2001 ProSeries/1040 ReadMe

Version 2001.03

Click on any of the links below to go directly to the topic of your choice.

Items addressed in this release of ProSeries/1040

All 1040 forms can be filed

Items addressed in a prior release of ProSeries/1040

Issues to be aware of

What's new in ProSeries/1040

New ProSeries/1040 forms and worksheets

Importing data from Quicken or QuickBooks

Electronic filing

Items addressed in this release of ProSeries/1040

Job Creation and Worker Assistance Act of 2002

This release of ProSeries/1040 addresses many of the provisions of the Job Creation and Worker Assistance Act of 2002 that are retroactive to 2001. Information about this release is presented in the following sections:

Summary

Important electronic filing considerations

Revised forms, worksheets, and instructions

ProSeries/Individual State products

Conclusion

Summary

Following is a brief summary of the major provisions of the recently-enacted Job Creation and Worker Assistance Act of 2002 that are addressed in this release of ProSeries/1040:

• A taxpayer may be able to claim an additional 30% first-year depreciation for MACRS depreciable property, with a recovery period of 20 years or less, that was placed in service after September 10, 2001.
• The first-year depreciation limit for luxury automobiles placed in service after September 10, 2001 is increased from $3,060 to $7,660.
• A net operating loss (NOL) arising from a tax year ending in 2001 or 2002 can be carried back 5 years (instead of 2 or 3 years).
• If a taxpayer owes alternative minimum tax, any alternative tax NOL deduction attributable to an NOL carried back from (or carried forward to) a tax year ending in 2001 or 2002 is allowed to offset 100% (instead of 90%) of the taxpayer’s alternative minimum income determined without regard to that deduction.

Important: This release of ProSeries/1040 does not automatically support the following provisions of the Job Creation and Worker Assistance Act of 2002:

• Qualified New York Liberty Zone leasehold improvements are not separately identifiable in ProSeries/1040 for purposes of applying the 5 year straight line or 9 year ADR depreciation method and the related exclusion from the 30% special depreciation allowance.

To obtain this treatment, go to the Asset Entry Worksheet (“Depr Entry Wks” on the Forms Bar), use the asset type “Other,” and follow the steps detailed in the Tax Help for the Asset Entry Worksheet.

• Additional 30% special depreciation deduction (and associated AMT depreciation treatment) for the following types of property: Residential rental real estate, home office, daycare center, or home office improvement, as defined in the Job Creation and Worker Assistance Act of 2001.

For more information, click http://www.proseries.com/service_support/find_tech_answers.shtml#search to go to the Find Technical Answers page of ProSeries.com. When the Find Technical Answers page appears, search for “Special Depreciation.”

• Up to $35,000 IRC Section 179 expense deduction limit for qualified New York Liberty Zone property placed in service after September 10, 2001.

ProSeries does not support exceptions to the general Section 179 limitations for qualified zones such as enterprise zones. The special $35,000 Section 179 expense deduction is therefore not incorporated into this release of ProSeries/1040. For more information, see the revised IRS instructions for Form 4562.

For more information about the effects of the Job Creation and Worker Assistance Act of 2002, click http://www.proseries.com/products/jcwaact.shtml to go to the Job Creation and Worker Assistance Act of 2002 page of ProSeries.com.

Important electronic filing considerations

Due to the Job Creation and Worker Assistance Act of 2002, the IRS will be changing their electronic filing systems to accommodate a new record layout for Form 4562. Starting April 8^th at 12:01 am (ET), the IRS electronic filing system will reject the old version of Form 4562.

If you have a federal return that is not impacted by the Job Creation and Worker Assistance Act of 2002 and contains the old Form 4562, you must electronically file the return prior to April 8^th at 12:01 am (ET). After the IRS makes their changes, all returns that are electronically filed must contain the new version of Form 4562, otherwise they will be rejected by the IRS.

Once you install the latest release of ProSeries/1040, the new version of Form 4562 is installed and the old version is deleted. You will not be able to electronically file returns that contain the new version of Form 4562 and/or that are impacted by the Job Creation and Worker Assistance Act of 2002 until April 8^th at 12:01 a.m. (ET).

Note: If your tax practice is in AL, AR, GA, LA, MS, NC, or TN, you file returns through the Memphis Service Center. The IRS's Memphis Electronic Filing Service Center made updates to their system to accommodate the Job Creation and Worker Assistance Act of 2002 on April 4^th. You can electronically file returns with the new version of Form 4562 that were impacted by the Job Creation and Worker Assistance Act of 2002 through the IRS's Memphis Electronic Filing Service Center as soon as you have installed the latest version of ProSeries/1040.

Note: With this release of ProSeries/1040, you can electronically file a return even if the client makes the election to opt out of the 30% bonus depreciation. The Election Statement will be included with the electronically-filed return.

For more information about the effects of the Job Creation and Worker Assistance Act of 2002 on electronic filing, click http://www.proseries.com/products/jcwaact.shtml to go to the Job Creation and Worker Assistance Act of 2002 page of ProSeries.com.

Revised forms, worksheets, and instructions

In this release of ProSeries/1040, the following forms, worksheets, and instructions have been revised due to the Job Creation and Worker Assistance Act of 2002. To see additional information about the effects of the Job Creation and Worker Assistance Act of 2002 from within ProSeries/1040, refer to the Tax Help for the Federal Information Worksheet, the Asset Entry Worksheet, the Vehicle Expenses Worksheet, and the Car and Truck Expenses Worksheet.

Federal Information Worksheet

Page 1 of the Federal Information Worksheet includes a new section titled “Job Creation and Worker Assistance Act of 2002.” Check the box in this section if you want ProSeries to implement the Job Creation and Worker Assistance Act of 2002 calculations for the client’s Form 1040 return.

Important: If you check the box in the Job Creation and Worker Assistance Act of 2002 section, ProSeries implements the Job Creation and Worker Assistance Act of 2002 calculations --- even if you’ve already filed the client’s Form 1040 return. If you’ve already filed a client’s Form 1040 return, refer to the Tax Help for this new section of the Federal Information Worksheet for more information.

Asset Entry Worksheet (Depr Entry Wks)

The Asset Entry Worksheet has been revised to reflect the new 30% special depreciation allowance. There’s a new section titled “Special Depreciation Allowance for assets placed in service after 9-10-01.”

Note: This new section of the Asset Entry Worksheet is activated only if you check the box on the client’s Federal Information Worksheet to implement the Job Creation and Worker Assistance Act of 2002 calculations.

This new section has the following lines:

• Elect OUT of 30% Special Depreciation Allowance after September 10, 2001 – Select “Yes” or “No.” Selecting “Yes” will exclude the asset from the 30% special depreciation allowance. If you select “Yes,” be sure to select “Yes” for all other assets in the same asset class (for example, all 7-year assets). If you select “Yes,” go to the Election to NOT claim 30% Special Depreciation Allowance worksheet and create an election under IRC Section 168(k)(2)(C)(iii).
• “Original use” of the asset started after September 10, 2001 – Select “Yes” or “No.”
• “Qualified Property” for Special Depreciation Allowance after September 10, 2001 – Select “Yes” or “No.”
• Special Depreciation Allowance – ProSeries calculates the appropriate amount for the asset.
• QuickZoom to complete the election to not claim the 30% Special Depreciation Allowance – Click to open the Election to NOT claim 30% Special Depreciation Allowance worksheet.

Vehicle Expenses Worksheet and Car and Truck Expenses Worksheet

The Vehicle Expenses Worksheet and the Car and Truck Expenses Worksheet have been revised to reflect the new 30% depreciation rules for vehicle expenses. There’s a new section titled “Special Depreciation Allowance for vehicles placed in service after 9-10-01” below line 27 of the Vehicle Expenses Worksheet and below line 33 of the Car and Truck Expenses Worksheet.

Note: This new section is activated only if you check the box on the client’s Federal Information Worksheet to implement the Job Creation and Worker Assistance Act of 2002 calculations.

This new section has the following lines:

• Elect OUT of 30% Special Depreciation Allowance – Select “Yes” or “No” for each asset. Selecting “Yes” will exclude the asset from the 30% special depreciation allowance. If you select “Yes,” be sure to select “Yes” for all other assets in the same asset class (for example, all 7-year assets). If you select “Yes,” go to the Election to NOT claim 30% Special Depreciation Allowance worksheet and create an election under IRC Section 168(k)(2)(C)(iii).
• “Original Use” started after 9-10-01 – Select “Yes” or “No” for each applicable asset.
• “Qualified Property” for Special Depreciation Allowance – Select “Yes” or “No” for each applicable asset.
• Special Depreciation Allowance – ProSeries calculates the appropriate amount for each applicable asset.
• QuickZoom to complete the election to not claim the 30% Special Depreciation Allowance – Click to open the Election to NOT claim 30% Special Depreciation Allowance worksheet.

Form 4562, Depreciation and Amortization

Form 4562 and the government instructions for Form 4562 have been revised to reflect the new depreciation rules. Form 4562 has been revised as follows:

• Part II, Special Depreciation Allowance and Other Depreciation, formerly was Part III, Other Depreciation.
• Part III, MACRS Depreciation, formerly was Part II, MACRS Depreciation.
• The text for line 14 (formerly line 17) in Part II now is “Special depreciation allowance for certain property (other than listed property) acquired after September 10, 2001.” ProSeries calculates line 14.
• The text for the new line 17 in Part III is “MACRS deductions for assets placed in service in tax years beginning before 2001.” ProSeries calculates line 17.
• The text for the new line 25 in Part V, Listed Property, is “Special depreciation allowance for listed property acquired after September 10, 2001 and used more than 50% in a qualified business use.” ProSeries calculates line 25.

Form 2106, Employee Business Expense

Form 2106 and the government instructions for Form 2106 have been revised to reflect the new depreciation rules for vehicle expenses.

• Part II, section D, line 31 now reads “Enter section 179 deduction and special allowance.”

Form 6251, Alternative Minimum Tax - Individuals

Form 6251, line 20, “Alternative tax net operating loss deduction,” is no longer subject to a 90% limitation. Be sure to check the box on the Federal Information Worksheet to activate the Job Creation and Worker Assistance Act of 2002 calculations. At the time of this release of ProSeries/1040, the IRS had not yet released updated instructions for Form 6251.

Form 1045, Application for Tentative Refund

At the time of this release of ProSeries/1040, the IRS had not yet released updated instructions for Form 1045.

Elections Summary

The following two elections have been added for this release of ProSeries/1040:

• IRC Section 168 (k)(2)(C)(iii) – Election to NOT claim 30% special depreciation allowance.
• IRC Section 172(j) – Election to disregard 5-year carryback period for NOL. This election simply returns the taxpayer to the 2-year carryback rules. It does not elect out of carryback altogether.

Client Letter

The client letter for ProSeries/1040 includes two new insert paragraphs relating to the Job Creation and Worker Assistance Act of 2002.

Client Billing – Rates Per Form

The ProSeries/1040 Rates Per Form worksheet now includes:

• IRC Section 168 (k)(2) election
• IRC Section 172(j) election

Tax Planner worksheets and What-If Worksheet

The Tax Planner worksheets and the What-If Worksheet have been updated to reflect the following:

• The extension of the moratorium on taking the credits against AMT through 2002 and 2003
• The effect of the 30% depreciation allowance on future depreciation

Split MFJ Return feature

The Split MFJ Return feature will not transfer check boxes and fields specific to the new Job Creation and Worker Assistance Act of 2002 for the 2001 version of ProSeries/1040.

ProSeries/Individual State products

Due to the Job Creation and Worker Assistance Act of 2002, ProSeries will be re-releasing the following Individual State products: AR, AZ, CA, GA, HI, IA, ID, IN, KY, MA, MN, MS, NH, SC, VA.

Any ProSeries/Individual State product not listed above is currently not impacted by the Job Creation and Worker Assistance Act of 2002 for Tax Year 2001. As a result, the latest release of these non-impacted states is up to date.

For more information on the impact of the Job Creation and Worker Assistance Act of 2002 on individual state returns, and for ProSeries/Individual States release information, click http://www.proseries.com/service_support/2001/faqs/docs/10294.shtml to go to the State Decisions Relating to the Job Creation and Worker Assistance Act of 2002 page of ProSeries.com.

Critical Note:

If you have a client that is impacted by the Job Creation and Worker Assistance Act of 2002 and they will be filing a return for one of the previously-mentioned states, you must install the update of that ProSeries/Individual State product prior to preparing your client’s state return.

Conclusion

Given the scope of the retroactive provisions of the Job Creation and Worker Assistance Act of 2002, you may need to amend Form 1040 returns for 2001 that have already been filed. In addition to analyzing the effect that the recently-revised depreciation and NOL carryback rules may have on your clients’ Form 1040 returns, it is important that you plan for the impact that amended “flow-through” entities, such as S corporations, partnerships, estates and trusts, may have on your clients in the weeks and months ahead.

For more information about the effects of the Job Creation and Worker Assistance Act of 2002 on federal returns, state returns, electronic filing, and other issues, click http://www.proseries.com/products/jcwaact.shtml to go to the Job Creation and Worker Assistance Act of 2002 page of ProSeries.com.

All 1040 forms can be filed

All forms in this release of ProSeries/1040 are final and can be filed with the IRS.

Important: Note the information about Form 4562 and electronic filing in the Important electronic filing considerations section of this ReadMe.

Items addressed in a prior release of ProSeries/1040

Form 6252 calculation of Qualified Five Year Gain

With the previous release of ProSeries/1040, the calculation of Qualified Five Year Gain may have been understated, and line N (Total Gross Profit from Section 1251 Property) of the Unrecaptured Section 1250 Gain/Five Year Gain Smart Worksheet may have been blank instead of containing “0”. This situation affected tax returns meeting the following conditions:

• An Asset Entry Worksheet associated with Schedule A reflects disposition of Section 1245 property held more than five years, and
• A net gain is reported as installment sale on Form 6252, and
• An overall net capital gain is reported on Schedule D, and
• The total ordinary taxable income is less than the maximum amount for the 15% tax bracket.

This situation is corrected with this release of ProSeries/1040.

Deemed sale election of a building and land

With the previous release of ProSeries/1040, the amount of income tax resulting from the deemed sale election of a building and land may have been overstated. This situation affected tax returns meeting the following conditions:

• Deemed sale tax treatment of both a building and land is elected, and
• The deemed sale is reported on an Asset Entry Worksheet, and
• The Type of Asset field on that Asset Entry Worksheet contains either “H”, “I”, “J”, “M”, or “N”, and
• There are entries in both the “Land included in cost” field and the “Land sale price” field on that Asset Entry Worksheet, and
• An overall net capital gain is reported on Schedule D.

This situation is corrected with this release of ProSeries/1040.

Maximum number of Schedule D transactions increased from 999 to 5,000

With the previous release of ProSeries/1040, the Capital Gains and Losses Smart Worksheet on Schedule D didn’t accept more than 999 transactions. If more than 999 transactions were entered, the program produced an error message and had to be restarted.

This situation is corrected with this release of ProSeries/1040. The Capital Gains and Losses Smart Worksheet on Schedule D now accepts as many as 5,000 transactions.

Supplemental Business Expense Worksheet and Schedule K-1 Worksheet for Partnerships or S Corporations

With the previous release of ProSeries/1040, the program may have generated an incorrect Alternative Minimum Tax depreciation adjustment if a Supplemental Business Expense Worksheet was associated with a Schedule K-1 Worksheet for Partnerships or a Schedule K-1 Worksheet for S Corporations. As a result, an Alternative Minimum Tax amount may have been calculated too low or too high. This situation affected tax returns meeting the following conditions:

• A Supplemental Business Expense Worksheet is attached to a Schedule K-1 Worksheet for Partnerships or a Schedule K-1 Worksheet for S Corporations, and
• An Asset Entry Worksheet is associated with that Supplemental Business Expense Worksheet, and that Asset Entry Worksheet includes an Alternative Minimum Tax depreciation adjustment, and
• The Schedule K-1 activity is nonpassive and the AMT depreciation adjustment amount times 2 exceeds the excess of Alternative Minimum Tax income over regular taxable income, OR the Schedule K-1 activity is passive and the AMT depreciation adjustment amount times 2 exceeds the excess of regular taxable income over Alternative Minimum Tax income.

This situation is corrected with this release of ProSeries/1040.

Client letter and the federal due date for residents of Maine

With the previous release of ProSeries/1040, the client letter insert code for Federal Date Due for residents of Maine didn’t incorporate the one-day extension of the filing deadline due to Patriot’s Day, as recently revised by the IRS. This situation affected tax returns meeting the following conditions:

• The taxpayer was a resident of Maine for federal income tax filing purposes, and
• The ProSeries/1040 client letter was included with the copy of the federal tax return that was delivered to the taxpayer.

This situation is corrected with this release of ProSeries/1040.

Direct deposit and electronic funds withdrawal error messages

With the previous release of ProSeries/1040, the program may have ignored direct deposit or electronic funds withdrawal information without providing a warning error message under the following conditions:

• In Part V of the Federal Information Worksheet, both the Direct Deposit of Your Client’s Federal Refund check box and the Use Electronic Funds Withdrawal for Your Client’s Federal Balance Due (EF Only) check box are not checked, and
• Bank information is entered in Part V of the Federal Information Worksheet, and
• There’s a federal tax refund and the intention was that it be deposited directly into the named bank account, OR there’s a federal tax due amount and the intention was that it be paid by electronic funds withdrawal from the named bank account.

These situations are corrected with this release of ProSeries/1040.

Form 2555 Physical Presence Text and Electronic Filing error messages

With the previous release of ProSeries/1040, the program produced an Electronic Filing error message that it shouldn’t have produced under the following conditions:

• The return is marked for electronic filing, and
• The dates entered in the “From” and “Through” fields of Form 2555, Part III, line 16 are for the 2001 calendar year.

With the previous release of ProSeries/1040, the program did not produced an Electronic Filing error message that it should have produced under the following conditions:

• The return is marked for electronic filing, and
• The dates entered in the “From” and “Through” fields of Form 2555, Part III, line 16 result in less than 330 total number of days, OR the total number of days for line 16 minus the total number of days entered in column (e) of line 18 is less than 330 days.

These situations are corrected with this release of ProSeries/1040.

Form 2848 updated

Form 2848, Power of Attorney and Declaration of Representative, has been updated with this release of ProSeries/1040.

Additional unsupported calculation

If an Asset Entry Worksheet shows that the regular depreciable basis for the asset is “0” but the AMT depreciable basis for that asset is an amount greater than “0”, ProSeries does not calculate the amount of AMT depreciation.

If a client’s tax return includes an Asset Entry Worksheet that shows a regular depreciable basis of “0”and an AMT depreciable basis greater than “0”, calculate the AMT depreciation for that asset manually, then enter that AMT depreciation amount as an additional adjustment on Form 6251.

Form 4797 calculation of Qualified Five Year Gain

With a previous release of ProSeries/1040, a gain may have been incorrectly calculated as Qualified Five Year Gain on Form 4797 under the following conditions:

• The Disposition Worksheet includes the disposition of a non-depreciable property or asset with Property Code “A = Section 1231,” and
• The disposition reported on Form 4797 is of a property held more than one year but less than five years and a day, and
• A net gain is reported on Form 4797, page 1, and
• An overall net capital gain is reported on Schedule D, and
• The total ordinary taxable income is less than the maximum amount for the 15% tax bracket.

This situation is corrected with this release of ProSeries/1040.

Form 4684 and Modified Adjusted Gross Income calculation

With a previous release of ProSeries/1040, Modified Adjusted Gross Income may have been calculated incorrectly under the following conditions:

• Form 4684, page 2, line 35(b)(ii) includes a loss on property held more than one year, and
• There’s an amount on Form 4684, page 2, line 39.

This situation is corrected with this release of ProSeries/1040.

Form 4972 calculation

Form 4972 calculation was incorrect when all of the following conditions existed:

• Lump sum distribution with tax calculated on Form 4972.
• Both the 10-year averaging and 20% capital gain were elected.
• There is: (a) a current actuarial value of an annuity contract that is part of a lump-sum distribution (an amount in box 8 of Form 1099-R), and/or (b) federal estate tax paid that is attributable to this lump-sum distribution.
• There is no death benefit exclusion.

Form 5329 didn't print

Form 5329 did not print with the tax return. This issue affected taxpayers who:

• Had a return of a Roth contribution before the due date of the tax return, and
• The distribution was before age 59-1/2 (Form 1099-R code "J" and code "8").

The tax is correct and is not affected by this printing issue.

Client Organizer to ProSeries/1040 Transfer

This issue affected taxpayers who:

• Have a 1998 Roth IRA Conversion with income spread over four years, and
• Transfer from ProSeries/1040 for 2000 to Client Organizer, and then from Client Organizer to ProSeries/1040 for 2001.

Bank Product Information Worksheet had a negative value for preparer fees

Bank Product Information Worksheet had a negative value for preparer fees after exiting the client file. This issue affected the following client returns:

• Electronically filed tax return, and
• Selected a RAL in the Bank Product Information Worksheet, and
• Had not been saved using the F10 function key (or equivalent) prior to exiting the tax return.

Bank Product Information Worksheet did not subtract payments from amount due to the preparer

Bank Product Information Worksheet did not subtract prepayments recorded on the Client Billing Worksheet from the amount due to the preparer. This issue affected the following client returns:

• Electronically filed tax return, and
• Selected a RAL in the Bank Product Information Worksheet, and
• Client Billing Worksheet includes a prepayment or retainer.

Negative RAL loans were not blocked

Negative RAL loans were not blocked. This issue affected the following client returns:

• Electronically filed tax return, and
• Selected a RAL in the Bank Product Information Worksheet, and
• Taxpayer has a Rate Reduction Credit, and
• Total fees exceed the net refund (refund minus rate reduction credit)

Excess Railroad Retirement Tax Act (RRTA) tier 2 tax

Excess Railroad Retirement Tax Act (RRTA) tier 2 tax was being treated as an income tax payment when it shouldn't have been, based upon recent information provided by the IRS.

This issue affected taxpayers who are railroad employees:

• The taxpayer must have had more than one railroad employer in 2001, and
• Total compensation was over $59,700, and
• Combined RRTA tier 2 tax from all railroad employers was over $2,925.30.

New Client Letter paragraph

A new Client Letter paragraph is available for clients affected by the September 11, 2001 terrorist attacks.

This change is available for users who employ the ProSeries/1040 Client Letter feature.

Calculation of Earned Income

The calculation of Earned Income has been updated based upon information released by the IRS after the initial release of ProSeries/1040.

This change affects taxpayers with:

• Form 8812, or
• Additional Child Tax Credit.

District office codes for EIN assignments

The IRS has expanded the range of district office codes for EIN assignments. ProSeries/1040 now includes this expanded range in its Electronic Filing Validation.

This change affects client returns that are:

• Filed electronically, and
• Include a district office code within the newly expanded range.

Electronic filing activated

Electronic filing is enabled in this release of ProSeries/1040. The Intuit Electronic Filing Center will begin to accept returns on January 11, 2002 at 12:01 a.m. Eastern time.

Refund Anticipation Loans available for taxpayers who have a Rate Reduction Credit

This release of ProSeries/1040 allows you to provide a Refund Anticipation Loan to a customer who has a Rate Reduction Credit on line 47 of Form 1040.

Updating billing fees on the Bank Products Information Worksheet

With this release of ProSeries/1040, billing fees are updated on the Bank Products Information Worksheet whenever you save the return (if you previously selected the Electronic Filing Billing Information option in the Miscellaneous Global Options for 1040 Only section of the Options dialog box). With the previous release of ProSeries/1040, billing fees were updated on the Bank Products Information Worksheet when you saved the client’s return while it was open, but they weren’t updated when you saved the client’s return as you exited it.

Issues to be aware of

Transfer of Form 6252 information from Client Organizer to ProSeries/1040

ProSeries does not transfer certain values relating to Section 1250 gains from ORG23 (Installment Sale Income) to Form 6252 (Installment Sale Income). In ProSeries/1040, error messages for Form 6252 notify you that these values need to be entered. Enter these values on the Unrecaptured Section 1250 Gain/Five Year Gain Smart Worksheet of Form 6252, as directed by the error messages in Final Review.

Form 4797 and Alternative Minimum Tax

Alternative Minimum Tax may be overstated due to an understatement of Qualified Five Year Capital Gains under the following conditions:

• An Asset Entry Worksheet, Disposition Worksheet, or Car and Truck Expenses Worksheet includes a disposition with a loss for Alternative Minimum Tax purposes, and Passive activity limitations apply to that loss,

OR

• A Deemed Sale with an Alternative Minimum Tax loss is reported on Form 4797,

AND

• Form 4797, page 1, results in a net loss for Alternative Minimum Tax purposes, and
• Form 4797 includes 5-year gains, and
• Schedule D shows a net capital gain, and
• The taxpayer is in Alternative Minimum Tax position, and
• Ordinary taxable income is within the maximum allowable for the 15% tax bracket.

Note: Under the conditions outlined above, ProSeries calculates the correct amount of taxable income for regular tax and Alternative Minimum Tax purposes.

Don't change a Bank Product application after electronically filing a return

If a client is applying for a Refund Anticipation Loan (RAL), a Refund Transfer (RT), or a Refund Transfer Direct Deposit (RTDD), don't change the application from one type of Bank Product to another type after you file the return electronically.

What's new in ProSeries/1040

New ProSeries/1040 forms and worksheets

Split MFJ Return

Use this new ProSeries feature to split a Married Filing Joint return into two Married Filing Separate returns.

• From HomeBase, select the file, then go to the File menu and choose Split MFJ Return. From the open Married Filing Joint return, go to the File menu and choose Split MFJ Return.
• The splits are generally based on the TSJ tags that you selected in the Married Filing Joint return. For exceptions, see Program Help for the Split MFJ Return command or Tax Help for the MFJ vs. MFS Comparison Worksheet.
• Be sure to carefully review each of the newly-created MFS returns for accuracy and completeness. The Split MFJ Return feature is intended to substantially reduce the number of keystrokes that are required to create the MFS returns. It is not intended to result in MFS returns that can be filed immediately.

Enhanced Schedule B

Schedule B has been revised to improve ease of use. Boxes 1 and 3 now occupy separate columns on the Interest Income Smart Worksheet. You can enter both types of interest from the same source (such as a broker’s statement) on the same line. The Type of Interest pick list now applies only to Box 1.

Enhanced Form 1099-R Worksheet

The Form 1099-R Worksheet has been revised to improve billing flexibility and ease of use. The worksheet is now a single-payer form, which improves per-form billing.

Two new distribution codes are available from the Distribution Codes pick list. They are N – Recharacterized 2001 IRA contribution and T – Roth distribution, exception applies.

Changes in Depreciation for 2001

You can make the Half-Year Convention election per IRS Notice 2001-70. Use the Miscellaneous Global Options for 1040 Only section of the Options dialog box to implement this election automatically for all clients who would benefit. You also can make this election on a client-by-client basis by checking the Apply Half-year convention for MACRS property placed in service in 2001 pursuant to Notice 2001-70 box at the top of the Depreciation Options Worksheet.

MACRS Assets can be designated as Qualified Indian Property by checking a box at the activity level (for example, on Schedule C). The IRS allows slightly more accelerated depreciation and no AMT adjustment for property that falls under this description.

A new asset type is available from the Type of Asset pick list. It is Q – 5/9 Distributive trades and services.

Privacy Policy Paragraph in Client Letter

The client letter now provides a privacy paragraph to help you create a document to communicate the privacy policy of your firm to your clients. This privacy statement is intended for tax professionals who do not disclose any nonpublic personal client information (current or former clients) with nonaffiliated third parties, except as permitted or required by law. Consult your attorney to ensure this letter incorporates your firm's practices. For additional information regarding the Gramm-Leach-Bliley Act, go to http://www.ftc.gov/privacy/index.html.

For more information

For more information on what’s new in ProSeries/1040, open a 1040 return, go to the Help menu, choose Help Center, then select What’s New This Year?

New ProSeries/1040 forms and worksheets

We've added the following forms and worksheets to ProSeries/1040 for the 2001 tax year:

• Form 8845, Indian Employment Credit
• Form 8879, IRS e-file Signature Authorization
• Rate Reduction Credit Worksheet
• Dependency Support Worksheet
• Deemed Sale Election
• Preparer Notes for Electronic Filing
• Bank Products Information Worksheet
• Dependent Filer Worksheets
• Tax Worksheet for Schedule D, line 40

Importing data from Quicken or QuickBooks

From Quicken

To use the Quicken Import feature to import data into ProSeries, you must use Quicken 2000, 2001, or 2002. To import data from Quicken 1 through 6, Quicken 98, or Quicken 99, use the TXF file format described in Program Help and chapter 9 of the ProSeries User's Guide.

Be sure to open Quicken before using Quicken Import to import Quicken information into a client's return.

From QuickBooks

To use the QuickBooks Import feature to import data into ProSeries, you must use QuickBooks 2000, 2001, or 2002. To upgrade your version of QuickBooks, call 1-800-446-8848 or go to http://www.quickbooks.com.

Be sure to open QuickBooks before using QuickBooks Import to import QuickBooks information into a client's return. In a multi-user environment, only the QuickBooks Administrator in single-user mode can import data into ProSeries.

Electronic filing

Before you can convert or transmit client files in HomeBase, you must go to the EF Center (also known as the HomeBase Electronic Filing view) to activate the E-File button on the toolbar and the commands on the Electronic Filing menu. (To see the Electronic Filing menu, go to the File menu and choose Electronic Filing.)

Most electronic filing states supported by ProSeries rely on the federal government for assistance with return processing. Every state except California, Illinois, Maine, Maryland, Massachusetts, Minnesota, and New York require that you electronically file the federal and state returns together. If you don't electronically file the federal and state returns at the same time, you will need to print and file for those state returns through the mail.

Don't change a Bank Product application after electronically filing a return

If a client is applying for a Refund Anticipation Loan (RAL), a Refund Transfer (RT), or a Refund Transfer Direct Deposit (RTDD), don't change the application from one type of Bank Product to another type after you file the return electronically.