Using custom tax codes for UltraTax CS integration

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Tax codes are a set of predefined groupings that are assigned to accounts. Once assigned, reports can be generated that provide totals for each code. Tax codes can also be used to bridge amounts to other tax applications, such as UltraTax CS.

Note: Custom tax codes can also be added on the fly for a selected client in the Setup > Chart of Accounts screen.

Adding custom tax codes at the client level

  1. Choose Setup > Tax Codes and click the Add button.
  2. Select the Tax code from the appropriate fields.
  3. Enter the new custom code represented by a one or two digit alphanumeric character in the Subcode field.
  4. Click Enter to add the custom tax code for the client.

Note: Adding custom tax codes at the client level applies only to the selected client.

Adding custom tax codes at the firm level

  1. Choose Setup > Firm Information > Firm Tax Codes.
  2. Select the Tax code from the appropriate fields.
  3. Enter the new custom code represented by a one or two digit alphanumeric character in the Subcode field.
  4. Click Enter to add the custom tax code for the firm.

Note: Adding custom tax codes for the firm applies to all newly added clients in the firm.

Example

The following scenario illustrates the advantages of creating custom tax codes.

A client has several utilities and insurance expense accounts set up in their Chart of Accounts. The expenses for these accounts relate to tax code 213 (1120, Other deductions). The client would like to be able to group these expenses as two items (utilities and insurance) for tax integration purposes.

Assigning regular tax code 213 to these accounts yields unnecessary detail for both utilities and insurance in the tax export and tax reports under a single tax code. By assigning custom tax codes 213-1 - "Utilities" and 213-2 - "Insurance", all the utilities expenses are grouped together as "Utilities", and all the insurance expenses are grouped together as "Insurance" to provide the necessary summary information for these separate groupings within the tax export and related tax reports.

Setup | Tax Codes screen in ACS:

Chart of Accounts Setup:

Once the custom tax codes have been created they must be assigned to the relevant accounts.

  1. Go to Setup > Chart of Accounts.
  2. Verify the correct client is selected in the client drop-down
  3. Locate the correct account in the list or select Add for a new account.
  4. In the Tax code field select the custom tax code created.
  5. Select Enter to save.

How the resulting UltraTax CS Statement will appear:

Notes:

Importing Summary Balances Vs. Using Custom Tax Codes

During the import, UltraTax CS gives the option of importing Detail, or Summary tax code information:

Important! Accounts that have custom tax codes assigned are not affected by this decision. Also, custom tax codes allow for more control over line item descriptions that appear in UltraTax CS after the import. For example, let's say there are 2 expense accounts that need to appear in the statement on L26 of Form 1120. One is account 300 - "All Farmers Car Insurance" and the other is account 301 - "Cable and Internet". They each have a balance of $250,000 for a total of $500,000 going to L26. If both accounts are assigned tax code 213 (a regular tax code), and "Detail" is selected during the import, then here is how the L26 statement would appear:

If both accounts are assigned tax code 213 (a regular tax code), and "Summary" is selected during the import, then here is how the L26 statement would appear:

Note: The amounts are totaled, and UltraTax CS used the description of one of the accounts.

If both accounts are assigned tax code 213-1 (a custom tax code given the description "Utilities"), then it does not matter whether "Summary", or "Detail" is selected during the import. In both scenarios, here is how the L26 statement would appear:

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