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Federal input screens

Screen Rent - Rent and Royalty Property (1040)

Enter the street, city, state, and ZIP code for the rental real estate property. The address must be complete for electronic filing purposes. To use the address on Schedule E for royalties, mark
Print property descriptions as physical address of royalties on Schedule E
 in
Setup
,
1040 individual
 then
Other Return Options
.
Enter the type code for the rental real estate property or royalty property. This is a required field for completion of Schedule E. The available codes are listed in the following table and in the fieldview.
Code
Description
Results
1
Single family residence
Schedule E, line 1b and line 2 is completed.
2
Multi-family residence
Schedule E, line 1b and line 2 is completed.
3
Vacation/Short-term
Schedule E, line 1b is completed. Line 2 is completed from information on the Rent-3 screen.
4
Commercial
Schedule E, line 1b and line 2 is completed.
5
Land
Schedule E, line 1b and line 2 is completed. Property will be treated as subject to the net income recharacterization of passive income rules.
6
Royalties
Schedule E, line 1b and line 2 is completed.
7
Self-rental
Schedule E, line 1b and line 2 is completed. Property will be treated as subject to the net income recharacterization of passive income rules.
8
Other
Schedule E, line 1b and line 2 is completed.
9
Nonbusiness Personal Property
Schedule 1 (Form 1040), line 8l and line 24b is completed.
Code 7 - Self-rental properties and Code 5 - Land are automatically included in the "Subject to recharacterization rules." Activities indicated as "Subject to recharacterization rules" will have the rental income treated as nonpassive. See IRS Publication 925 for the rules that apply to recharacterization for substantially nondepreciable property (Land) or properties rented to activities with material participation (Self-rental).
Code 9 - Nonbusiness personal property must meet the requirements as instructed for Schedule 1 (Form 1040), line 8l. Income is reported on Schedule 1 (Form 1040), line 8l, and expenses are reported on Schedule 1 (Form 1040), line 24b.
Codes 3, 6, and 9 - Income from rentals with codes 3, 6, or 9 are not included for QBI purposes. For code 6, you may still use the
Qualified business income (Force)
 field on the Rent-2 screen to include the income if qualified business.
It is assumed that income from a rental activity is included in net investment income for Form 8960 unless one of the following is true.
  • The Rent screen field
    Type of property
     is
    7
     and the activity has net income
  • The Rent-2 screen field
    Passive activity code
     is
    3
     or
    4
Enter a code in this field to assign the net investment income treatment for this activity if it is different from the default treatment.
Enter a percentage in this field if the property is not 100 percent owned. This percentage affects only the total amount of income or loss. Enter 100 percent of the income and expenses and the ownership percentage is applied to the bottom line.
If the property is a duplex or similar type property and only a portion is rented, enter the percent used for business. Enter 100 percent of income and expenses in this screen. Only the business portion of expenses are reported on Schedule E. One hundred percent of the rent and royalties is reported on Schedule E. The business use percentage is applied to all expense items except advertising, auto from asset module, commissions, depreciation, and management fees. To apply a different percentage to an expense item, use the
Percentage
 field next to the corresponding expense field.
In the statement, enter the state use code for processing the 1040 state return and the ID number for the state return selected.
Code
Description
State number
1
Form OP-424: CT
Enter seven-digit SOS ID number
2
Form IT-204-LL: NY
State number is not applicable
3
Form 568: CA
Enter the 7, 9, 10, 11 or 12 digit SOS file number. If no number has been assigned, enter
None
,
None 1
, etc.
4
FAE 170: TN
Enter Tennessee account number. If no number has been assigned, enter
None
,
None 1
, etc.
5
Form 725: KY
Enter Kentucky six-digit LLC account number
7
Form 05-158: TX
Enter 10-digit SOS file number
8
Tax identification number: HI
Enter Hawaii general/excise use 12-digit tax identification number. Do not include letters or dashes
9
Form LC: KS
Enter up to seven-digit business entity ID number. If no number has been assigned, enter
None
.
10
Qualified oil & gas activity: MI
State number is not applicable
11
Personal service income: SC
State number is not applicable
12
Form PPT: AL
Enter six-digit SOS file number
13
Form RI-1065: RI
Enter the nine-digit SOS ID number
14
Form BT Summary (LLC): NH
Enter the nine-character Department Identification Number (DIN), format NL and seven numbers
15
Form LLC Annual Report: MA
Enter the nine-digit ID number assigned by the Secretary of Commonwealth
16
LLC Franchise Tax Report: AR
Enter the nine-digit Arkansas filing number
19
Forms PHL NPT/BIRT: PA
Enter the 7-digit Philadelphia account number
21
Schedule DE: WI
State number is not applicable
New York note:
 Code 17 for NY MCTMT is not applicable for rent or royalty income.
To activate AR, CA, KS, KY, MA, NC, NY, PA, TN, and TX LL/LLC returns, select
File
 then
Client Properties
, select desired state tab, and mark the box for the form/return in the Other return(s) group box.
Enter the city code for the state in which the rental or royalty property is located. This code is used by the various state or city applications to aid in determining in-city and out-of-city income. After you select the city code from the fieldview, UltraTax CS automatically fills out the
City name
 field.
To access the State allocation spreadsheet, the following conditions must be present in the current client.
  • The client being processed must include at least one state return.
  • You must be viewing Client Organizer Data Entry or Input Screen Data Entry.
  • For the 4835 and F screens, data must exist in the
    Description
     field.
  • For the C screen, data must exist in
    Principal business
     field.
  • For the Rent screen, data must exist in
    Property kind/location
     field.
When these conditions have been met, access the spreadsheet by clicking the Allocation icon in this screen.
Two methods (percentage or amount) of allocation can be used to allocate federal unit net income to the applicable states displayed in the State allocation spreadsheet.
  • Percentage:
     Enter a percentage in XXX.XX format in the first field available in the State allocation spreadsheet. Select the state to which this percentage applies from the fieldview. Click the Apply button. UltraTax CS automatically calculates the amounts attributable to that state and displays the amounts in the spreadsheet. The percentage entered for that particular state will appear below the state name for easy reference. If enabled, individual item amounts can be changed (overwritten) on the spreadsheet from UltraTax CS-calculated amount.
  • Amount:
     In cases where a percentage of the federal amounts do not apply, individual item amounts, if enabled, may be entered in the spreadsheet for the applicable state. Zero (0) is a valid entry and will prevent the state amount from defaulting to the federal calculated amount. If an individual item amount field is left blank, the federal amount, if present, will be used in the state's calculation.
Build-up states that report or otherwise calculate income from these Schedules C, F, E, and Form 4835 activities on an amount by amount basis may be allocated using a percentage only, while passive carryover amounts may be allocated by entering the state specific carryover amounts within the State allocation spreadsheet.
Other states, which are typically AGI states that require net activity amounts only, may be allocated by percentage or by entering the net amount of activity income/(allowable loss) attributable to the specific state.
The State allocation spreadsheet may be printed in a report format for future reference. Click the Print or Preview button in the lower portion of the spreadsheet. If licensed, you can also print to FileCabinet CS.
If the taxpayer is married, files a separate federal return, and resides in one of the following community property states - AZ, CA, ID, LA, NM, NV, TX, WA, or WI (or for registered domestic partners, files a Single or Head of Household federal return, and resides in CA, NV or WA) - use this field to identify whether or not the rental or royalty income/loss is generated from community property. By default, a blank entry (i.e. no entry) is treated as community property and an entry of
N
 as non-community property (i.e. separate property). Rent & Royalty units indicated as community property will be allocated 50/50 to the taxpayer and the spouse when two separate clients are created via the Filing Status Optimization utility with the Split income according to Community Property rules option enabled.
For more information about the Filing Status Optimization utility and the option for community property returns, refer to Using the Filing Status Optimization utility (1040) and Filing Status Optimization dialog.
Enter
X
 to indicate this rental activity was not active for the current year. UltraTax CS ignores any data entered in the activities input screens and asset detail. This unit will proforma to next year. When activity resumes, unmark this field.
Enter
1
 for a complete disposition of the activity. Prior-year suspended passive losses are released and the activity, plus any other related screens, will be deleted during next year's proforma process. If the activity has any passive activity credits, the activity will proforma to keep the prior year passive activities available to be used against future passive income per Form 8582-CR.
Enter
2
 if this is a passive activity that was sold on an installment basis. UltraTax CS treats installment dispositions as follows:
  • In accordance with IRC Sec. 469(g)(1), only suspended passive losses are fully deductible when there is a complete disposition of the passive activity in a fully taxable transaction. Both current and suspended losses of the passive activity are fully deductible. Prior suspended at-risk losses are not released in a complete disposition.
  • UltraTax CS calculates any allowed losses for the current tax year by multiplying the overall loss, by the ratio of current-year gain recognized, divided by unrecognized gain as of the beginning of the tax year. Losses in excess of the allowed amount are suspended and proforma'd to the following tax year. Any unused passive activity credits will proforma.
  • When the gain recognized in the current year exceeds all of the current and carryforward losses, all losses will be allowed in the current year. Also, any other related screens are deleted during next year's proforma process. Any activity that is coded
    2
     with no passive loss carryovers, plus any other related screens, is deleted during next year's proforma process.

Expenses

The amount entered in this field is deducted in full regardless of the business use percentage entered above or calculated from vacation home information. Enter a business use percentage in the field to the right if you want to only deduct a portion. Please note the amount will be further reduced by any ownership percentage entered in the General Questions section of the Rent screen. Advertising will show on the Vacation Home worksheet as a direct expense.
Enter an amount in this field if you want to override the calculated amount from the Auto Worksheet for auto and travel expenses. If no auto and travel expenses should appear on Schedule E, enter
0
 (zero) in this field.
These amounts will be added to the auto expenses on Schedule E. The auto and travel expenses are carried to the operating and maintenance section of the Vacation Home Worksheet.
The amount in this field is deducted in full regardless of the business use percentage entered or calculated from vacation home information. Use a business use percentage field to deduct a portion. Please note that the amount will be further reduced by any ownership percentage entered. Management fees show on the Vacation Home Worksheet as a direct expense.
Enter in the statement attached to this field the amount of interest paid to banks or other financial institutions. Interest in this field is considered qualified mortgage interest for purposes of completing the Vacation Home Worksheet.
Use this field to enter mortgage interest to be reported on Schedule E as other interest instead of on the
Mortgage interest paid to banks
 line. The following mortgage interest should be reported as other interest:
  • The recipient was not a financial institution.
  • The mortgage interest was not reported on a Form 1098.
  • The mortgage interest was reported on a Form 1098 issued to someone other than the taxpayer. For example, if the rental is owned by more than one person, use the
    Other interest - information of others receiving Form 1098
     statement to report the required statement per Schedule E instructions for this situation.
Use the attached statement to enter tax information. In the
State use
 field, select the applicable code from the fieldview for processing the 1040 state return.
Connecticut, Indiana, Illinois, Kansas, Michigan, Montana, New Jersey, Pennsylvania, Rhode Island, and West Virginia:
 Enter
1
 in the
State use
 field to indicate taxes are attributable to taxpayer's principal residence and qualify as taxes used to calculate the state's property tax credit or deduction.
Please note that if you retrieve depreciation expense using tax code 520 or manually enter the expense amount here, UltraTax CS uses the amount in this field rather than the amount calculated on Form 4562. If no depreciation expense should appear on Schedule E, enter
0
 (zero) in this field.
Enter an amount here or use tax code to retrieve depletion if you want to override the calculated depletion from the UltraTax CS/Oil & Gas module. If you are not using the UltraTax CS/Oil & Gas module, and you are entering a royalty interest directly in this screen, enter the depletion amount here. Any limitations or tax preferences are not calculated based on the entry in this field.
Please note that you should only use tax code 518 to retrieve amortization from Write-Up CS into the attached statement if you do not have amortization amounts in a corresponding Form 4562 in UltraTax CS; otherwise, the amortization amounts appear twice when you print the statement.
Use the statement attached to these fields to enter the information necessary to calculate the deductible amount of mortgage points for the current year. Amounts entered here are also used on Home Mortgage Worksheet A.
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