DPAD and Balance Sheet

[Unregistered]

OK, yet more on the DPAD.

I have an 1120S. It is totally balanced before I figure the DPAD. This deduction has to go on Sch K line 12 and pass to the Sch K-1 like a Sec 179. But then the return is totally out of balance. And I'm not sure where to adjust to fix this.

Can anyone help?

[Matt Sova]

Sch M

Expenses on return not on the books.

[Safire]

Isn't this for information purposes only on the S return K-1?

It's not really a deduction for the S Corp, it is only providing the information that the shareholder needs to compute the deduction on his personal return.

[JON]

Matt has it

How did you figure it. I still say IRS does not know. Make sure embedded services are not included???? I have one here I have to do????

[Unregistered]

Isn't this for information purposes only on the S return K-1?

It's not really a deduction for the S Corp, it is only providing the information that the shareholder needs to compute the deduction on his personal return.

Yes, but the Sec 179 isn't a deduction for the Corp either. It is info provided for the personal return. So, it needs to be on the Sch K so the IRS can match up the Sck K-1's.

[JON]

Book Tax Difference

You can have as many M-1 adjustments as you want. If depreciation is different book to tax then that will be an M-1 adjustment to get back to the book income also. M-1 is to reconcile BOOK income to Tax-it can be a lot, just a few or none depending on your client.

[Gretel]

What the heck is DPAD?

Thanks. Gabriele

[WhiteOleander]

What the heck is DPAD?

Thanks. Gabriele

Domestic Production Activities Deduction.

Makes AMT look like child's play.

[Safire]

"Yes, but the Sec 179 isn't a deduction for the Corp either. It is info provided for the personal return. So, it needs to be on the Sch K so the IRS can match up the Sck K-1's"



Yes, but you elect a specific amount of Section 179 deduction to take and that in itself changes the depreciation on the return.

DPAD in no way changes the amounts anywhere on the S Corp return, because it is not a deduction that is in itself passed on to the shareholder, there is no way to even determine the DPAD at the S Corp level.

Am I right here? It is the information to compute "the deduction" that is passed on to the shareholder not "the deduction" that is passed on to the shareholder.

[Safire]

To add:

My program ( ATX ) has a place on the worksheet for Sch K line 12, that at the bottom says "Domestic Production Activities Information"

There is room to put all the info that the shareholder needs, but the numbers do no show up on Line 12. I have not printed yet but I assume that a statement will print to give this info to IRS to match up to K-1s.

[WhiteOleander]

"Yes, but the Sec 179 isn't a deduction for the Corp either. It is info provided for the personal return. So, it needs to be on the Sch K so the IRS can match up the Sck K-1's"



Yes, but you elect a specific amount of Section 179 deduction to take and that in itself changes the depreciation on the return.

DPAD in no way changes the amounts anywhere on the S Corp return, because it is not a deduction that is in itself passed on to the shareholder, there is no way to even determine the DPAD at the S Corp level.

Am I right here? It is the information to compute "the deduction" that is passed on to the shareholder not "the deduction" that is passed on to the shareholder.

You may be right. Trying to put it on the Sch K on line 12 is really creating all kinds of other problems and changes.

But, I was thinking that it needed to be on the Sch K to match back to the K-1's.

To get it to the K-1, I have to override and put it there.

[Safire]

I think I had to override to get the numbers to the K-1 also. Probably this is so new the software developers don't even know how to handle it. Maybe next year it will flow where it should flow.

[John of PA]

Separately Stated Items

For a pass through entity, the Domestic Production Activity information is a separatly stated item, just like any other SSI. (ex: 179 deduction, donations, etc.); as mentioned in an earlier post. The software should have this data entry screen in with the other SSI data entry screens. Unlike 179ded and donations, it's not fully automated, you have to enter the amounts in the Sch K data entry screens. In Lacerte, it's screen 33, "Sch K-1 overrides" which has a section for the Domestic Production Activities. Hope this helps.

[JG EA]

Try form

You may be right. Trying to put it on the Sch K on line 12 is really creating all kinds of other problems and changes.

But, I was thinking that it needed to be on the Sch K to match back to the K-1's.

To get it to the K-1, I have to override and put it there.

Try putting it on the 8903 first before anywhere else. I did this and it filled in all the places it should.

[Safire on Home Computer]

But there shouldn't even be an 8903 for the S Corp. There is no way to complete the 8903 at the S Corp level because you don't know what the shareholders AGI is at that point.