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Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

How does UltraTax CS change the ordering of distributions when the election to distribute accumulated E&P first is made?

Answer

UltraTax CS automatically prints the election to distribute accumulated E&P first when the Election to distribute accumulated E&P first field is marked in Screen Ms in the Balance Sheet folder.

Enter distributions up to the beginning balance of the Accumulated Earnings and Profits (AE&P) in the Distributions field in Screen Ms. Enter any remaining distributions in the other Schedule M-2 account columns in Screen Ms.

UltraTax CS applies the following ordering when excess distributions are entered in the Accumulated Adjustment Account column.

1. Undistributed Previously Taxed Income (PTI) to the extent the distribution does not reduce the account below zero.
2. Any remaining distribution will then reduce the Accumulated Adjustments Account (AAA). If the distribution reduces AAA to zero, any remaining distribution will reduce the Other Adjustment Account (OAA) to the extent the distribution does not reduce the account below zero.
3. Any remaining distribution reduces the Retained Earnings Timing Differences (REU) account.

If you want to use a different ordering of the distributions, enter the amount of distribution (including zero) in the respective column. For example, if you have a beginning balance in PTI, but do not want UltraTax CS to allocate a distribution to this account, enter 0 (zero) in the Distributions field in the Undistributed Previously Taxed Income column.

If you only want to print the election to distribute accumulated E&P first, but do not want to change the ordering of distributions, select the Distribute Accumulated E&P First election from the Election Description fieldview in the Election statements section on Screen Elect and do not mark the Election to distribute accumulated E&P first field in Screen Ms.

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