Drake Tax – 1040: K1F Negative Entries

Negative amounts are not allowed on screen K1F in a 1040 return. Losses can only be reported in the final year of a 1041 return. Per the 1041 Instructions:

"You can't show any negative amounts for any class of income shown in boxes 1 through 8 of Schedule K-1. However, for the final year of the estate or trust, certain deductions or losses can be passed through to the beneficiary(ies). See the instructions for box 11 for more information on these deductions and losses."

When the final return is completed and the Schedule K-1 is issued, final-year deductions appear in box 11 as positive amounts (and can be entered on screen K1F in the 1040 package as positive numbers).

To summarize, the following limitations apply to the data entry screen K1F:

• Lines 1 – 11 and 13 can only be entered as positive values.

  • Lines 1 – 8 are income or gain lines.

  • Lines 9 – 11 are deduction lines; however, these amounts should be entered as positive values. These amounts reduce the income as appropriate.

  • Line 13 must be positive; you cannot have a negative credit.

• Lines 12 and 14 allow negative values, if applicable.