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10090: 1120 - K1P Screen Lines 2 and 3 Missing


1120 Corporate

Why is there no data entry for lines 2 and 3 for rental real estate on a K-1P received by a corporation?

 

Drake Tax is unable to make the determination on how the income is to be handled, thus there is not a data entry line for rental income coming to the corporation from a partnership K-1 (K1P screen). There are many questions the preparer should ask before making a decision as to how the income or loss is reported.

Form 8810, Corporate Passive Activity Loss and Credit Limitations, is not supported in Drake Tax. This means that there is no place for the income to flow to, if you determine that the income is passive.

IRS Instructions for Form 1120 state:

"Enter the gross amount received for the rental of property. Deduct expenses such as repairs, interest, taxes, and depreciation on the proper lines for deductions. A rental activity held by a closely held corporation or a personal service corporation may be subject to the passive activity loss rules."

Use screen INC line 6 to enter gross rents. Double-click on the entry field to create an OVERFLOW worksheet of income and expenses. The total will carry to line 6; however, the worksheet does not e-file with the return.

For more information about regulations relating to limitations on passive activity losses and credits for personal service corporations and closely held corporations, see IRC Section 469 and IRS Publication 925, Passive Activity and At-Risk Rules.  


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