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Federal input screens

Screen Rent - Rent and Royalty Properties (1065)

Overview

Rental real estate properties transfer to Form 8825 and other rental properties and royalties transfer directly to Schedule K.

General Questions

Enter a unit number that corresponds to the number in the
Unit
 field in the 4562 Screen. When you enter a unit number, the application assigns the depreciation and amortization to the correct activity.
If you entered the address of the rent or royalty property as the description, use the
Address
 field as the second line of the address or leave that field blank. This field is mandatory.
Select the Ptr Alloc button to specially allocate this rental activity to partners using ratios that are different from the profit-sharing percentages. You do not need to use this field unless the partnership has an allocation for this rental that differs from the profit-sharing percentages.
Enter the state postal code for the state in which the rental or royalty property is located. The state postal code allows certain state-specific applications to determine in-state and out-of-state income.
Enter the appropriate activity type code in the field provided. The codes available are listed in the following table and in the drop-down list.
Code
Description
Location
1
Rental real estate
Form 8825
2
Other rental (default)
Schedule K, Other gross rental income (loss)
3
Royalty
Schedule K, Royalties (income) and Schedule K, Other deductions (expenses)
Select the type of property or enter the other type of property in the
Other (specify)
 field for Form 8825, Schedule K-1, box 2 and the Rent and Royalty Schedule. If you leave the
Type of property
 field blank, the type of property defaults to type 8 - Other and you must enter a description in the
Other (specify)
 field.
Enter the number of personal use days for the rental property in the
Number of personal use days
 field. To calculate the personal use percentage, the application divides the number of days entered here by the number of days in the tax year. Enter a percentage (xxx.xxxx) in the
Personal use percentage, if personal use test met (Force)
 field to use a different personal use percentage.
Enter
X
 to include the net income (loss) from rental real estate activities in the calculation of section 179 business income limitation.
Enter
X
 if this activity meets the criteria for an excepted trade or business and therefore
should not be included
 in the Form 8990 calculation. If this activity does not meet the criteria and should be included in Form 8990 then leave field blank.
To see the criteria, visit page 2 of the Form 8990 instructions.
Enter
X
 to delete this unit of the Rent Screen on next year’s proforma and to indicate that this activity is disposed in the statement for Schedule K-1, box 2, Net rental real estate income (loss) or box 3, Other net rental income (loss).

Income

The application automatically calculates the net gain or loss from the sale of rental property included as ordinary income on Form 4797, Enter an amount, including 0 (zero) to override the calculated amount. The application subtracts the sale of rental property from the gain transferred from Form 4797 to Form 1065, Page 1, line 6. This field is applicable only if you entered
1
 or
2
 in the
Type of activity
 field.

Expenses

Enter the amount of auto and travel expense. The application reduces this amount by the amount of lease inclusion before transferring this amount to the return.
Enter an amount to override the lease inclusion calculated from the asset module. If the lease inclusion is zero, enter 0 (zero). The application reduces auto and travel expense before transferring this amount to the return.
Enter the portion of interest expense, not including floor plan financing interest expense, that qualifies as business interest expense for Form 8990.
Enter the amount of tax expenses
before
 the reduction for the credit for employer social security and Medicare taxes paid on certain employee tips. The application reduces the amount entered in this field by the amount of the allowable Form 8846 credit based on entry in the Cr-4 Screen for the associating activity before transferring the net amount to the return.
Enter the amount of wages and salaries
before
 any reductions for allowable credits. The application reduces the amount entered in this field by the amount of the allowable credits for Forms 5884, 8932, and 8994 based on entries in the Cr, Cr-3, Cr-4, and Cr-5 Screens for the associating activity before transferring the net amount to the return.
Enter an amount to override the depreciation calculated from either the asset module or the 4562 Screen for this rental.
Use the statement to enter other expenses not entered elsewhere. The items entered in the statement add to the following adjustments before transferring the net amount to the return.
  • Amortization (Rent Screen)
  • Meals expenses (Rent Screen)
  • Guaranteed payments (Rent Screen)
  • Start-up expenses (asset module or 4562 Screen)
  • Organization costs (asset module or 4562 Screen)
  • Form 6765, Credit for Increasing Research Activities (Cr-2 Screen)
  • Form 8820, Orphan Drug Credit (Cr-2 Screen)
  • Form 8826, Disabled Access Credit (Cr-2 Screen)
  • Form 8881, Credit for Small Employer Pension Plan Startup Costs (Cr-5 Screen)
  • Form 8882, Credit for Employer-Provided Childcare Facilities and Services (Cr-5 Screen)
  • Form 8941, Credit for Small Employer Health Insurance Premiums (Cr-5 Screen)
Enter an amount to override the amortization calculated from either the asset module or 4562 Screen for this rental.
Enter 100 percent of the meals expenses. The application automatically reduces this amount by 50 percent when calculating other expenses. A Schedule M-1 or Schedule M-3 reconciling amount generates for the nondeductible portion.
Enter 100 percent of the meals expense for employees, which are subject to the hours of service limitations of the Department of Transportation (DOT). The application automatically reduces this amount by 20 percent when calculating other expenses. A Schedule M-1 or Schedule M-3 reconciling amount generates for the nondeductible portion.
Examples of qualifying employees are certain air transportation employees, interstate truck and bus operators, railroad employees, and merchant mariners under Coast Guard regulations.
Enter the amount of health insurance considered guaranteed payments to partners. The amount you enter in this field combines with the amounts in the
Total guaranteed payments: Pensions and IRAs
 and
Total guaranteed payments: Other
 fields before transferring the net amount to Form 8825, line 15 – Other. This amount also transfers to Schedule K, line 4 – Guaranteed payments and line 13 – Other deductions.
Enter the amount of pensions and IRAs considered guaranteed payments to partners. The amount you enter in this field combines with the amounts in the
Total guaranteed payments: Health insurance
 and
Total guaranteed payments: Other
 fields before transferring the net amount to Form 8825, line 15 – Other. This amount also transfers to Schedule K, line 4 – Guaranteed payments and line 13 – Other deductions.
Enter the amount of deductible guaranteed payments to partners not related to health insurance or pensions and IRAs. The amount entered in this field combines with the amounts in the
Total guaranteed payments: Health insurance
 and
Total guaranteed payments: Pensions and IRAs
 fields before transferring the net amount to Form 8825, line 15 – Other. This amount also transfers to Schedule K, line 4.
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