Common questions about S-corporation ordinary deductions in Lacerte

Below are solutions to frequently asked questions about ordinary deductions in Screen 15, Deductions of the S-Corporate module.

Ordinary deductions overview

Most business deductions are listed on Screen 15 with headings from Accounting to Utilities.

Most business deductions are entered on Screen 15 under categories ranging from Accounting to Utilities.

For deductions not listed under a specific category, use the Other subsection.

1. Enter a description and amount for each item.
2. Lacerte reports these on Form 1120-S, Page 1, Line 19, and prints a supporting statement.

Domestic Production Activities Deduction (DPAD)

DPAD under former IRC Section 199

• Repealed for tax years beginning after 2017.
• Form 8903 is still used only for prior-year items arising before the repeal.
• Use the December 2018 instructions for Form 8903 if applicable.

DPAD for specified agricultural or horticultural cooperatives

• Section 199A(g) provides a new deduction for tax years beginning after 2017.
• Specified cooperatives may use Form 8903 to calculate the 199A(g) deduction.

Regulatory guidance
Taxpayers may rely on Proposed Regulations REG-118425-18 (June 19, 2019), provided they apply all rules consistently.
For W-2 wage limitation guidance, see Notice 2019-27 (2019-31 IRB).

Entering officers salary for an 1120-S return

1. Go to Screen 2, Officer Information.
2. Enter the Officer Compensation for each officer.
3. Go to Screen 15, Ordinary Deductions.
4. Enter the amount in the Compensation of officers [O] override field.

Reporting health insurance premiums on Form 1120-S

There are three ways to report health insurance premiums:

1. Report on Line 7 — Compensation of officers

1. Go to Screen 2, Officer Information.
2. Include premiums in each officer’s Officer Compensation amount.

2. Report on Line 19 — Other deductions

1. Go to Screen 15, Deductions.
2. Scroll to Deductions.
3. Enter premiums in Insurance.

3. Report on Line 12a — Other deductions (K-1 separately stated)

1. Go to Screen 20, Income and Deductions.
2. Under Deductions, press Ctrl+E in Other deductions (Ctrl+E).
3. For K-1 Code, select S = Other deductions.
4. Enter “Shareholder Health Insurance” as the description.
5. Enter the premium amount.

Additional resources

Entering Amounts for Domestic Production Activity Deduction in Corporate Scorporate and Partnership

Entering Officers Salary for an 1120S Return

Entering Health Insurance Premiums (W-2) for more than 2% Shareholder (S-Corporation Module)