1040-US: Allocating income to states in the K1 state allocation spreadsheet

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Question

How do I allocate federal net income to the applicable states displayed in the State allocation spreadsheet? (K1 state allocation)

Answer

Allocating income to states in the State allocation spreadsheet

Two methods can be used to allocate income to the states appearing in the spreadsheet. Please note that amount fields applicable to one state may not be applicable to another state. Those amount fields that do not apply to a particular state have been disabled (shaded). Each section of Screens K1, K1-2, K1-3, K1-4, K1-5, K1-6, K1-7, PBasis1, PBasis2, SBasis1, SBasis2, K1T, K1T-2, K1T-3, and 6198 (if present) has been assigned a separate tab for ease of data entry.

Primary state behavior

The postal code entered in Screen K1 or Screen K1T, regardless of residency, will be considered the primary state for that unit if that state is attached to the client being processed. The primary state always appears first within the State allocation spreadsheet and the SID fields in Screen K1 or K1T will be used to populate the first column of the spreadsheet. If an SID amount is not entered and remains blank in the spreadsheet, the federal amount will be used to process income for that state.

If the primary state for that unit is attached as a nonresident or part-year resident, a second primary state will appear in the State allocation spreadsheet if a resident state is attached and being processed for the client. The purpose of a second primary state is to allow for blank spreadsheet amounts to default to federal amounts for the resident state being processed. The second primary state, if present, always appears second in the State allocation spreadsheet.

All other attached states for this client will appear in the State allocation spreadsheet, in alphabetical order as secondary states. These other nonresident and part-year resident processed states will automatically be assigned zero in every applicable spreadsheet amount field. Until an amount has been entered for a secondary state, no income will be transferred to that state from this unit.

If the postal code represents a non-UltraTax/1040-processable state (Nevada, for example), the amounts entered in the SID fields will be reported as "Other" next to the last column in the spreadsheet. The last column within the spreadsheet represents federal amounts which may be used for reference only during data entry within the State allocation spreadsheet. In this case, the primary state will be determined by searching for any states being processed as resident, and if none, the first alphabetically attached state being processed.

Data entry for different categories of states

States fall within certain categories based on their calculation needs. Full build-up states, AL, CA, HI, MA, and WI, normally require that differences - depreciation, for example - be presented in a format similar to the federal return presentation. Partial build-up states, KY, NJ, and PA, require less detail or specialized calculations that differ from the federal return presentation. AGI states, AR, AZ, CO, CT, DC, DE, GA, IA, ID, IL, IN, KS, LA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NM, NY, OH, OK, OR, RI, SC, UT, VA, VT, and WV, require that the in-state portion of federal AGI be reported for part-year resident and nonresident returns. These part-year resident and nonresident amounts are transferred and calculated using the AGI Worksheet. States that are not affected by the State allocation spreadsheet are NH and TN, and the Trust paid state estimated tax field within the K1T allocation spreadsheet is used by all processed states.

Related topic: State allocation spreadsheet FAQs (1040)

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