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Screen 8697 - Interest Computation Under Look-Back Method (1040)

Form 8697 - General Information

Once made, the election applies to all current and future years, unless the IRS consents to a revocation of the election. The tax election prints automatically with the return and is included in the electronic file.
Enter the trades or businesses that involve de minimis long-term contracts. Once made, the election applies to all current and future contracts, unless the IRS consents to a revocation of the election. When this election is present, Form 8697 doesn't calculate or print, and the
8697
 screen fields aren't available. The tax election prints automatically with the return, including the list of trades or businesses, and is included in the electronic file.
Use this statement to record the description, tax year taken, effective period (perpetual or for only the tax year), and additional comments about the Form 8697 elections.
"Amended" prints automatically on Form 8697 when you select code 2. Per the IRS Form 8697 instructions, "Amended" doesn't print on Form 8697 when you select code 1 since the original Form 8697 wasn't filed separately. Also, two copies of Form 8697 print when one is required to be filed separately and the other is to be filed with the amended income tax return.

Interest Computation Information

When this field is left blank, the taxable income or loss on the current tax return is used for the Form 8697 Part I Filing Year line 1 amount.
When the regular method is used, enter the completed long-term contract number and job name, or the K-1 EIN and pass-through entity name. Also, enter either the total previously reported estimated contract income, total actual contract income, and any other adjustments that would have resulted from a change in income from long-term contracts, or the difference between total previously reported K-1 contract income and total actual K-1 contract income. Adjustments may be entered as either positive or negative. These amounts reflect income that's hypothetically reallocated to (or from) the filing year from (or to) the redetermination years. This information prints in a required statement if a contract number or more than one EIN is present.
When the regular method is used, enter the hypothetical tax liability on the hypothetically redetermined current year taxable income calculated on line 3 (Filing Year column) of Form 8697, page 1. Use tax rates in effect for the current tax year and include alternative minimum tax. Reduce the tax liability amount by nonrefundable credits, but don't reduce the tax liability by refundable credits.
Enter the taxable income or loss for the prior year, as shown on the tax return or as previously adjusted. The taxable income shouldn't be reduced (or the loss increased) by any carryback of a net operating loss, capital loss, or net section 1256 contracts loss, except to the extent that the carryback resulted from or was adjusted by the redetermination of income from a long-term contract for look-back purposes.
Enter the completed long-term contract number; job name (or other reasonable identifying method used); actual contract price and costs allocable to each prior year; previously reported estimated contract price and costs; any other adjustments that result from a change in income from long-term contracts (regular method only); actual contract price and costs allocable to each prior year for AMT purposes (simplified method only); previously reported estimated contract price and costs for AMT purposes (simplified method only).
Other adjustments may be entered as either positive (net increases to income) or negative (net decreases to income). This information prints in a statement.
Enter the pass-through entity name, EIN, regular adjustment (net change to income from long-term contracts), and AMT adjustment (simplified method only) reported on Schedule K-1. The entity name and EIN will automatically print on Form 8697, page 1, Box C. If more than one entity is entered in this statement for any year, a statement prints detailing by entity the net change to income.
If using the regular method, enter the tax liability on Part I line 3 adjusted taxable income using tax rates in effect for the prior year. Make sure to reduce the tax liability by allowable credits, but don't take into account any credit carrybacks other than carrybacks that resulted from or were adjusted by the redetermination of income from a long-term contract for look-back purposes. Include any taxes (such as alternative minimum tax) required to be taken into account in the tax liability computation.
If using the regular method, enter the tax liability shown on that year's return (or as previously adjusted). Make sure to reduce the tax liability by allowable credits, but don't take into account any credit carrybacks other than carrybacks that resulted from or were adjusted by the redetermination of income from a long-term contract for look-back purposes. Include any taxes (such as alternative minimum tax) required to be taken into account in the tax liability computation. If Form 8697 was required to be filed for an earlier year, enter the line 4 amount from that Form 8697 that affects the prior year.
The increase or decrease in tax for the prior years through the current return due date, or, if earlier, the date the current return is filed (based on
Date
2024
 return filed
 in the
Pen
 screen) calculates automatically. If exceptions apply, then enter manually calculated amounts. Positive amounts are treated as interest due and negative amounts are treated as interest to be refunded.
Enter the explanation of how the interest was computed, if using a different method to correctly calculate interest. This information prints in a statement. Don't enter information in this statement if using the simplified marginal impact method.
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