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Common questions about Form 1120 in Lacerte

by Intuit Updated 1 year ago

For most taxpayers, NOLs arising in tax years ending after 2020 can only be carried forward. See Net operating losses for more information.

  1. How can I transfer a S Corporate to the Corporate Module or vice-versa?

    Lacerte does have the functionality to transfer a client from S Corporate to Corporate or from Corporate to S Corporate. See Transferring Clients Between the Corporate and S Corporate Modules for more information

  2. How can I create/prepare a Short Year 1120 Return?

    See Preparing a Short Year Return and click on the Corporate section for the step by step instructions.

  3. How do I mark Form 1120 as a Final Return?

    See Marking the Federal Return as a Final Return and click on the Corporate section for step by step instructions.

  4. What is its purpose of the Accrue federal tax checkbox (Screen 4.1, code 14)?

    When the Accrue federal tax box is checked, Lacerte calculates the total tax, then credits the ending balance of Prepaid Federal Tax (Screen 37, Balance Sheet) up to the amount of prepaid federal income tax, and credits Federal Tax Payable (Screen 37, Balance Sheet) by any tax remaining. See Entering Accrued Taxes for Form 1120/1120S for more information

  5. My charitable contributions have been entered correctly but they are not carrying to line 19 of the Form 1120. Why not?

    The most likely answer relates to the limitation imposed on corporate charitable contributions. In a particular year, a corporation's charitable contribution deduction is limited to 10 percent of taxable income. For the purpose of the charitable contribution deduction, corporate taxable income is computed without regard to the charitable contribution deduction, any NOL carryback, any capital loss carryback and the dividends received deduction. Charitable contributions not utilized in the current tax year may be carried forward for five succeeding tax years. In applying the limitation, the current year's contributions are deducted first, with the excess deductions from previous years deducted chronologically. See Charitable Contribution Input and Calculations on a Corporate Return for more information.

  6. What is PHC and how can a Schedule PH be generated through the program?

    PHC stands for Personal Holding Company. A Corporation is classified as a personal holding company if both of the following tests are satisfied: First, at least 60% of adjusted gross income of the corporation is PHC Income. Second, more than 50% of the value of the corporation's outstanding stock must be owned, either indirectly or directly, by five or fewer individuals at any time during the last half of the tax year. See Schedule PH, Personal Holding Company for more information.

  7. Where is the input located in the program to indicate that a corporation is "Closely Held"?

    Check the box in Screen 3, Miscellaneous for Closely held corporation.

    If the box is selected, the program completes Form 8810 if the corporation is involved in any passive activities. If the corporation is a closely held corporation, it is allowed passive losses in excess of passive gains, but limited to its net active income. The program calculates net active income without regard for the following: passive income and deductions, gain/loss on stock transactions, interest income, dividend income, and portfolio capital gains/losses from Schedule K-1. If the corporation has other income and deductions entered on the tax return that should not be included in the calculation of net active income, you must use the override at the bottom of Screen 13, Income. This amount prints on Form 8810, line 2.
  8. If the requirements for filing Form 4626 are not met, is there any way to force the program to generate the form?

    AMT doesn't apply to C corporations in post-2017.

  9. Where in the program may an election to forego an NOL carryback be made if the corporation has a current year NOL indicated?

    See Electing to Forego NOL Carryback for a Corporation (Schedule K, line 11)

  10. Lacerte is generating an NOL deduction schedule in regular format. Is there any way to generate a more detailed schedule in an NOL format?

    "NOL Statement Format" user options are found under Federal Tax Options. The program calculates the corporation's available net operating loss deduction and prints a net operating loss deduction worksheet if you make entries in the appropriate input fields. This worksheet is available in two formats. Use this option to specify the format for the NOL schedule. Option 1 will print the worksheets in detailed NOL schedule format. Option 2 will print the worksheets in regular format.

  11. Where is the input in the program for prior year Section 179 expense OR Section 179 carryover?

    Prior year Section 179 expense input is located on Screen 21, Depreciation. Enter Section 179 expense allowed on each asset in previous years. Lacerte reduces the adjusted basis of the asset accordingly, but does not limit the amount entered. Section 179 carryover has multiple input fields in Lacerte. See Entering Section 179 Carryover in the Corporate Module.

  12. The program isn't giving me a Schedule M-1 or Schedule M-2. Why not?

    Are the total corporation's total receipts (line 1, line 1a, plus lines 4 through 10) for the tax year and its total assets at the end of the tax year less than $250,000? If 'Yes,' the corporation is not required to complete Schedules L, M-1, and M-2.

    To force these schedules, see Balancing an S-Corporate balance sheet on Form 1120-S in Lacerte. To suppress them, see Suppressing the 1120 Balance Sheet.
  13. Why is Form 1125-E not generating with the return?

    Form 1125-E is only required if total receipts are $500,000 or more.

  14. How can the ending balance of retained earnings be overridden in Lacerte? 

    Yes. On Screen 38, Balance Sheet Miscellaneous you can make an entry in, Ending Retained Earnings (-1 If none) [O].

    Caution: If you use this override, Schedule M-2 may not be correct. If this situation arises, a warning error prints in the diagnostics.
  15. How does the program calculate the ending balance of retained earnings?

    The starting point is Schedule M-1 line 10. The program takes the taxable income before NOL and special deductions (line 28, page 1, Form 1120) and prints it on line 10 of the M-1. The program works backwards from line 10 working its way through all M-1 adjustments until it backs into net income per books on line 1 of Schedule M-1. The program takes this net income per books and prints it on line 2 of Schedule M-2. The program works through Schedule M-2 and calculates the balance of unappropriated retained earnings on line 8 of Schedule M-2. This number is taken to Schedule L, line 25, column D.

  16. I can't generate estimated tax vouchers for my corporate return. Why not?

    Corporations must use electronic funds transfers to make all federal tax deposits using the Electronic Federal Tax Payment System (EFTPS).

  17. Why doesn't Lacerte generate Form 1120-H when Homeowners association (MANDATORY) is marked in Screen 54, Homeowners Association (1120-H)?

    Homeowners associations may optionally file on form 1120 or 1120-H, whichever produces the lowest tax. According to page 2 of the 1120-H instructions, a homeowners association should compare its total tax computed on Form 1120-H with its total tax computed on Form 1120, U.S. Corporation Income Tax Return. The association may file the form that results in the lowest tax. To force form 1120-H, in Screen 54, Homeowners Association, enter a 1 in 1=Force 1120-H, 2=force 1120.

  18. The program is printing Form 5472, Foreign Owned Corporation, however the program isn't checking the "Yes" box for question 7, Schedule K, Form 1120, page 3 and answering questions 7(a) and 7(b) per instructions. Why?

    In Screen 4.1, Miscellaneous, check the box "Foreign Person Owns Over 25% of Corp.'s Stock" if a foreign person at any time during the tax year owned, directly or indirectly, 25% or more of the voting power of all classes of stock, or the total value of all classes of stock of the corporation. The program checks the "Yes" box on Schedule K, line 7. If at a foreign person owns at least 25% of the total value of all classes of stock in the corporation, enter the percentage owned in Percentage Owned by Foreign Person (XXX.XX). The entry prints on Schedule K, line 7a. If an individual, partnership, corporation, estate, or trust owned 25% or more of this corporation and was not a U.S. resident, enter the owner's country in Foreign Owner's Country in Screen 4.1, Miscellaneous. This description prints on Schedule K, line 7b.

  19. Generate a controlled group allocation & consent form?
    1. Open Screen 9, Controlled Group Apportionment.
    2. In the Members list, click the Add button.
    3. Enter information in the General Information and Apportionment Amounts sections.
    4. Repeat steps 2 and 3 for each member.

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Lacerte Tax

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