Drake Software User's Manual Supplement: S Corporations (1120S)

Drake Software User’s Manual Supplement: S CorporationsSchedule K-1 for 1120S (Shareholder Information)Editing theK-1 LetterAs with other letters provided by the program, you can edit the text to suit your officeneeds and style.TIPReview the following sections of the Drake Software User’s Manual:Tax Year 2010 before making changes to letter templates:- “Introduction to Letters in Drake” in Chapter 2, Installation & Setup- The “Letter Keywords” section of Appendix C, KeywordsTo edit the text of the K-1 letter:1. From the Home window, select Setup > Letters. The Client CommunicationsEditor is displayed.2. Select Open > S Corporation > Sub S K-1 Cover to view the template of the Scorporation K-1 letter.3. Make any desired changes to the template.4. Click Save.NOTEFor an amended return, the K-1 letter automatically refers to theamended K-1. To edit the letter for an amended K-1, select Open > SCorporation > Sub S K1 Amended and follow steps 3 and 4 of theprevious procedure.Shareholder’s Adjusted Basis WorksheetNOTEBasis information for individual shareholders should be entered in the1040 package in Drake; this information cannot be exported from the1120S package to a 1040 return. Such an import would override limitationsand carryovers calculated in the 1040 program.Use the Shareholder’s Adjusted Basis Worksheet (Basis Wks screen) to calculate ashareholder's new basis after increases and decreases are made during the current year.The basis of S corporation stock is adjusted on an ongoing basis (unlike for a “C” corporation,where stock basis remains constant unless additional stock purchases aremade or stock is sold). A shareholder’s beginning basis in S corporation stock is theoriginal capital contribution.The Basis Wks screen is accessible by clicking the Basis Wks tab at the top of the K1screen for a shareholder (Figure 11). (Access the K1 screen from the Data EntryMenu.)Figure 11: K1 screen tab for accessing the Adjusted Basis WorksheetTax Year 2010 21