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Common questions about fiduciary Schedule E rental and royalty income

SOLVEDby IntuitLacerte Tax4Updated July 27, 2021

Below are solutions to frequently asked questions about entering Schedule E rental and royalty income in the Fiduciary module of Lacerte.

Follow these steps to enter rental or royalty income:

  1. Go to Screen 23, Rental & Royalty Inc. (Sch. E).
  2. Enter the Description of the property.
  3. Enter the address information in the fields below the applicable U.S. or Foreign subsection.
    • An address is only required for rental real estate properties. For royalty properties, line 2 and the address portion of line 1 of the Schedule E should be left blank, and you should enter code 6 for royalty property.
  4. Select the Type of property (Ctrl+T) from the drop down menu.
    • See the Instructions for Schedule E for definitions of the types of properties.
    • If you don't choose a type of property and instead enter the Other type of property field, Lacerte will generate code 8 on Schedule E, per the form instructions.
  5. Complete any other applicable fields in the Rental and Royalty Income (Schedule E) section.
 

Lacerte considers rentals as passive activities with active conduct of a trade or business. Check the box labeled Did not actively participate to indicate that a rental is non-passive with no active conduct.  

  1. Scroll down to the Income section.
  2. Enter the Rents or royalties received.
    • Lacerte will determine if the amount relates to rents or royalties based on the Type of Property selected in step 3.
  3. Scroll down to the Expenses section and complete any applicable fields.
  4. Complete any other applicable fields on this screen.
    1. If you need to enter more than one Schedule E, click Add from the left navigation panel to add a new activity.
  1. Go to Screen 27, Depreciation (4562).
  2. Select the Asset you want to link to the Schedule E from the left navigation panel.
  3. Scroll down the Asset Information section and locate the General subsection.
  4. Click the arrow next to the Form (Ctrl+T) field and choose 3=Schedule E (rental).
  5. Enter the Activity name or number (Ctrl+T).
  6. Complete any other applicable fields on this screen.
  1. Go to Screen 23, Rental & Royalty Inc. (Sch. E).
  2. Locate the Rental and Royalty Income (Schedule E) section.
  3. Enter the Percentage of ownership if not 100% (.xxxx) field.
 

You can also enter a Percentage of business use (.xxxx) under the Additional Information subsection of Screen 27, Depreciation (4562). However, you shouldn't use these two fields together, as this will cause an inaccurate reduction of rental income and expenses.  

  1. Go to Screen 23, Rental & Royalty Inc. (Sch. E).
  2. Scroll down to the Prior Year Unallowed Passive Losses section.
  3. Under the Regular subsection, enter the Operating loss amount as a positive number.
  4. Under the AMT subsectionenter the Operating loss amount as a positive number.
 

The program uses the AMT amounts to compute the passive activity adjustment on Form 6251. If you don't know the AMT amount, enter the regular tax amount in both the regular tax and AMT fields. This will prevent the program from computing an incorrect adjustment on Form 6251.  

  1. Go to Screen 23, Rental & Royalty Inc. (Sch. E).
  2. Locate the Rental and Royalty Income (Schedule E) section.
  3. Enter any applicable information regarding the income producing item.
  4. Check the box labeled Farm rental to be included in self-employment calculation.
    • This will cause the amounts to flow to the Schedule K-1, line 14, with a code F for Gross farm and fishing income, to be reported on Schedule E, line 42, of Form 1041.

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