel who manageappointments but do not prepare tax returns, this mode allows a receptionist to set upviews and manage appointments. Front Office designations are made in Setup >Preparer(s) > Security.Figure 102: Calendar TabsDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E T o o l s | 1 6 5PREPARING TO USE THE SCHEDULERPreparer schedules and Front Office logins must be created before you can use the Scheduler.Generating Preparer SchedulesTo create a preparer schedule, complete the following steps:1. From the Home screen of Drake, select Setup > Preparer(s) on the menu bar. Selecta preparer and click Edit Preparer. Click Schedule to create the preparer’s schedule.2. In Setup Schedule, select a day from the Select day list.3. Choose the In and Out times for that day. As times are selected, they appear on theschedule grid. Continue to set In and Out times for each day of the week. To apply theselected times for every day of the week at once, click Apply to All.4. Click Save to save the schedule, then click Save and Exit to exit Preparer Setup.SCHEDULING APPOINTMENTSOnce preparer schedules are created and selected for view, appointments can be scheduled inAppointment Detail.To access Appointment Detail, click New Appt from the Scheduler toolbar, or double-click atime slot on the schedule grid.Creating a New AppointmentTo schedule an appointment, complete the following steps.1. Click New Appt from the toolbar, or double-click a time slot on the schedule grid toopen Appointment Detail.2. Complete the fields.3. Choose to schedule the appointment for one or more preparers.4. Click Save to display the appointment on the schedule grid.___NOTEWhen setting up appointments, enter an SSN/EIN of a client already in dataentry and the Name, Address, Phone, Client Type, and AppointmentType fields are automatically filled. Data entered manually in these fields isnot overridden. You can also auto-fill Appointment Detail using theLookup feature to search for a client by last name.Copyrighted MaterialDrake Software Evaluation Guide


1 6 6 | T o o l s 2 0 0 8 D R A K E S O F T W A R ECREATING APPOINTMENT REPORTSTo generate reports based on scheduled appointments, complete the following steps:1. From the Home window, open the Scheduler and select Reports.2. Select the type of report to run:• Preparer Appointments – List of a preparer’s appointments for one day. Enterappointment date and preparer. The report is printed.• Preparer Calls List – List of a preparer’s calls for one day.• Call List for All Preparers – List of all preparers’ calls for a specific date.• New Client List – List of new clients entered in the Scheduler.3. Choose a preparer (except when running the Call List for All Preparers).4. Click View to generate the report and open the Report Viewer.OTHER TOOLSTwo tools are located in the File menu: Forms Based Data Entry and the Quick Estimator.FORMS BASED DATA ENTRYForms Based Data Entry is available in Drake for individual tax return preparation. Instead ofaccessing data entry from the Data Entry Menu, screens are accessed from an interactive1040 form. See Figure 104 on page 167.Click a form line to access the data entry screen associated with the line. Data entry screensmay also be accessed by entering the screen code in the Screen To Load field. See Figure 103below.Figure 103: Screen to Load fieldData entry screens with data appear on the interactive 1040 form as purple links. To go backand make edits to entries on screens, click the link on the interactive form. Screens withoutdata appear as blue links. Red characters represent data as it will appear on the form.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E T o o l s | 1 6 7Figure 104: Forms Based Data EntryCopyrighted MaterialDrake Software Evaluation Guide


1 6 8 | T o o l s 2 0 0 8 D R A K E S O F T W A R EQUICK ESTIMATORThe Quick Estimator allows you to enter individual return data and quickly estimate the returnresults.WARNING!Do not electronically file or mail the return generated in the Quick Estimatorto the IRS. If the return is filed from the Quick Estimator, an amended returnis required.A return created in the Quick Estimator counts as one Pay Per Return.1. Go to File > Quick Estimator.2. Select a return to open or create a new return using the client’s SSN. If a return previouslyprepared in the program is selected, the Quick Estimator does not override entriespreviously made.3. Complete the Quick Estimator screen.4. Press CTRL + C tp calculate the return and view the results___NOTERemember: the Quick Estimator is only for estimating taxes. A full returnshould be prepared later. Information from the Quick Estimator flows to thefull tax program and may need adjusting.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e p o r t s | 1 6 9ReportsTo help you manage your practice, Drake Software offers several reporting options on the Reports menu:• Report Manager• Report Viewer• Depreciation List• Fixed Asset Manager• Client Status Manager• Hash TotalsREPORT MANAGERThe Report Manager provides a centralized location for managing reports in Drake. From theReport Manager, choose from predefined reports, edit existing reports, or create new reports withcustom filters to suit your office needs. In addition to reporting current year data, you can also runreports on last year’s data. All reports can be saved as CSV (comma separated value), Excel, ortext (in TXT format) files.Go to Reports > Report Manager. See Figure 105 on page 170. The Report Manager displaysthe list of reports in a standard tree format. Click one of the plus signs (+) to expand a category listand display the available reports in that category. Click a minus sign (-) to collapse the list, hidingthe reports in a category.There are multiple reports to choose from among several categories. For instance, under ClientReports, double-click Client Contact to see such reports as address lists, birthday lists, clientlists, K1 lists, and contact lists, all of which can be edited or changed in hundreds of differentways.The following report categories and subcategories are available:• Client Reports — Predefined reports based on client data• Client Contact• Preparer and Revenue• Return Details• Status and Tracking• Summary• EF/Bank Reports — Predefined reports based on electronic filing and banking data• Bank - Status and Tracking• Bank Checks• Bank SummaryCopyrighted MaterialDrake Software Evaluation Guide


1 7 0 | R e p o r t s 2 0 0 8 D R A K E S O F T W A R E• EF-Status and Tracking• EF Summary• Preparer and Revenue• Return Details• My Reports — Custom reports, created either from scratch, or by editing a predefined report.• Other Report Options — Allows you to access report features from other areas of theprogram, and includes:• Client Status Manager Reports• Scheduler Reports• Depreciation List• Fixed Asset Manager• Hash TotalsVIEWING REPORTSClick a report and a sample of that report is displayed in the Sample Report section at the bottomof the Report Manager. See Figure 105 below. View a description of the selected report (ifavailable) and whether the report will be printed in Portrait or Landscape format. (Potentiallytoo wide means the number of columns may cause the report to be too wide to print withoutcutting off data. In this case, the report is still suitable for viewing in the report viewer.)Figure 105: Report ManagerDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e p o r t s | 1 7 1Choose from one of the following functions in the Report Manager:• New Report — Create a new report from scratch.• Edit Report — Highlight an existing report, edit the report’s settings, and save as a newreport.• Delete Report — Delete any reports listed under My Reports.• View Report — Create and view a new report or an existing report. For existing reports,choose to view the previous version of the report or create the report again using the mostcurrent data.___NOTETo view a list of previously created reports, go to Reports > Report Viewer.Reports can be exported to Excel as XLS files, to CSV format, or toNotepad as text in TXT format.DEPRECIATION LISTGenerate a client depreciation report that lists detailed depreciation information for one, several, orall clients.1. Go to Reports > Depreciation List. The Depreciation List Client Selection window isopened.___NOTEThe Depreciation List report is also accessible from the Other ReportOptions section of the Report Manager. (Go to Reports > ReportManager).2. To print a report on all clients, click Next. To print a report for one or more clients, enter anSSN or EIN in the text box and click Add Client. Continue until all the desired clients areentered. Click Next.3. If creating a report on all clients, the Basic Search Conditions window appears. If necessary,modify the settings and click OK.4. When prompted, choose to print the report, export the file in CSV format, or cancel the report.Copyrighted MaterialDrake Software Evaluation Guide


1 7 2 | R e p o r t s 2 0 0 8 D R A K E S O F T W A R EFIXED ASSET MANAGERRun reports based on client assets. Create macros to quickly print a standard group of reports.Go to Reports > Fixed Asset Manager. Select from the following reports:• Depreciation Schedules — Produces a depreciation list containing asset number, description,date in service, method and recovery period, basis, prior depreciation, salvage value, currentyear section 179 expense, and current depreciation.• Listings — Produces a depreciation list containing asset number, description, date in service,fee method and recovery period, auto listed and business percent used, cost, federal basis,current year section 179 expense, federal prior-year depreciation, federal depreciation, statedepreciation, AMT depreciation, book depreciation, tax schedule code, and date disposed.• Section 179 Assets — Produces a list of items that were expensed during the current year.• Dispositions — Produces a list of items disposed of within the current year.• Department Summary — Produces an asset summary report sorted by department orschedule.• Year Summary — Produces a summary report of assets on a yearly basis, grouped bydepartment. For each department, there is a summary line for each year up to 10 years prior.This report also totals depreciation for 11 years and prior.• Preference Report — Produces a list of assets placed in service after 1986.• Auto Code Print — Produces a report based on the macro setup for each client selected. Thereports can be composed of any of the described reports and any valid options associated withthem.___NOTEFixed Asset Manager reports are also accessible from the Other ReportOptions section of the Report Manager (Reports > Report Manager).CLIENT STATUS MANAGERThe Client Status Manager (CSM) is used to track the workflow within a tax office. Client fileslisted in the CSM are easy to search, view, and organize. Customize your view using built-in filtersand run reports to narrow your search for data.Open the Client Status Manager in one of the following ways:• From the menu bar, go to Reports > Client Status Manager.• Click the CSM speed button from the Home screen toolbar.• Press CTRL + L from the Home screen.When the Client Status Manager in opened, all returns existing in the 2008 program are displayed.This includes returns brought forward from previous years, any new returns, and returns startedbut deleted from Drake. It also includes clients files imported from QuickBooks. Each columndisplays specific information about the return. See Figure 106 below.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e p o r t s | 1 7 3Figure 106: Client Status ManagerThe toolbar across the top contains speed buttons that perform various functions. See Figure 107on page 174. These buttons are:• Open (CTRL + O) — Click to highlight a return in the CSM and click Open to open the file indata entry. You can also right-click the return in the Client Status Manager to view a pop-upmenu. Items on this menu include: Open Selected Client, Quick View, Set Client Status,Delete Record, Customize Display, Search Client Records, Restore CSM Data (ThisClient), Remove Duplicate Entries (Entire Database), and Cancel.• Search (CTRL + F) — Enter the first few letters of the client’s name or ID number (SSN orEIN). The CSM locates the record and highlights it. Click Open to open the client return.• Customize (CTRL + D) — Open the Customize Display window, which enables you to tailorthe look of the CSM by selecting which columns to display. For more information oncustomizing, see “Customizing the CSM” on page 175.• Refresh (F5) — Retrieve the latest information for the CSM database. This is useful if theCSM has been open for an extended period of time.• Filters — Use filters to narrow the search for data viewed in the CSM. For more informationon filters, see “Filtering CSM Data” on page 176.• Quick View (CTRL + Q) — Click Quick View to view a summary of all client statusinformation for a client. Click Open to access data entry for that return.• Reports (CTRL + R) — Generate reports from data stored in the CSM. For more informationon Reports, see “CSM Reports” on page 176.• Export (CTRL + E) — Open Excel and fill with all columns and rows from the CSM.• Help (F1) — Access the Drake Help System for further assistance.Copyrighted MaterialDrake Software Evaluation Guide


1 7 4 | R e p o r t s 2 0 0 8 D R A K E S O F T W A R E• Exit (ESC) — Exit the Client Status Manager.Figure 107: Client Status Manager speed buttonsTRACKING RETURN STATUSESThe Status column in the CSM is based on the return status and is set automatically by thesoftware or manually by the preparer: select a status from the CSM speed button in return dataentry or right-click a record in the CSM.Whether the return status is user-defined or manually set, it can be changed at any time.Statuses include:• New Client — Set automatically when a new file is created• In Progress — Set automatically by the program when the first change is made to thereturn in data entry• On Hold — Manual setting• Under Review — Manual setting• Under Extension — Manual setting• Printed — Set automatically when the return is printed through Print Sets• Signed — Manual setting• EF Pending — Set automatically when a “P” ack is received• EF Accepted — Set automatically when an “A” ack is received• Delivered — Manual setting• Complete — Manual setting• Custom — Manually create your own statuses - See “Status Settings Tab” on page 175___NOTEReturn information is updated in the Client Status Manager every time aclient return is calculated in data entry. To ensure the CSM data is alwayscurrent, activate Auto-calculate tax return when exiting data entry inSetup > Options > Calculation & View/Print.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e p o r t s | 1 7 5CUSTOMIZING THE CSMInitially, the Client Status Manager displays client data in the most commonly referencedcolumns. These columns can be customized.Column Layout TabClick Customize from the toolbar. The Customize Display window is opened to theColumn Layout tab. The Available Columns are listed in the left pane and in theColumns in Current View are listed in the right.To add an available column to your view:1. Highlight the desired column in the left pane. Click Select or double-click the desiredcolumn. To add all of the fields, click Select All.2. Click OK to save and exit.To remove columns from your view:1. Highlight the column in the right pane that you wish to remove. Click Remove ordouble-click the desired column. To remove all, click Remove All.2. Click OK to save and exit.To reset columns back to the original view:1. Click Reset.2. Click OK to save and exit.To change the order of columns displayed in the Columns in Current View list:1. Click and drag the field up or down the field list. An arrow shows the new position ofthe field. Release the mouse button when the field is in the desired position.2. Click OK to save and exit. The new position of the field is reflected in the columnview.___NOTEIn the Status column, File Not Found in red indicates a return that wascreated and then deleted through the program. Deleted files remain in theClient Status Manager for tracking purposes.Status Settings TabCustomize up to 10 CSM statuses. Click Customize from the toolbar and the StatusSettings tab in the Customize Display window. Select a status in the list of customizablestatuses then click Edit. Enter a new description and click OK.Copyrighted MaterialDrake Software Evaluation Guide


1 7 6 | R e p o r t s 2 0 0 8 D R A K E S O F T W A R ECSM Column ViewsIn addition to determining which columns appear in the CSM, you can adjust the columnorder, widths, and locations from the main screen of the Client Status Manager.• Sort each column in ascending or descending order by clicking the column header.• Adjust column widths. To narrow a column, run your pointer over the right side of thecolumn header until the arrow turns into a double-headed arrow. Click and drag thecolumn to the left. To widen a column, drag the column to the right.• Change the location of a column by clicking and dragging the column header to thedesired location.FILTERING CSM DATAUse filters to further customize your view in the CSM. Select a filter from Filters on thetoolbar. You can select one filter item from each section to build a “complex filter.” Forexample, in Figure 108 below, All Preparers, All Status Types, and Individual (1040) areselected. The CSM displays only items that match those criteria.Figure 108: Filters menuCSM REPORTSSeveral status and financial reports are available in the CSM. To run a report, click theReports speed button and choose a report from the drop list.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e p o r t s | 1 7 7Select any specific fields for the report and click Report. The report view appears, displayingthe report. To print the report, go to File > Print or click the printer icon.___NOTEMany of the reports rely on data entry for accuracy. To take full advantageof the CSM’s reporting features, you must use the data entry screensmentioned.MULTI-OFFICE MANAGERThe Multi-Office Manager, also known as MOM, is the online version of the Client StatusManager. Designed for the multi-office environment, MOM allows you to track the work flowof multiple offices and see a snapshot of your entire business. View and print reports on returnstatus and return type. Include fees, acknowledgements, refunds, phone numbers. Sort thereports by preparer or by EFIN.To access the Multi-Office Manager, from the Drake Support Web site, enter your EFIN andpassword, go to My Account > EF Database, then click MOM.Copyrighted MaterialDrake Software Evaluation Guide


1 7 8 | R e p o r t s 2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s P a r t 7 | 1 7 9Review Questions Part 7Answer the following questions. See page 180 for answers and explanations.1. Which of the following statements about Update Profile is not true?a) It lets you choose which clients files to update from 2007 to 2008b) It lets you choose which federal and state program enhancements to update onlinec) It can be set to automatically download and install updates dailyd) It is found at Setup > Update Profile2. What should you do before installing updates through the Update Manager?a) Install the latest Drake CDb) Create an Update Profilec) Copy updates from another computerd) Call a Drake CSR to assist you in the update process3. You want to write a customized preseason letter to remind all of your 1040 clients it’s time to gathertheir tax information and come in for a scheduled meeting. Where in Drake do you go?a) Tools > Letters > Lettersb) Tools > Organizers and Proformasc) Setup > Letters > Open > Individuald) Setup > Letters Organizers4. When using the Scheduler to set up appointments with clients, how are you reminded about your dailyappointments?a) They’re sent by e-mail to your EFIN@1040.com addressb) They’re automatically transferred to your computer’s calendarc) They’re downloaded with your daily updates from Tools > Install Updatesd) They’re listed in the Appointments section of the Home page5. To create an asset summary report for a client, use the following report tool:a) Report Managerb) Depreciation Listc) Fixed Asset Managerd) Client Status ManagerCopyrighted MaterialDrake Software Evaluation Guide


1 8 0 | R e v i e w Q u e s t i o n s P a r t 7 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 71. The only false statement is a) It lets you choose which clients files to update from 2007 to 2008. Clientfiles are not updated through the Update Profile. Client files are updated by going to Last YearData > Update 2007 to 2008.b) is incorrect. In designing your Update Profile, you choose which federal and state updates todownload.c) is incorrect. You can choose the exact time you want updates downloaded (even while your office isclosed). You can also choose to have the updates automatically installed.d) is incorrect. You design your Update Profile at Setup > Update Profile.2. The correct answer is b) Create an Update Profile. An Update Profile tells the Update Manager whatparts of the program to update. Go to Tools > Install Updates and create an Update Profile beforedownloading updates.a) is incorrect. Throughout a tax season, Drake sends update CDs to clients. Drake recommends theseupdates be installed, but it is not necessary to install the latest update CD before installing updates. It isimportant to install updates on a daily basis during tax season.c) is incorrect. Updates are downloaded from Drake servers over an Internet connection. The only timeit would be necessary to copy updates from another computer is if a computer running Drake withoutan Internet connection needed updates.d) is incorrect. The Update Manager simplifies the process of installing updates. It is not necessary torequest assistance from a Drake CSR when installing updates.3. The correct answer is c) Setup > Letters > Open > Individual. Among the 18 letters listed is the IndividualPreseason Letter for Last Year’s Clients. Make whatever changes you need here.a) is incorrect. Go to Tools > Letters > Letters when it’s time to sort the list of who gets a letter, andwhen it’s time to print the letters.b) is incorrect. Organizers and proformas are the forms and questionnaires your clients use to guidethem in gathering the correct information about their tax year. Print blank organizers and proformasfrom Tools > Blank Forms, or for individualized organizers and proformas, go to Last Year Data >Organizers and Proformas.d) is incorrect. There are no organizers listed with Setup > Letters.4. The correct answer is d) They’re listed in the Appointments section of the Home pagea) is incorrect. The Scheduler does not send e-mail to your 1040.com addressb) is incorrect. The Scheduler does not interface with your computer’s calendar.c) is incorrect. Your appointments are not downloaded with the daily updates.5. The correct answer is c) Fixed Asset Manager. Go to Reports > Fixed Asset Manager to run variousreports based on client assets.a) is incorrect. Use the Report Manager to run reports on client and EF data, but not on assets.b) is incorrect. Use the Depreciation List to run detailed depreciation reports for clients.d) is incorrect. The Client Status Manager is used to track the workflow in an office.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u p p o r t R e s o u r c e s | 1 8 1Support ResourcesDrake offers several support resources. These resources are constantly updated and reviewed so our clientshave 24-hour access to the latest information.DRAKE ELECTRONIC TRAINING CENTERThe Electronic Training Center (or ETC) offers training for both single and multi-site offices byproviding tutorials, practice returns, and interactive tax courses. With progress-tracking tools andinteractive testing, ETC makes it simple for individuals and group administrators to monitor theirpersonal and collective progress through the online training center.Earn continuing education credits through ETC. Receive CPE credits for a test score of 80% orhigher on our tax courses. Review CPE details for each tax course on the tax course page. View allcourses for which a CPE certificate is earned. The course description, date credits were earned,and date certificate was printed are displayed.ETC is offered free to Drake clients. Non-Drake customers can also access ETC, but certain feesapply.To open Drake’s Electronic Training Center, go to www.DrakeETC.com. See Figure 109 onpage 182.AVAILABLE ON ETC• Tax Courses — Interactive tax courses explore IRS tax law and terminology and whatthese laws and terms mean in Drake data entry. CPE credits are available.• Tutorials — Step-by-step tutorials teach the basics of Drake through text, sound, andanimation. After viewing a tutorial, test your knowledge and understanding by taking ashort quiz.• Practice Returns — Twenty data entry practice returns are available. Prepare a return indata entry, calculate the return, and compare it to the corresponding solution. Hands-ontraining in data entry and electronic filing.• Report Card — Record of each course with the date started and date completed. Viewresults of each test.• Videos — Watch Drake education trainers as they teach you the basics of Drake setup,data entry, return preparation and much more in short video clips.• Administration — Available only when logged in with an ADMIN account, this taballows you to create student accounts and view student report cards.Copyrighted MaterialDrake Software Evaluation Guide


1 8 2 | S u p p o r t R e s o u r c e s 2 0 0 8 D R A K E S O F T W A R EFigure 109: ETC Welcome page___NOTECurrently, ETC offers four tax courses: basic 1040, intermediate 1040, abasic corporate tax course and a basic partnership course.For a tax course to run properly, your system must meet the followingrequirements:• Browser - Internet Explorer 5.5 SP1 or later, Firefox 1.0 of later,Netscape Navigator 7.1 or later• Internet Connection - High Speed DSL/cable (recommended) or dial-up• Media Player - Windows Media Player or RealPlayerDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u p p o r t R e s o u r c e s | 1 8 3PASSPORT TO SUCCESSPassport to Success is an itinerary of “stops” - important items and resources specifically designedto prepare new clients for tax season. Use Passport to Success to explore the stops on the journey,from the installation of the software to discovering Drake Support. Passport to Success includesinstructions, tutorials, and forms that prepare Drake clients for tax season. To access Passport toSuccess, log in to Support.Drakesoftware.com with your EFIN and password and go to TrainingTools > Passport to Success. See Figure 110 below.Figure 110: Passport to Success home pageCopyrighted MaterialDrake Software Evaluation Guide


1 8 4 | S u p p o r t R e s o u r c e s 2 0 0 8 D R A K E S O F T W A R ERIA CHECKPOINT ONLINERIA offers advanced research tools for tax professionals. Drake clients have unlimited access —for free. To access RIA, go to Help > RIA Tax Research or click the Research speed button. Thisresource includes:• The 2009 Federal Tax Online Handbook — The most extensive RIA handbook ever,containing answers to hundreds of tax questions.• Public Domain Materials — The most complete collection of federal case law and IRSrulings memoranda available.• Weekly Newsletters and Daily E-mail Updates — Stay on top of fast-breakingdevelopments in the tax industry.• RIA Tax Return Guides — Available for Individual, Corporate, Partnership, and Estatepackages. Use in conjunction with the Form Line Finder.• Form Line Finder — Search for content based on the form name and line number. Makessearching quick and easy.• Calculators — 80 calculators available for use in auto, investment, loan, mortgage, personal,retirement, savings and tax calculations. Use in conjunction with the Drake Tax Planner.• Training — To get the most out of the RIA Checkpoint resources, learn as much as you canabout it. There are various training resources available in the Training and Support section ofthe RIA home page.HELPThe Drake Software Help System answers many of the most commonly asked questions about thesoftware. It is easy to use and fully searchable. To access the Help system:• Go to Help > Drake Software Help, or press CTRL + F1 from the main screen of the program.• Click the Help button on any window (except in data entry). This opens the Help for thatwindow. For example, if you are in Pricing and click Help, the Help for that screen is opened.• In data entry, right-click in the gray area and select Read Manual to access the Help System.___NOTEIn data entry, right-click a field or press F1 to get field-specific Help.On certain screens, screen-specific Help is available. These screens havea Screen Help button in the upper right corner.FAQSThe FAQ screen, located in return data entry, is a great resource for federal and state-specificinformation. On the Data Entry Menu for the federal or state return, type FAQ in the selectorfield. Click to view the desired topic. Reject codes can be found on each state’s FAQ pages.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u p p o r t R e s o u r c e s | 1 8 5SOFTWARE MANUALSDrake’s software manuals are available online as PDF files, and are included as PDF files on theinstallation discs.Drake User’s Manual: Tax Year 2008— This is a complete resource for all your softwarequestions. With more than 300 pages of information, it includes details on installation, setup,navigation, return preparation, states, electronic filing, banking, and reports.2009 Drake Client Write-Up Manual — A guide for using Drake’s Client Write-Up program toprepare and print both live and after-the-fact payroll, vendor checks, W-2s, 1099s, 940s, 941s,943s, 944s, 941SSs, and 944SSs.DRAKE UPDATE SCHOOLS AND VIDEOSEach fall, the Drake Education team holds several Update Schools across the country. Theinformation presented at the schools is also available on the Drake Update Video. With topics tobenefit everyone, the video can be used as a training tool or as an office refresher course. For moredetails on the Drake Update Schools and video, visit Support.Drakesoftware.com. From the menubar, select My Account, then Update School Registration, or to order the video, go to TrainingTools and select Video.PRACTICE RETURNSBecome more familiar with the program’s data entry screens and electronic filing process byentering and viewing practice returns, test returns, and EF-Banking practice returns.• Practice data entry returns are located on your Drake Evaluation CD. (Put the Evaluation CDin your computer’s CD drive, and when prompted, select Practice & Test Returns.Double-click Data Entry.) There are 12 taxpayer scenarios, including any W-2s or 1099s,needed to complete the return. Enter the provided information into the software as if you werepreparing a real return. When finished, calculate and view the results. Compare the results tothe solutions.• View electronic filing and banking practice scenarios. These scenarios are designed tofamiliarize beginning electronic filers with the process of electronic filing and check printingin Drake software. The information and instructions are located on your Evaluation CD. Insertthe CD into your CD drive, and from the main menu, select Practice & Test Returns,Electronic Filing and Banking Practice. These returns have SSNs from 500001001 through500001008. Calculate the returns in the software and electronically file them. These particularreturns are set up to be either accepted or rejected. Correct the rejected ones and resend toreceive acknowledgements. Practice printing checks for the returns with a bank product.___NOTETest transmissions do not receive an additional IRS acknowledgement. The“T” acknowledgement indicates the transmission was successful.Copyrighted MaterialDrake Software Evaluation Guide


1 8 6 | S u p p o r t R e s o u r c e s 2 0 0 8 D R A K E S O F T W A R EDRAKE SUPPORT WEB SITEAll Drake clients have access to the Drake Support Web site, Support.Drakesoftware.com. This isa comprehensive online research center designed for Drake preparers. Quickly access the Web sitefrom the Support speed button in the software, or open the Web site in your Internet browser.Some of the features available are:• The Knowledge Base• Online Federal/State Database• Online EF Database• Forum/Message BoardKNOWLEDGE BASEThe Drake Software Knowledge Base (KB) is a comprehensive searchable database consistingof support solutions and articles of interest. Providing support around the clock, theKnowledge Base is a great alternative to a support call. Continuously updated, the KB ensuresthat Drake preparers always have access to the most up-to-date information available. Findingthe information you need is easy. Search by keywords, read important FAQs, view the mostpopular articles, or simply browse KB articles by category. From the home page of the KB,view important alerts.To open the Knowledge Base from the Drake Support Web site, go from the Tools page, clickKnowledge Bases, or from the menu bar, click Resources and select from among severalKnowledge Bases.ONLINE FED/STATE FACTS DATABASEFed/State Facts allows you to quickly access important federal and state-specific information,such as electronic filing specifications, form instructions, and support links. Need to prepare areturn for an unfamiliar state? We have done all the research for you and stored it in our StateDatabase. To access the Fed/State Facts Database from the Drake Support Web site, go toResources > Fed/State Facts. Click a state or review federal filing information.ONLINE EF DATABASEThe Online EF Database displays information about your electronically filed returns in realtime and offers various online reporting features. Because the electronically filed informationis stored here at Drake, the information is always current. Run reports on returns, loans, andchecks, or search for electronic filing information for a single SSN or EIN. Access theMulti-Office Manager (MOM) and view Client Status Manager data for one or multipleoffices.To access your EF Database from the Tools page of the Drake Support Web site, click EFDatabase. To access your EF Database from the main screen of the software, go to EF >Search EF Database and either click the F10 - Online DB button or press F10.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u p p o r t R e s o u r c e s | 1 8 7FORUM/MESSAGE BOARDForums provide an opportunity for Drake preparers to participate in online discussions ofeverything from business strategies and software questions to the latest tax news and softwaresuggestions. Sometimes customers answer each other’s questions, while other times a Drakemoderator may be available to provide explanations. This is a great way to share notes andnetwork with fellow professionals. To access the Forums, from the Resources page of theDrake Support Web site, click Forums.CUSTOMER SERVICE AND SUPPORTAt Drake, we pride ourselves in having the best customer support in the industry. No matter whichsupport method you choose, you can be assured of receiving friendly and accurate service.PHONEWork one-on-one with a support technician to resolve software issues. Drake technicians aretrained year-round on Drake topics. The number is (828) 524-8020 and the lines are openMonday - Friday 8 a.m. until 10 p.m., and Saturday 8 a.m. until 6 p.m during tax season. Ournon-season hours are Monday - Friday 8 a.m. until 9 p.m., and Saturday 8 a.m. until 5 p.m.(All times are Eastern Time.)FAX SUPPORTSend your questions to Support via fax at (828) 349-5718 and we will quickly respond to yoursoftware question with a fax. Be sure to include specific details about your issue.E-MAIL SUPPORTFor those non-urgent questions, or for more difficult questions that may not be resolved overone phone call, opt to send an e-mail question. Ask more specific Support questions throughthe Drake E-mail program.Our general support e-mail address is Support@DrakeSoftware.com. From the software, clickthe E-mail button, and from the New Message window, click the To button. Choose DrakeSupport Address Book. Double-click to select an address.Copyrighted MaterialDrake Software Evaluation Guide


1 8 8 | S u p p o r t R e s o u r c e s 2 0 0 8 D R A K E S O F T W A R EE-MAILThe E-mail program allows Drake clients to send and receive e-mail using a 1040.com e-mailaddress. This address is your EFIN@1040.com. (For instance, 777777@1040.com.) Use Drake’se-mail program to:• Receive Drake broadcast e-mail during tax season. These e-mails messages contain importantIRS and state updates and alerts and interesting facts about Drake Software.• Send e-mail to Drake Support and easily attach client files.• Send bulk e-mail to your clients or other contacts.• Create customized e-mail using the custom query tool.Use it as your everyday e-mail tool. To access Drake’s e-mail program, go to Help > E-Mail.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u i t e P r o d u c t s | 1 8 9Suite ProductsIn addition to providing our comprehensive tax software, Drake offers these additional applications to enhanceyour practice. These features include:• Tax Planner• Drake Document Manager• Client Write-UpTAX PLANNERThe Tax Planner is a stand-alone product that integrates with Drake Software and helps you andyour clients plan their tax futures. The Tax Planner allows your clients to see how events such asmarriage, the birth of a child, or becoming a single parent affect their income and taxes in both thecoming year and as many as seven years ahead.Some questions a client may need answers to include: “How will having a child affect my incometax next year?”, “What if I add money to my IRA?”, “What are the tax implications of gettingmarried this year versus next?’” Use the “Multi-Case” option to show the client various scenariosfor the coming tax year and use the “Multi-Year” option for long-term planning.___NOTEThe Drake Tax Planner requires Microsoft Excel 2000 or later.INSTALLING TAX PLANNERThe Tax Planner is installed during the Drake Tax Software installation and a Tax Plannericon is created on your desktop.CREATING A TAX PLANNER FILEThere are two ways to set up a client in the Tax Planner:1. Click the Tax Planner icon on your desktop and create a file from scratch. This methodrequires direct entry on each tab of the Tax Planner.2. Open a completed return in Drake Software and on the data entry toolbar, click TaxPlanner.The Tax Planner is opened and the client’s current year information is automatically importedinto the Tax Planner. This information is editable once it is in the Tax Planner.Copyrighted MaterialDrake Software Evaluation Guide


1 9 0 | S u i t e P r o d u c t s 2 0 0 8 D R A K E S O F T W A R EOPTIONSTax Planner options are available in a drop list from the Options button on the Tax Plannertoolbar:• Send to DDM — Tax Planner files can be saved to an existing Drake Document Managerclient folder. Click Send to DDM from the toolbar to print the planner to a PDF file andsave to the appropriate folder. See “Drake Document Manager” on page 192 for details.• Case Options — From the case selector, choose the number of years or cases to view andprint in the Tax Planner. Click Set selection as default to have the same number of yearsselected each time a new planner is created.• Directories and Paths — Select a data path for the Tax Planner to use. The current path isdisplayed. Enter a new path in the New field. Tax Planner files are saved to the selectedlocation.Tax Planner tabs include: Client Setup, Demographics, Summary, Income, Adjustments,Itemized Deductions, Credits, Other Taxes, and Payments.Planning PreferencesSelect multi-year or multi-case from the Planning Preferences drop list on the ClientSetup tab. See Figure 111 on page 191. The multi-year option provides long-rangeplanning for up to seven years, and the multi-case option provides short-term planning (forthe current year) with up to seven different scenarios defined by the preparer.___NOTEClick Setup Options from the Tax Planner toolbar and select CaseOptions to change the number of years or cases to create in the planner.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u i t e P r o d u c t s | 1 9 1Figure 111: Planning Preferences drop list___NOTEOnce the multi-year option is selected and the Tax Planner is saved,the multi-case option cannot be changed, but you can create a newplanner for the multi-case option. If multi-year and multi-case plansare required for one client, create two files.When client information is imported from Drake into the Tax Planner, all applicable 2008information and amounts are automatically filled in on the tabs. On the Demographicstab, the 2008 information automatically fills in for the number of years or scenariosselected; changes are needed in the applicable fields and years only. The Income,Adjustments, Itemized Deductions, Credits, and Other Taxes tabs are filled with 2008tax information for each year. The amounts for the additional planning years can bechanged by using the Adjustment column, by copying and pasting from prior years, or bydirect entry.The Adjustment column can contain either dollar amounts or percentages. To change topercentages, enter the number with a percentage sign (%). The adjustment amount fills thesame field in the projected years. To decrease an amount, enter a negative percentage bytyping a minus sign (-) before the amount. (For example, enter -5% in the Adjustmentcolumn.To apply adjustments to all future years, right-click the cell and select Carry AdjustmentAcross.Items on the Summary tab are adjusted by making entries on other tabs. Double-click acell on the Summary tab to jump directly to the tab where changes can be made.Copyrighted MaterialDrake Software Evaluation Guide


1 9 2 | S u i t e P r o d u c t s 2 0 0 8 D R A K E S O F T W A R EThere is a Notes section on each tab. Record comments or thoughts pertinent to the clientor data. To move between tabs, click the Next or Back buttons on each screen. Click anyof the tabs to move directly to that tab.Printing A PlannerClick Print Planner from the toolbar to access the print selector. Select the sheets andreports to print. Click Print Preview to preview your selection and Save Selection to savepage selections as the default.Tax Planner FilesTax Planner files have DTP (Drake Tax Planner) extensions. These files also can be savedas Excel files with XLS extensions so you can e-mail the files to clients. Drake supportsExcel 2000 and above.ReportsTo access standard reports, click Reports from the tax planner toolbar. Select a reportfrom the Reports drop list. There are also standard charts and graphics available.Planner HelpTo access cell-specific help, right-click a cell and select Drake Help. The helpinformation for that cell is also displayed across the bottom of the Tax Planner window.DRAKE DOCUMENT MANAGERThe Drake Document Manager (DDM) allows you to create an electronic organizational filestructure for the storage of your office documents.The DDM is organized as a three-level system. Think of it as a virtual filing cabinet with drawersand folders in the drawers. Level 1 is the “Cabinet,” Level 2 is the “Drawer,” and Level 3 is the“Folder.” Folders may also have sub-folders. Store your files in these folders electronically,creating a paperless office.INSTALLING DDMThe Drake Document Manager is installed during the Drake Tax Software installation, and aDDM icon is created on your desktop.Technical RequirementsThe DDM program takes very little disk space, but the amount of space needed to storeyour office files must be taken into consideration. The drive where files are stored shouldhave three to five GB (gigabytes) of space for three to five years of storage (for an averagesize office). Most new computers have at least a 20GB hard drive.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u i t e P r o d u c t s | 1 9 3Long file names can be used, although this naming convention might not functionproperly on older systems that limit file names to eight or fewer characters.Password-Protecting DDM FilesProtect files with a password in the DDM.• Assign a password — Right-click a file and select Password Protection. Enter thepassword twice, then click Continue.• Open a password-protected file — The Password Protection dialog box is openedwhen you try to open the file. Enter the password and click Continue.• Remove or change a password — The Password Protection dialog box is openedwhen you try to open the file. Enter the password and click Continue. Whenprompted to enter and reenter a new password, enter a new password or leave thefields blank to remove all password protection and click Continue.OptionsSome DDM configurations must be manually set. Access these options from within theDDM. Go to Setup > Options.• Document Manager Data Path — To store DDM data in a different location fromthe actual DDM program, enter the data path here.• Use this scan device — By default, the DDM automatically chooses your defaultscanner when scanning documents. To choose a different scanner, select it from thedrop list.• Turn off scanner interface — Click to activate or disable the scanner option in theDDM.• Build index when DDM starts — The DDM index (used to search the DDM) mustoccasionally be rebuilt to ensure proper functionality. Click to activate or disable theoption to rebuild the index each time the DDM starts.___NOTEChoosing to rebuild the index each time the DDM starts does not interferewith the Document Manager operation. You can also choose to rebuild theindex by going to File > Rebuild Search Index.Choosing a File StructureBuild your file structure from scratch or integrate the DDM with Drake. Before you canbegin storing files in the DDM, you must create a file structure. See “Building a FileStructure” on page 194.___NOTEPut some thought into the development of your file structure before creatingit in the Drake Document Manager. You can name the cabinets, drawers,and folders, whatever suits the needs of your office, but it could becomedifficult to rearrange the structure of the filing system once it is in place andfilled with files.Copyrighted MaterialDrake Software Evaluation Guide


1 9 4 | S u i t e P r o d u c t s 2 0 0 8 D R A K E S O F T W A R EIntegrating with Drake SoftwareAmong the benefits of integrating Drake Document Manager with Drake TaxSoftware:• Information from new clients is automatically used by DDM to create new clientfolders in the Document Manager. See “Opening a Return” on page 43.• A predefined file structure is created in the DDM with a Clients filing cabinet,drawers numbered 0 through 9 and A through Z, folders in each drawer for eachclient labeled by last name or business name, a Tax sub-folder, and a 2008sub-folder.• The Doc Mgr speed button in Drake data entry opens the DDM to the client’stax-year folder.• When tax returns are printed using PDF995 software (see “Installing PDF995” onpage 9), they are saved to the correct folder in the Document Manager.• Files saved in a client’s 2008 folder can be attached through the e-mail program(Help > E-mail).To implement the Drake document file structure, complete the following steps:1. From Drake Software, go to Setup > Printing > Document Manager.2. Set the Document Manager location. If the location in this field is incorrect, clickSearch then Yes to choose the appropriate location.3. Put a check mark in the box, Allow Drake to set up Document Manager clientfolders (recommended).4. Save the new location.___NOTEIf the Drake file structure is introduced into an existing system, the Drakestructure is added to your system. The Drake file structure does notoverwrite existing file structures or files. You can add additional cabinets,files, and folders to your filing system once the Drake file structure isimplemented.BUILDING A FILE STRUCTUREIf you choose to build your own file system, have it mapped out on paper before you begincreating the structure in the DDM. The following sections cover the steps necessary to createcabinets, drawers, and folders. As you create a level, an icon representing that level appears inthe left pane of the DDM, creating a “tree” structure.Creating a CabinetYou must have a cabinet in which to place your drawers and folders.1. To create a cabinet, open the DDM, then click Create a new cabinet.2. In the pop-up window, enter the name for the cabinet.3. Click OK. The new cabinet appears in the left pane. See Figure 112 on page 195.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u i t e P r o d u c t s | 1 9 5To create additional cabinets, repeat these steps. You cannot add file cabinets inside filingcabinets. Each cabinet acts as Level 1 storage.Figure 112: Create a New CabinetCREATING A DRAWERDrawers can be added to cabinets.1. Click to highlight the cabinet. The drawer is added to the selected cabinet.2. Click the New Drawer speed button.3. In the window, enter the name for the drawer and click OK. The new drawer appearsin the left pane as Level 2, in the Level 1 cabinet.CREATING A FOLDERDocuments are stored on the folder level in the DDM. You can add folders to drawers andsub-folders to folders.1. Click to highlight the drawer or folder.2. Click New Folder.3. In the window, enter the name for the folder and click OK. The new folder appears inthe left pane as Level 3, under the Level 2 drawer in the Level 1 cabinet.Once you have created cabinets, drawers, and folders, you can put files into the system.Copyrighted MaterialDrake Software Evaluation Guide


1 9 6 | S u i t e P r o d u c t s 2 0 0 8 D R A K E S O F T W A R EWORKING IN THE DOCUMENT MANAGER___NOTEThe Document Manager window is resizable. Place your cursor over theedge of the screen and drag to size.Each speed button on the DDM menu bar activates a different function. Depending on yourcurrent level in the DDM, different buttons are accessible. For example, if you’re on thecabinet level, you can add only drawers and cabinets, so only these buttons are active. To viewa short description of each button’s function, rest your pointer on the button. See Figure 113below.Since you can begin working in the DDM on the folder level, several buttons are displayed:• New Folder — Create a new folder• New File — Create a new file• Open — Open the currently selected document• Scan — Scan a new document into the Document Manager• Import — Import a document from another location• Copy — Export a document to another location• Cut — Remove a document so that it may be placed in another location• Paste — Place a document that has been Cut in a new location• Rename — Rename the currently selected document• Email — E-mail the currently selected document• Delete — Delete the currently selected document• Drag — Activate Drag and Drop• Link File — Create a link between a DDM document and a document outside of theDDM.• Help — Find answers in the DDM help system• Exit — Close the Drake Document ManagerFigure 113: DDM folder level speed buttonsDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E S u i t e P r o d u c t s | 1 9 7ADDING FILES TO FOLDERSAdd files to DDM folders by importing or scanning.Importing DocumentsTo import a document:1. Select the folder in which to save the document. This is the currently selected or activefolder.2. Click Import from the menu bar. Browse to the file location on the server or harddrive and select the document for import.3. Click Save. The Drake Document Manager copies the document into the selectedfolder and leaves the master document in the existing location. Any file type can beimported into the system.Scanning DocumentsEnter documents into the system by scanning, using either a flat-bed scanner or documentfeeder scanner. To be compatible with the DDM, scanners much be TWAIN compliant.A flat-bed scanner scans one page at a time, creating one PDF document at a time. Ascanner with a document feeder scans multiple pages and makes one document of manypages, which is more efficient.___NOTEMost scanners support both bed and feeder capabilities, in much the sameway that many printers support more than one feeder tray.Initiate the scan process from the Drake Document Manager. The Document Managerlocates your system’s default scanner. If a Scanner Cannot be Located message appears,the scanner might not be TWAIN compliant or properly installed.To scan a document:1. Select the appropriate folder, click Scan, and choose either Use Scanner Bed or UseDocument Feeder, depending on the type of scanner and which part of the scanner touse.2. Click to select the file type.___NOTEScanned documents can be saved in PDF, BMP, GIF, JPG, TIF, and PNGformats.Copyrighted MaterialDrake Software Evaluation Guide


1 9 8 | S u i t e P r o d u c t s 2 0 0 8 D R A K E S O F T W A R E3. Enter a name for the document and click OK.___NOTEHave a naming convention established before scanning so that everyone inyour office names documents in a similar manner for easy search andretrieval.WORKING WITH DOCUMENTSOnce a document is entered into the system, right-click the document and enter a descriptionin the Description field of the Document Properties window. The Drake DocumentManager Audit Log also shows the actions that have occurred to the document, for example,Date Imported and By Whom. It also shows if the file has been renamed, exported, e-mailed,or opened. It provides an audit trail of activity occurring with the document if created withinthe Drake Document Manager. Any action created outside the Drake system is not recorded.To open a document, double-click the document name or click the Open speed button.Documents in the Document Manager can be exported to another location. To export adocument, right-click a document and select Export to New Location. Browse to the filelocation for the export and click Save. To e-mail a file, select the file and click Email. Torename or delete a file, select the document and click Rename or Delete.To find a cabinet, drawer, or folder, enter part of the name in the text box under FilingCabinets and click Find. The file location is highlighted.CLIENT WRITE-UPDrake Client Write-Up is an extensive payroll package with basic bookkeeping functions andaccounts payable. The payroll portion supports Live and After The Fact payroll for employees(W-2) and contractors (1099), MICR check printing, production of W-2s, W-3s, 1099s, 94X forms,and all state quarterly unemployment forms. Through CWU, you can upload W-2s, W-3s, 1099s,and electronically file 94X forms.A number of reports, including multi-column profit and loss reports, pre-posted reports,comparative or single column balance sheets, and payroll reports are also available. Templates areincluded to allow easy creation of a chart of accounts. There is an export function to carry thisinformation into Drake.Install Client Write-Up from your Drake Evaluation CD.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E R e v i e w Q u e s t i o n s P a r t 8 | 1 9 9Review Questions Part 8Answer the questions below. See page 200 for answers and explanations.1. These interactive courses explore IRS tax law and terminology on the Drake Electronic Training Center(ETC):a) Tax Coursesb) Tutorialsc) Practice Returnsd) Test Returns2. Drake recommends using which RIA Checkpoint resource in conjunction with the Drake Tax Planner?a) Calculatorsb) Form Line Finderc) Public Domain Materialsd) Weekly Alerts3. Which option should be chosen when creating a tax planner for long-range planning in the Tax Planner?a) Multi-yearb) Multi-casec) Detailed Reportd) Summary Report4. When determining the amount of space necessary to adequately store files in the Drake DocumentManager over three years, consider the following:a) Reserving three gigabytes - one gigabyte of space for each yearb) Reserving one gigabyte of space to store three years of files and another gigabyte for the actualDDM programc) Purchasing a separate drive to store filesd) Drake Document Manager files are deleted after three years5. When opening a new return in Drake, what items entered on the New Return screen are used to createclient folders in the Drake Document Manager file structure?a) The SSN/EIN Verification fieldsb) The Name Entry fieldsc) The selected return typed) Client folders must be manually createdCopyrighted MaterialDrake Software Evaluation Guide


2 0 0 | R e v i e w Q u e s t i o n s P a r t 8 2 0 0 8 D R A K E S O F T W A R EANSWERS PART 81. The correct answer is a) Tax Courses. Drake’s ETC also offers an Intermediate tax course and a BasicCorporate tax course.b) is incorrect. Tutorials teach the basics of Drake Software by using text, sound, and animation.c) is incorrect. Nineteen basic and intermediate practice return scenarios provide data entry practiceand solutions for comparison of results.d) is incorrect. Test returns are available in Drake Software and are not located on ETC.2. The correct answer is a) Calculators. While all the RIA tools help you accurately serve your clients,the RIA calculators along with the Tax Planner provide them tax and financial planning services. Fromthe RIA Web site, go to the Tools tab.b) is incorrect. The Form Line Finder works in conjunction with the RIA Tax Return guides toquickly and easily search for line-specific instructions. It is also available from some screens in dataentry.c) is incorrect. RIA Public Domain Materials give you access to IRS Rulings and Memoranda.d) is incorrect. Weekly Alerts are designed to keep you on top of fast-breaking tax developments.3. The correct answer is a) Multi-year. The Planning Preferences option allows long-range planningover multiple years.b) is incorrect. The multi-case planning preference allows multiple scenarios within the current year.c) is incorrect. Run a detailed report clicking Reports from the Tax Planner toolbar. It does notdetermine the planning preferences of the tax planner.d) is incorrect. A Summary report displays a summary of tax planner data. It is accessed from theReports button on the Tax Planner toolbar and does not determine the planning preference.4. The correct answer is a) Reserving three gigabytes - one gigabyte for each year. Drake recommends3-5 gigabytes of storage space for 3-5 years of files for an average office.b) is incorrect. The actual DDM program takes up little hard drive space.c) is incorrect. It is not necessary to consider purchasing a new drive to store files. Most newercomputers come with at least 20GB of hard drive space, which allows adequate file storage.d) is incorrect. While three years is recommended, DDM files can be stored as long as necessary.5. The correct answer is b) The Name Entry fields. When the DDM is activated in Drake (go to Setup >Printing > Document Manager) the New Return information is used to create a folder in the DDM.a) is incorrect. The SSN/EIN Verification is activated for Pay Per Return clients and when the optionis activated in Setup > Options, Data Entry tab.c) is incorrect. Selecting the return type determines only what type of file is created for the new return.d) is incorrect. Client folders must be created manually in the DDM if the option to integrate the DDMis turned off. Go to Setup > Printing > Document Manager and clear the box to disable AllowDrake to set up Document Manager client folders (recommended).Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E G l o s s a r y | 2 0 1GlossaryAcknowledgements (acks)Archive ManagerBank ProductsBasic ModeBlank FormsCalculation ResultsClassic ModeAll electronically-filed returns receive “acks,” acknowledging to the transmitter that the return wasreceived. “T” acks designate a test returns, “P” acks acknowledge a transmission was received,“A” acks designate a return was accepted, and “R” acks designate a return was rejected.Is a tool that allows you to archive various versions of a return. Archive, restore or delete thearchived returns from the Archive Manager.Allow a taxpayer to receive a refund faster and assist paying for tax preparation service or anymoney owed to the IRS.A View and Print mode that displays a color-coded cascade of forms.Many forms that are not required and are not automatically filled out by Drake Software can stillbe found and printed from the software.This window is available whether in View mode or Print mode. It displays federal and state feesand figures, error messages, and a printable summary of return numbers and amounts.Client Status ManagerData Entry MenuDemographicsA View and Print mode that simulates DOS data entry.A program used to track workflow in an office.The first screen encountered when opening an existing return. All return navigation begins here.One of the names of the program’s first data entry screens. Also known as screen 1 and the Nameand Address screen, it’s where the personal information of the client is entered.Copyrighted MaterialDrake Software Evaluation Guide


2 0 2 | G l o s s a r y 2 0 0 8 D R A K E S O F T W A R EDrake Document ManagerEF MESSAGES PageEFINA program included with Drake Software designed to help you set up, organize, and maintain a“paperless” office.Red pages that appear in View or Print mode when a return has certain issues that would cause anIRS/State rejection. You cannot select a return for electronic filing with a red EF MESSAGESpage. Correct the issue and view the return. If the EF MESSAGES page is gone, the return can beelectronically filed.Electronic Filing Identification Number. Preparers new to electronic filing must apply for an EFINby preparing and submitting a Form 8633 to the IRS.Electronic Training Center (ETC)E-mailE-mail (Broadcast)Enhanced ModeEROFAQ ScreenFlagged FieldsAn online training site with tax courses and 40 tutorials to help new preparers learn Drake’s taxsoftwareUsed to send and receive e-mail in the Drake program.E-mail that provides information on important IRS updates and software changes. Receive thesemessages in Help > E-mail to Drake.A View and Print mode that allows viewing and printing from the same window, making it easierand faster to see how a printed return will look.Electronic Return Originator. To become an ERO, preparers must apply for an EFIN.Frequently Asked Questions. Type FAQ in the selector field to access additional information.Data entry fields that can be “flagged” to automatically remind the preparer to verify the data inthose fields before the program allows electronic filing. Flagged fields turn red by default untilverification.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E G l o s s a r y | 2 0 3Forms Based Data EntryGrid Data EntryA data entry format that allows preparers to view an interactive 1040 form rather than the DataEntry Menu.A condensed data entry screen requiring data entry in only the most commonly used fields.Heads Down Data EntryHelpHome ScreenHot KeysKnowledge BaseMacrosUses field codes that correspond with interview sheets (proformas). Data can be gathered by a taxpreparer and entered by a data entry operator.Various types of Help are available, from field Help and screen Help to aid you in determininghow to complete required screens, to online tax research.The main screen in the Drake program, accessed by logging in.Allow you to perform specific actions quickly and easily using the keyboard. For example, pressCTRL + C to calculate a return.A comprehensive searchable database consisting of support solutions and articles of interest,providing support around the clock.Menu BarKeys that can be programmed to enter long strings of data with just a few keystrokes.The list of menu options across the top of the Drake screen.Multi-Office Manager (MOM)NOTES PageAn online version of the Client Status Manager, designed to track the work flow in a multi-officeenvironment.The yellow NOTES page provides reminders or tips about a tax return but does not preventelectronic filing.Copyrighted MaterialDrake Software Evaluation Guide


2 0 4 | G l o s s a r y 2 0 0 8 D R A K E S O F T W A R EOnline EF DatabaseDisplays information about your electronically filed returns in real time and offers various onlinereporting features.Overrides and AdjustmentsPINsPIN SignatureFields marked by a red equal sign (=) or blue plus and minus signs (+/-). Entries in these fieldschange the amount calculated by the program.Personal Identification Numbers for tax preparers.PDFA PIN that takes the place of a signature on electronically filed returns. All electronically filedreturns must be signed by the taxpayer, spouse, (if filing a joint return), and preparer with PINs.Portable Document Format (PDF) is a file format that captures all the elements of a printeddocument as an electronic image that can be viewed or printed. PDF files are created in AdobeDistiller, PDF995, or similar products. View the files with Adobe Reader.PiggybackPractice ReturnsPrint ModeQuick EstimatorRIAElectronically filed state returns that are sent with the federal return to the IRS. If the federal returnis rejected, the state return is not sent.Like test returns, practice returns allow preparers not familiar with Drake to complete returnsbased on various scenarios and learn the basics of data entry.Allows printing of the forms associated with a return. Press CTRL + P to enter Print mode.Allows you to prepare an estimated individual return quickly and calculate the results. (Resultsform the Quick Estimator should not be filed.)RIA Checkpoint Online is an advanced online research tool for tax professionals. To access RIA,go to Help > RIA Tax Research.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E G l o s s a r y | 2 0 5SchedulerSelector FieldSetup WizardSpeed ButtonSplit ReturnA program for setting up and managing the schedules and appointments of multiple preparers.Reminders and reports are also available through the Scheduler.In data entry, the entry field located at the bottom of the screen. Type corresponding screen codesinto the field and press ENTER to access data entry screens.A feature designed to guide you through the process of setting up important parts of the program.Used for quick access to commonly used program functions. Speed buttons are located on thetoolbar directly under the menu bar and are represented by icons.Press CTRL + S to split a MFJ (Married Filing Joint) return into two MFS (Married FilingSeparate) returns, allowing you to easily compare and determine the best option for the taxpayers.State and City ProgramsTax PlannerTest ReturnsToolbarTutorial (CBT)Programs necessary for completing state and city tax returns. Install from the Evaluation CD.A program for predicting your clients’ tax future and how changes in their lives – marriage,children, retirement, divorce – can change their tax liabilities as far ahead as seven years.Pre-prepared returns already loaded into the software that new customers can use to learn thesoftware and the basics of electronically transmitting tax returns.Located beneath the menu bar, the toolbar is where you’ll find speed buttons — one key-strokeshortcuts to commonly-used program finctions.Computer Based Tutorial. Tutorials help tax preparers learn the basics of the software throughshort instructional videos. View from the CD or to access the complete library, go to Drake’sElectronic Training Center at www.drakesoftware.com/etcCopyrighted MaterialDrake Software Evaluation Guide


2 0 6 | G l o s s a r y 2 0 0 8 D R A K E S O F T W A R EUpdates (Patches)View ModeWorksheetsChanges in tax laws and corrections, additions, and improvements to how the program functionsthat Drake sends its customers. During tax season, updates should be downloaded from Drakeevery day.Allows you to view the actual forms that print with a return. Press CTRL + V to enter View mode.Available in every numerical field in data entry, worksheets allow up to 30 lines of descriptionsand amounts. Amounts entered are totaled in the data entry field. Detail worksheets are notelectronically filed with a return.Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C P E E x a m | 2 0 7CPE ExamAnswer the questions below. See“CPE Exam Answer Sheet” on page 213 for answer sheet and instructions forreceiving credit.1. Which of these setup options are available at Setup > Options > Data Entry tab?a) Choose which federal forms are included with returnsb) Choose which state forms share data entry information with federal returnsc) Select appearance, size, and content of data entry screensd) Select which data entry fields must be filled out for each return2. What operation does CTRL + F1 perform when on the Home window in Drake?a) Open the Quick Estimatorb) Open Drake Software Helpc) Transmit and Received) Add appointments to the Scheduler3. What purpose does the Multi-Office Manager serve?a) Stores returns and scanned-in tax papers in electronic filesb) Alerts you when to send preseason and after-season organizers and proformasc) Alerts you when an SSN has already been filed to prevent duplicate filingsd) Tracks client files for multiple offices4. What function does an EF MESSAGES page serve?a) Alerts you to messages and broadcast e-mail stored in the Drake Message Centerb) Prevents electronic filing and produces error messages, explaining why EF was preventedc) Produces NOTES pages with all EF errors listed for each clientd) Opens the EF Options Override screen with federal and state error messages listed5. Many of the settings on the Form and Schedule Options tab in Setup > Options can be overriddenon a per return basis from which screen in data entry?a) TRAC screenb) Screen 1c) PRNT screend) EF screen6. What key toggles grid data entry and full-screen mode?a) F4b) CTRL + F2c) SHIFT + F1d) F3Copyrighted MaterialDrake Software Evaluation Guide


2 0 8 | C P E E x a m 2 0 0 8 D R A K E S O F T W A R E7. By default, Drake automatically electronically files:a) The federal return and the selected piggyback state returnb) The federal return and any state return eligible for e-filingc) The federal return; state returns must be transmitted separatelyd) Only one state return at a time after the federal return is accepted8. Automobile expenses are reported on which screen in Drake?a) 4562b) AUTOc) 4797d) C9. Once a W-2 has been entered in Drake, how can you quickly save and produce an additional W2screen?a) Press INSERTb) Press PAGE DOWNc) Press F3d) Press ESC10. Forms Based Data Entry allows a preparer to access screens from which of the following?a) The Data Entry Menub) An interactive 1040 formc) A list of 1040 line numbersd) A pre-formatted PDF11. From the C screen, how can you search for the Business Code?a) You cannot. You must check the Schedule C instructions.b) In the Business Code field, press CTRL + SHIFT + Sc) In the Business Code field, press ESCd) Click Business Code.12. Where can you go to access information about electronically filed returns in real time and to runreports?a) Search EF Databaseb) Fed/State Factsc) EF Return Selectord) Online EF Database13. On a support call, a Drake Customer Support Representative asks you to send the client file in questionfor review. What is the easiest way to send the client file?a) From the main menu in Drake, go to Tools > File Maintenance > Send Filesb) Open your personal e-mail program, create a new e-mail message, and attach the client filec) Browse My Computer for the Drake08 folder. Locate the file, right-click it, and select SendTo > Mail Recipientd) From within return data entry, click Email. The client file is attached to a new messageDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C P E E x a m | 2 0 914. What is assigned to a firm to identify that it is associated with a tax return in screen 1 of data entry?a) Login IDb) Firm Numberc) Business Coded) Setup Numeral15. How do you file an amended return with Drake?a) Print the blank form, complete it, and mail to the IRS.b) Re-enter the return. Go directly to the X screen. Click Yes and enter the changes needed toamend the return. Select for EF.c) Re-enter all information into the return and reprint. Mail to the IRS.d) Enter X in the selector field. Click Yes to auto-fill the screen. Enter the changes needed toamend the return. Mail to the IRS.16. How do you create a Part-Year return with Drake Software?a) Enter PY as the resident state on screen 1b) Type PY in the selector field and fill out the screenc) Create two separate returnsd) From the Other tab, select PY, and enter two-letter state code17. Drake Software provides what supplemental document(s) to assist preparers in Due Diligence requirementsas specified in IRS Rule 6695?a) Paid Preparer’s Checklistb) EIC Worksheetsc) TRAC Reportsd) NOTES Pages18. Which of the following setup screens must be completed before you can prepare and electronically filereturns?a) Firm, ERO, and EF setupb) Firm, ERO, and Preparer setupc) Firm and ERO setupd) Firm and Preparer setup19. A client does not mind waiting for a refund, but doesn’t have the funds to pay for tax preparation.Offer that client which of the following bank products?a) Refund Transfer/Bonusb) RALc) Balance Due Loand) InstantCopyrighted MaterialDrake Software Evaluation Guide


2 1 0 | C P E E x a m 2 0 0 8 D R A K E S O F T W A R E20. In which case should Repair Index Files be used?a) When adding records to the EIN databaseb) After creating a new client filec) After a client return is calculatedd) Before processing e-file acknowledgements21. EIN, SSN, telephone numbers, and dates:a) Must be entered with no dashesb) Can be autofilled from the Auto fill Databasec) Need be entered only once, on screen 1d) Determine how returns are stored in the DDM22. Which of the following is a feature of Basic View/Print mode?a) A viewing tool that allows zooming and scrollingb) A viewing panel that displays a preview of a selected documentc) A collapsible and expandable tree view listing return documentsd) A color-coded cascade of forms that displays return documents23. To print blank federal or state tax forms in Drake Software:a) Go to Tools > Blank Forms, choose from the federal and state forms, and click Printb) Open a new return, click View, choose from the Forms list, and press CTRL + Pc) Click RIA Tax Forms, choose from the forms list, and click Printd) Click Support and download the selected forms from the Drake Support Web site24. Which statement is true about the PMT screen?a) This screen can be used to apply for a bank productb) If no payment date is entered on this screen, the default is the last day of the month in whichthe return was createdc) Separate accounts can be designed for federal and state payments on this screend) This screen is divided into two sections: one for withdrawals and the other for direct deposits25. Select one way to set the status of a return:a) From the Client Status Manager, click Customizeb) From within return data entry, click the CSM speed button and select a statusc) From the Client Status Manager, click Status, then select from the listd) From within return data entry, go to Tools > Set Client Status26. Where do you go to opt out of bonus depreciation for a 1065 return in Drake?a) From the Data Entry Menu, click BD or enter BD in the selector fieldb) From the Data Entry Menu, choose the 4562 tab and click Grid Data Entryc) From the Assets/Sales tab, go to the Depreciable Assets section and click 10 AdditionalDepreciation Electionsd) From the Depreciable Assets tab, click either Sales or AssetsDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C P E E x a m | 2 1 127. You’ve bought and installed a new printer in your system. How do you add the printer to Drake forprinting tax returns?a) Create a new printer profile at Setup > Update Profileb) Enter the new printer settings at Setup > Printing > Printer Setupc) The program automatically detects every printer installed on your computerd) The program automatically recognizes new printers and goes online to download new drivers28. Of the following, which action produces Form 8879 in the software?a) Entering the EF screenb) Entering the PIN screenc) Entering the 8453 screend) Entering the 8879 screen29. The Drake Document Manager allows you to build an electronic file structure using the followingthree levels:a) 1 - Cabinet, 2 - Drawer, 3 - Folderb) 1 - Drawer, 2 - Folder, 3 - Filec) 1 - File, 2 - Folder, 3 - Documentd) 1 - Cabinet, 2 - Folder, 3- File30. PDF995 allows you to:a) Install the PDF printer in Setup > Printing > Default Printerb) Print returns and files in PDF formatc) Print e-filed returns from the Drake EF Databased) Print e-filed returns directly from the IRS Web site31. Which screen is used to electronically sign the Consent to Use of Tax Information required by IRSRegulation 7216?a) CONS screenb) USE screenc) DISC screend) BANK screen32. What support resource offers a database of technical support issues and articles of interest?a) Knowledge Baseb) Forumsc) Fed/State Factsd) Drake ETC33. In Drake, the form used to calculate a partner’s new basis for income or gain is:a) Partner’s Special Allocation screenb) Partner’s Adjusted Basis worksheetc) M2 Partner’s Capitald) Schedule K-1 Partner’s InformationCopyrighted MaterialDrake Software Evaluation Guide


2 1 2 | C P E E x a m 2 0 0 8 D R A K E S O F T W A R E34. In an 1120 return, to reconcile income per books with income per return, go to:a) M-1 screenb) View Forms and print an income statementc) Income tab and click Reconciled) Reconciliation of Income tab and click Schedule M35. In an 1120 corporate return, how do you find the Principal Business Activity code number?a) On screen 1, General Information tab, select a code in the Principal Business Activities list.b) On either the Taxes and Licenses screen or the MISC screen, click in the Principal BusinessActivity code field.c) Go to the Schedule K screen, right-click in the Principal Business Activity code text box,select View Help.d) Consult your Drake Software manual, where there is list of all Principal Business Activitycode numbers.36. What operation does CTRL + S perform in data entry?a) Opens a return in the Data Entry Menub) Splits a Married Filing Joint return into two Married Filing Separate returnsc) Sends a PDF copy of the return to the Drake Document Managerd) Opens the return in Print/View Mode37. Which of the following fields is automatically completed when you begin entering data?a) The dependent Relation field on screen 2b) The Amount field on the 2441 screenc) The Wages, tips field on the W2 screend) The ERO’s PIN Signature on the PIN screen38. Which Setup option allows for easier viewing of data entry fields?a) Field Flagsb) Magnify Fieldsc) Global Flagsd) Detail Worksheet39. In a Corporate Return, which page of the return is used to see if the return is in balance?a) Page 2b) Page 3c) Page 4d) Page 540. A Partnership is required to file a Schedule M-3 if at the end of the taxable year, it’s gross assestsreported on Schedule L of Form 1065 are equal to or greater than:a) $ 1 millionb) $ 5 millionc) $10 milliond) $15 millionDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E C P E E x a m A n s w e r S h e e t | 2 1 3CPE Exam Answer SheetCircle the appropriate response on this answer sheet for each of the questions on the CPE Exam. Please returnthe completed Exam Answer Sheet and the 2008 Evaluation on page 214 before April 15, 2010 to: EducationDepartment, Drake Software, 235 E. Palmer Street, Franklin NC 28734, or fax to (828) 349-5713.1. A B C D2. A B C D3. A B C D4. A B C D5. A B C D6. A B C D7. A B C D8. A B C D9. A B C D10. A B C D11. A B C D12. A B C D13. A B C D14. A B C D15. A B C D16. A B C D17. A B C D18. A B C D19. A B C D20. A B C D21. A B C D22. A B C D23. A B C D24. A B C D25. A B C D26. A B C D27. A B C D28. A B C D29. A B C D30. A B C D31. A B C D32. A B C D33. A B C D34. A B C D35. A B C D36. A B C D37. A B C D38. A B C D39. A B C D40. A B C DCopyrighted MaterialDrake Software Evaluation Guide


2 1 4 | C P E E x a m A n s w e r S h e e t 2 0 0 8 D R A K E S O F T W A R E2008 EVALUATIONPlease take a moment and let us know what you think. We value your input and suggestions and strive to continuallyimprove our educational tools to better suit your needs. For CPE credit, enter your name and address and completeyour evaluation of the course material. Credit is awarded to a score of 70% or better on the exam. Exam Credits willbe determined by pilot test results. Your CPE certificate will be mailed to you.Please print all information clearly.Your Name and Designation _______________________________________________________EFIN____________________________________ CTEC # (for CA)*______________________E-mail: ________________________________________Phone __________________________Firm Name _____________________________________________________________________Address________________________________________________________________________City ________________________________________ST ___________ Zip _________________Are you interested in Oregon approved credits? Circle one: Yes or NoAre you interested in Texas approved credits? Circle one: Yes or No* A Course Report and Student List for this Evaluation is submitted on the 15th of each month to the California TaxEducation Council, www.ctec.org.Regarding content and media (please circle Yes or No):• Were the stated learning objectives met? Yes or No• If applicable, were prerequisites appropriate? Yes or No• Were program materials accurate? Yes or No• Were the program materials relevant and did they contribute to the achievement of the learningobjective? Yes or No• Was the time allotted to the learning activity appropriate? Yes or No• If applicable, were individual instructors effective? Yes or No• Were facilities and/or technological equipment appropriate? Yes or No• Were the handouts or advance preparation materials satisfactory? Yes or No• Were the audio and video materials effective? Yes or NoComments:__________________________________________________________________________________________________________________________________________________To receive your CPE certificate, you must sign and date this form.(Your signature)______________________________________________________(Date)____________(Your Name - Please Print) _____________________________________________(Date)____________Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E | vIndexAacks, 106acks only, 109adjusted basis worksheet, 147adjustments, 52admin login, 22allocation type, 146alternative electronic signature, 23Archive Manager, 95Creating an Archive, 95Restoring an Archive, 96auto-balanceForm 1065, 154Form 1120, 125auto-complete database, 53Bbackup, 162bank products, 112bank screen, 83Basic Mode, 95View, 95billingfee override, 32options, 30pricing, 32pricing on the fly, 33see pricing setupbusiness returns, see Form 1120Ccalculator, 58Client Status Manager, 172customizing, 175filtering data, 176MOM, 177return statuses, 174toolbar, 173colors setup, 34connection settings, 21CPEinformation, 3creating returns, 44CSM, see Client Status ManagerCustomer Service, 187data entryadding data, 48adjustments, 52auto-complete database, 53calculator, 58codes, 53customize, 32data entry menu, 46deleting data, 48deleting screens, 48detail worksheet, 55EIN database, 53existing forms list, 50exiting screens, 48FAQs, 82field flagssetting flags globally, 32, 51field search, 53grid data entry, 50heads down, 57hot keys, 39macros, 57magnifying fields, 52MFJ to MFS split, 54modifying data, 48navigation, 49overrides, 52DCopyrighted MaterialDrake Software Evaluation Guide


v i |2 0 0 8 D R A K E S O F T W A R Eresetting screens, 48resources, 58right-click menus, 58saving data, 48setup options, 27states and cities, 49ZIP code database, 52Zip Code Database, 53data entry menu, 46form codes, 47toolbar, 47DDM, see Drake Document Managerdirect deposit, 112directories and paths setup, 32Drake Document Manager, 192adding files, 197file structure, 193, 194installation, 6, 7installing, 192integrating with Drake, 194options, 193password, 193scanning, 197setup, 35toolbar, 196Drake Tax Planner, 189creating files, 189installation, 6, 7options, 190preferences, 190printing, 192reports, 192DTP, see Drake Tax PlannerEF message, see message pageEF return selector, 105EF transmission detail screen, 105EFIN, 101apply for, 101Temporary, 101EIN database, 53Electronic Filing, 101Eelectronic filingacks only, 109bank products, 112balance-due loans, 112direct deposit, 112Instant Loan, 112RAL, 112Refund Transfer/Bonus, 112state refund add-ons, 112stored value/debit cards, 112becoming an ERO, 101fingerprint cards, 101calculation results screen, 104clearing EF messages, 104EF database tabs, 111EF options override, 103EF return selector, 105EF transmission detail screen, 105EFIN, 101electronic filing and banking practice, 110electronic signature, 102electronically filing returns, 105ERO’s PIN signature, 102federal EF override, 103manifest, 107online EF database, 111options, 31practice filing electronically, 110practice returns, 110ready for EF indicator, 31, 103reject code lookup, 111review transmission, 107searching EF database, 110select state for piggyback, 103selecting returns for EF, 105send/receive, 108state EF override, 103suppress federal, 103suppress federal or state globally, 31suppress states, 103temporary EFIN, 101transmit/receive, 106transmit/receive dialog box, 107transmitting returns, 106electronic filing setup, see ERO setupElectronic Training Center, 181Drake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E | v i ie-mail program, 188Enhanced ModePrint, 93View, 92envelopes, 34ERO setup, 20ETC, 181existing forms list, 50fed/state facts online, 186field search, 53FIN, 101firm setup, 19fixed asset manager, 172Form 1040amended return, 86auto mileage for schedule C, 75bank products, 83child and dependent care expenses, 65demographics, 61dependent information, 64depreciation, 73direct deposit refund, 82EF Options, 84E-file Signature, 84electronic funds withdrawal, 83estimated taxes, 82filing an extension, 87filing status, 62interest income, 69IRS Reg. 7216, 84itemized deductions, 70moving expenses, 76name and address, 61partnership information, 82part-year return, 81preparing, 61profit or loss from business, 71Recovery Rebate Credit, 78resident city, 80self-employed income, 71state and city data, 80Use and Disclosure, 84Fwages, 66form 1040EIC, 79First Time Homebuyer Credit, 77Form 1040-ES (Estimated Tax Payments), 82Form 1040X (Amended Return), 86Form 1065, 137adjusted basis worksheet, 147balance sheet, 148business code search, 138entering depreciation, 152income and deductions, 139K-1 partners’ share, 144liabilities and partners’ capital, 148other deductions, 141other information, 142partnership general information, 137print options, 149Special allocations, 145state general information, 138taxes and licenses, 140Form 1120assets, 123balance sheet, 123books, 115corporation general information, 115cost of goods sold, 120depreciation, 127estimated tax, 130estimated taxes, 129financials, 133income and deductions, 116liabilities and shareholders’ equity, 124officer information, 121officers’ compensation, 121other deductions, 118other income, 116other information, 122reconciling income, 125retained earnings, 127taxes and licenses, 117worksheet, 126Form 1120W (Corporation Estimated Tax), 130Form 2350 (Extension Application), 87Form 2441 (Child and Dependent Care Expenses),65Copyrighted MaterialDrake Software Evaluation Guide


v i i i |2 0 0 8 D R A K E S O F T W A R EForm 3903 (Moving Expenses), 76Form 4562 (Depreciable and Amorization), 152Form 4562, (Depreciation and Amortization), 74Form 4868 (Extension Application), 87Form 5405First Time Homebuyer Credit, 77Form 8633 (Application to Participate in the IRSE-File Program), 101Form 8867EIC Checklist, 79Form 8879E-file signature, 84Form 8888 (Direct Deposit of Refund), 82form codes, 47Form W-2 (Wage and Tax Statement), 66forum, 187grid data entry, 50GHheads-down data entry, 57helpfield, 58form/line finder, 59screen, 58, 59Home windowhints, 13message center, 13recent files list, 13toolbar, 13hot keys, 15, 39individual return, see 1040ing, 9InstallationCD, 6Website, 7installationIDrake Document Manager, 6, 7PDF995, 9state and city programs, 8system requirements, 5tax software, 5Instant Loan, 112Knowledge Base, 186KLletterhead, 34lettersLetter Editor, 33letterhead setup, 34producing letters, 163setup, 33logging inas admin, 13Mmacros setup, 33mailing labels, 34manifest, 107manuals, 185message page, 92, 104MFJ to MFS split, 54Multi-Office Manager, 177NavigationKeyboard, 15Mouse, 14notes page, 92NDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E | i xOonline EF database, 111, 186opening a return, 43organizers, 163overflow statement, see worksheetoverrides, 52partnership returns, see Form 1065part-year return, 81pay per return, 32PDF, see PDF995PDF995installation, 9setup, 35PINERO’s PIN signature, 102PIN signature date, 102PIN signature, 22auto-generate, 31post cards, 34PPR, see pay per returnpractice returns, 185prepareredit, 22return signature options, 22security, 24setup, 22third party designee, 23pricing setup, 32Print mode, 47, 49print order, 35printer setup, 34printingprint order, 35sets, 35processing acks, 109proformas, 163RAL, 112PRRefund Transfer/Bonus, 112Reg. 7216Use and Disclosure, 84reject code lookup, 111reports, 169Client Status Manager, 172depreciation list, 171fixed asset manager, 172report manager, 169tax planner, 192viewing reports, 170required program settings, 19restore, 162returnscalculating, 89create a new return, 44data entry, 46electronic filing, 105message page, 92notes page, 92opening, 43preparation, 43printing, 91return type, 44SSN verification, 44test returns, 45viewing, 91RIA Checkpoint Online, 184Sscanner, 5Schedule A (Cost of Goods Sold), 120Schedule A (Itemized Deductions), 70Schedule B (Other Information), 142Schedule C, (Profit of Loss From Business)Auto Expense Worksheet, 74Schedule E (Officers’ Compensation), 121Schedule K (Other Information), 122Schedule K-1 (Partner’s Share), 144Schedule K-1 (Share of Income, Deductions,Credits, etc.), 82Schedule L ( Balance Sheet), 123Schedule L (Liabilities and Shareholders Equity),125Copyrighted MaterialDrake Software Evaluation Guide


x |2 0 0 8 D R A K E S O F T W A R ESchedule L (Partnership Balance Sheet), 148Schedule L (Partnership Liabilities and Capital),148Schedule M1 (Reconciliation of Income), 125Schedule M-2 (Retained Earnings), 127Schedule M-3 (Partnership Net Income (Loss)),150searching EF database, 110section 179, 146selecting returns for EF, 105send/receive, 108setupcolors, 34directories and paths, 32ERO, 20firm, 19firm number, 19letterhead, 34letters, 33macros, 33optional program setup, 26options, 26pay per return, 32preparer, 22pricing, 32pricing on the fly, 33printing, 34required program setting, 19Setup Wizard, 17update from prior year, 26Update Profile, 34Setup Wizard, 17shortcut keys, 15Special Allocations, 145split return, see MFJ to MFS splitSSN verification, 44state and citydata entry, 49state and city programsinstallation, 7options, 30running from CD, 8state requirements, 101status bar, 13, 47suite products, 189Client Write-Up, 198Drake Document Manager, 35Drake Tax Planner, 189support resources, 181customer servicee-mail support, 187fax support, 187phone support, 187Drake Support Web site, 186e-mail program, 188ETC, 181FAQs, 184fed/state facts online, 186forum, 187help, 184Knowledge Base, 186manuals, 185online EF database, 186practice returns, 185RIA Checkpoint Online, 184RIA Tax Research, 184update schools, 185videos, 185support Web site, 186system requirements, 5temporary EFIN, 20tes, 9test returns, 45third party designee, 23toolbarclient status manager, 173data entry menu, 47Drake Document Manager, 196Home window, 15speed buttons, 15Tools, 161backup, 162blank forms, 161file maintenance, 162repair index files, 162restore, 162updating the software, 161transmitting returns, 106TDrake Software Evaluation GuideCopyrighted Material


2 0 0 8 D R A K E S O F T W A R E | x iTutorialsviewing from CD, 10update profile, 34, 161Update Schools, 185UVvideos, 185View mode, 13, 47, 91View/PrintEnhanced Mode, 91Vista, see Windows VistaWindows Vista, 5worksheet, 55, 126WZIP code database, 52ZCopyrighted MaterialDrake Software Evaluation Guide


x i i |2 0 0 8 D R A K E S O F T W A R EDrake Software Evaluation GuideCopyrighted Material

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