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14224: 1040 - K1S Box 12 Code JD


K1 Entries

How do I enter code JD, Intangible Drilling Costs, from box 12 of K-1S? 

 

Intangible Drilling Costs can either be: 

  • deducted in full as a current business expense, or
  • amortized over a 60 month period.

Deducting in Full as a Current Business Expense

Beginning in Drake15, code JD, Intangible Drilling Costs (IDC), may be chosen from the drop down for box 12 of the K1S screen. An amount entered with code JD carries to the basis worksheet WKs ISBAS, line 9m. Depending on the shareholder's participation in the Scorp (active or passive), basis in the Scorp, and Scorp income (loss), IDC amounts may be able to offset current year income - review WKs ISBAS

If the partnership is not a passive activity, Intangible Drilling Costs allowed will show as a loss on Schedule E, Page 2, Part II with a description of Sec. 59e Expense: 


If the partnership is a passive activity, the deduction will still be calculated on WKs ISBAS, but the expense is not separately reported on E.PG2 as amounts carry to form 8582 first to determine any Passive Activity Loss Limitations.

Amortizing Intangible Drilling Costs

If the IDC deduction should be amortized over a five year period instead of being taken in full, the entry should be removed from the K1S screen and entered on the 4562 screen. Use the FOR and Multi-Form Code boxes to associate the 4562 with the K1S screen to which it belongs. 

​Note: IDC amounts may be subject to Alternative Minimum Tax as well-- see Related Links below.

See Shareholder's Instructions for Schedule K-1 (1120S) for more information. 


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