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Where the Form 1065 entries come from in Club Accounting

The IRS occasionally changes the layout of the tax forms, most recently in the 2004 - 2005 tax year.

In 2004, the IRS changed the layout of their tax forms. Since the forms look different, some of our customers have asked where the values on the 1065 come from in the Club Accounting program. I will break the form down and explain where the numbers are pulled from below.

Please note that the name "Distribution of Earnings" (or "DOE") from NCA2 has been changed to "Allocation of Income and Expenses" (or "AIE") in CA3.

Form 1065

5 Interest Income - This value can be found on the Allocation of Income and Expenses Report under the Taxable Interest column.

6a/6b - 6a is sum of the Qualified and Nonqualified dividends from the Allocation of Income and Expenses Report. 6b is just the Qualifying Dividends. These values can be found on the Allocation of Income and Expenses Report under the Non-Qualifying Dividends and Qualifying Dividends columns.

8 Short Term Capital Gain - This value can be found on the Allocation of Income and Expenses Report under the Short Term Capital Gain column.

9 Long Term Capital Gain - This value can be found on the Allocation of Income and Expenses Report under the Long Term Capital Gain column.

9c Unrecaptured Section 1250 Gain - This comes from 1099-DIV, if your club has invested in a REIT.

11 Other Income - This value can be found on the Allocation of Income and Expenses Report under the Misc Income/Expense column. While the column in the DOE reports the total income plus expenses, which could end in a negative number, the tax form only displays the income.

13a - Contributions - This value can be found on the Allocation of Income and Expenses Report under the Charity Donation column.

13b Deductions related to portfolio income - This value can be found on the Allocation of Income and Expenses Report under the Misc Income/Expense column. While the column in the AIE reports the total income plus expenses, which could end in a negative number, the tax form displays the expense alone as a positive number.

16d - Passive ... General Limitation - Only the dividends that are from foreign companies are included, which can be found in the Transaction Summary report.

16l Foreign taxes paid - This value can be found on the Allocation of Income and Expenses Report under the Foreign Taxes Paid column.

18a Tax-exempt interest income - This value can be found on the Allocation of Income and Expenses Report under the Federal Tax Free Interest column.

18c Non-deductible expenses - This value can be found on the Allocation of Income and Expenses Report under the Non-deductible expense column.

19a Distributions of cash and marketable securities - Cash distributions, found in the Withdrawal report(s).

19b Distributions of other property - Stock distributions, found in the Withdrawal report(s).

20a - This value can be found on the Allocation of Income and Expenses Report under many columns. It is the sum of the taxable interest, qualified dividends, nonqualified dividends, and income components of misc. expense/income, as they appear on the Allocation of Income and Expenses Report.

20b - Deductions related to portfolio income - This value can be found on the Allocation of Income and Expenses Report under the Misc Income/Expense column. While the column in the AIE reports the total income plus expenses, which could end in a negative number, the tax form displays the expense alone as a positive number.

In addition to these figures, the form also needs to be signed in two places:
1. Near the bottom of the First page, "Signature of general partner or limited liability company member manager". This should be signed and dated by the Treasurer.
2. Near the bottom of the Second page, "Enter below the general partner designated as the tax matters partner (TMP) for the year of this return." This should be signed by the club member preparing the tax returns. Most times this will be the Treasurer, but some clubs will assign a separate member, or an outside source to prepare the taxes. The identifying number requested will be the social security number of the person preparing the taxes.

Schedule K-1

Part 1
A, B, C, D, E, F - Basic club information such as name, address and filing location.

Part II
G, H, I, J and K - Basic member information such as name, address, social security number.

L - The share of the club profit and loss given to the member at the start of the previous year, and the end of the year.

M and N - These sections are not required for Club Accounting partnerships.

Part III
Lines 5, 6, 8, 9, and 19 - see above. 11a Other Income - This value can be found on the Allocation of Income and Expenses Report under the Misc Income/Expense column. Only the income is recorded here.

13 Other Deductions - This value can be found on the Allocation of Income and Expenses Report under the Misc Income/Expense column and the Charity Donation column. Only the expenses are recorded here. Charitable cash contributions are coded "A", charitable stock contributions are coded "E", and deductible expenses are coded "G".

16d - Passive ... General Limitation - Only the dividends that are from foreign companies are included. This amount is prorated, and while it is calculated, it cannot be directly found in the Club Accounting reports.

16l Foreign taxes paid - This value can be found on the Allocation of Income and Expenses Report under the Foreign Taxes Paid column.

20 Other information - This value can be found on the Allocation of Income and Expenses Report under the Misc Income/Expense column.

If this information does not answer your questions, please respond to this message with as much detailed information about your issue as possible and one of our support personnel will be happy to assist you.



 
  
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