Drake Tax - Short Year Return
Article #: 10719
Last Updated: October 18, 2024
"Short year" returns in Drake Tax
Individual Returns (1040):
You cannot generate a short-year individual return in Drake Tax. Only a calendar-year individual return can be generated. There is no option to change this.
Business Returns (1120, 1120-S, 1065, 1041):
Drake Software produces short-year business returns that can be e-filed in the current year and two preceding years. A short-year business return older than two preceding years can be produced in prior versions of Drake Tax, but it must be paper-filed.
Important Note: The return must reflect the laws and calculations applicable to the short-year period even though the software being used is the prior-year software. The program may not correctly calculate depreciation, gains, or losses for a short-year return. Depreciation for a short-year should be entered on screen 4562 and/or screens 6, 7, and 8; see Return Note 321 for details.
To generate a short-year return:
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Enter the appropriate dates in the fiscal year fields on screen 1.
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If this is an initial or final return, also check the box Initial Return or Final Return on screen 1.
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If this is not an initial or final return, you will need to make an short year election on the YEAR screen.
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Note: 1041 returns do not support short-year elections or filing other than in the initial or final year.
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If appropriate selections are not made, EF messages will generate:
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0081 or 0084 for an 1120
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0720 or 0727 for an 1120-S
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0101 for a 1041
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1023 for a 1065
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Short Year Elections
In 1120, 1120-S, and 1065 returns, use the YEAR screen to elect a 52-53 week year or to select that it is a short-year for another reason.
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To elect a 52-53 week year in the company’s first year, complete the first part of the YEAR screen. The required statement is produced.
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If the short-year reason is "final year," take the following steps:
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On screen 1, enter the dates of the short year (20YY) in the Fiscal year begins and Fiscal Year End fields.
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Mark the Final return check box.
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Open the YEAR screen, and from the Other short year reasons drop list, select General Explanation.
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In the Explanation text box, type Current Year Software Not Available - Final Year.
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if the reason is a change in tax year, take the following steps:
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On screen 1, enter the dates of the short year (20YY) in the Fiscal year begins and Fiscal year ends fields.
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Open the YEAR screen, and from the Other short year reasons drop list, select Filed under Revenue Procedure 2006-45 or 2006-46.
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No explanation is needed in the "Explanation" text box, but you may need to consider if Form 1128 should also be filed.
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If Form 1128 is to be included, it must be completed and signed outside the program and attached as a PDF with Form 1128 for Short Period Return as the Description on screen PDF.
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To elect a short-year return for some other reason, that is not on the Other short-year reason drop list, select General Explanation as the reason, and in the Explanation field, type an explanation. Statement 1935 is generated in View/Print mode.
See Publication 4163, for more information. Also See "Period Covered" in the form instructions for short-year returns: