1120-US: Changing the ordering of distributions when electing to forgo distribution of PTI (FAQ)

Alerts and notices

Question

How does UltraTax CS change the ordering of distributions when the election to forgo distribution of PTI is made?

Answer

UltraTax CS automatically prints the election to forgo the distribution of PTI when the Election to forgo distribution of PTI 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 account fields in Screen Ms.

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

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

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 OAA, but do not want UltraTax CS to allocate a distribution to this account, enter 0 in the Distribution field in the Other Adjustments Account column.

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