Common questions about Miscellaneous Information in Lacerte

This article addresses common questions related to entering miscellaneous information in Lacerte.

Table of contents:

How to generate or prepare a Short Year Return

Short year returns are required when a business or entity doesn't operate for a full 12-month tax period. This can occur when a company is formed or dissolved mid-year, or if there's a change in accounting period. Follow the steps for your tax module:

Partnership Module (1065):

1. Go to Screen 3, Miscellaneous Information.
2. Scroll to the Tax Year Information subsection.
3. Check Short tax year for depreciation (if applicable).
4. Enter the Beginning fiscal year [O] (M/D/YYYY).
5. Enter the Ending fiscal year [O] (M/D/YYYY).
6. Enter the Number of months, if a short tax year.
7. Check Print "Short Year 20YY", if applicable.
8. Use this option if the return covers fewer than 12 months that began and ended in the next tax year.

Corporate Module (1120):

1. Go to Screen 4.1, Miscellaneous Information.
2. Check Short tax year for depreciation (if applicable).
3. Enter Beginning fiscal year [O] and Ending fiscal year [O] (M/D/YYYY).
4. Enter Number of months, if short tax year (used for annualization).
5. For returns that are not initial or final, Lacerte uses this entry to annualize taxable income and AMTI.
6. Depreciation is automatically adjusted based on related entries.

S-Corporate Module (1120S):

1. Go to Screen 3.1, Miscellaneous Information.
2. In Short Tax Year Information, check Short tax year for depreciation (if applicable).
3. Enter Beginning fiscal year [O] and Ending fiscal year [O].
4. Enter Number of months if short tax year (leave blank if initial/final return).
5. Lacerte annualizes state income and prorates estimated tax using this info (not used for depreciation).

Fiduciary Module (1041):

1. Go to Screen 2.1, Miscellaneous Information.
2. Check Short tax year for depreciation (if applicable).
3. Enter Beginning and Ending fiscal year dates [O].
4. Enter the Number of months (use a negative number to trigger annualization).

Exempt Organizations Module (990 series):

Marking the return:

1. Go to Screen 4.1, Miscellaneous (990-N, 990, 990-PF, 990-T).
2. Scroll to Tax Year Information.
3. Check Short tax year for depreciation (if applicable).
4. Enter Beginning and Ending fiscal year dates [O].
5. Enter Number of months if short year (for annualization).

E-filing a short year return:

1. Copy the original return after it's been accepted.
2. In the new copy, clear the e-file status via E-File > e-file Support Tools > Clear Return.
3. In Screen 4.1, check File 20YY short year return and re-enter the fiscal dates.
4. Go to Screen 1, ensure no states are listed on the left.
5. Delete any states if shown.
6. Review and transmit the updated return.

Benefit Plan Module (5500):

1. Go to Screen 3, Miscellaneous.
2. In General Information, enter the Beginning and Ending fiscal year [O].
3. Enter Number of months if it's a short plan year.

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Marking Returns as Initial or Final

Some clients' returns need to be marked as Initial or Final to indicate the start or end of their filing obligations.

Overview Table

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Entering Accrued Taxes for Corporations (Form 1120 / 1120S)

Corporations that report on an accrual basis may need to deduct taxes owed but not yet paid. This section applies to Corporate (1120) and S Corporation (1120S) modules.

Steps to enter accrued taxes:

1. Go to Screen 19, Taxes.
2. In the section labeled Deductible Taxes, enter the amount of accrued taxes.
3. Use supporting input fields to enter federal, state, and local tax liabilities as appropriate.

Additional federal and state accrual settings:

• Use Screen 3.1 (1120S) or Screen 4.1 (1120) to select accrual options under the Miscellaneous section.
• For federal taxes, selecting the "Accrue Federal Tax" box causes Lacerte to credit prepaid tax balances (from Screen 29 or 37) and calculate the liability as needed.
• For state taxes, choose from Option 1 (automatically deducts calculated tax and adjusts book/tax differences) or Option 2 (manual deduction and Schedule M-1 adjustments).
• These options also apply to local taxes in states like NY, OR, KY, and OH.

Prepaid Tax Adjustments:

• Lacerte automatically carries overpayments and estimated payments into Prepaid State or Federal Tax fields.
• If calculated tax exceeds prepaids, the excess becomes a payable; if it’s less, Lacerte adjusts the asset balance accordingly.

Who should use this: Preparers managing accrual-basis corporations with deductible tax liabilities, especially those filing multi-state or city-specific returns.

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Generating Schedule PH, Personal Holding Company

Schedule PH is used to calculate the tax on undistributed personal holding company income. This section is relevant to Corporate (1120) clients that may meet the PHC criteria.

PHC Qualification Tests:

To be classified as a PHC, a corporation must meet both of the following IRS criteria:

• PHC Income Test: At least 60% of the corporation's adjusted ordinary gross income is PHC income.
• Stock Ownership Test: More than 50% of the corporation’s stock is directly or indirectly owned by five or fewer individuals at any time during the last half of the tax year.

Steps to generate Schedule PH:

1. Go to Screen 4.1, Miscellaneous Information.
2. In the Miscellaneous section, check the box labeled Personal holding company.
3. Go to Screen 34, Schedule PH in the left navigation panel.
4. Complete Screen 34.1 with income details.
5. Use Screen 34.2 to enter Excess Expenses and Depreciation under Section 545(B)(6), if applicable.

Tips:

• Use the IRS Instructions for Schedule PH to review income and stock ownership tests in more detail.
• Lacerte will generate the Schedule PH automatically if the applicable fields are completed.

Who should use this: Corporate preparers dealing with closely held companies or corporations with significant passive income.

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Related Links

• How to generate or prepare a short year return in Lacerte
• Marking federal returns as initial or final in Lacerte
• Entering Accrued Taxes for Form 1120 / 1120S Corporations
• Generating corporate Schedule PH, Personal Holding Company in Lacerte