2018 UltraTax CS
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The following are various worksheets available to calculate allocation expenses and examples to show how those worksheets calculate. For more information about these worksheets, see Worksheets that show how expenses are allocated.
Partnership / S Corporation worksheet
Each 1065 or 1120S activity generates a unit of this worksheet showing the income reported. Charitable, other, and miscellaneous deductions reported on an activity are only allocated to the income categories reported for that activity.
Example
A partnership has the following business income.
| Income | Total |
|---|---|
| Business income | $6,000 |
| Interest income | $1,000 |
| Dividend income | $500 |
| Deductions related to portfolio income not subject to a 2% limitation |
$700 |
On the worksheet, $467 of the deduction is allocated to interest (700 x 1000) / (1000 + 500). No deduction is allocated to the business income because the deduction is related to portfolio income.
Allocation of deductions for tax-exempt income worksheets
These worksheets calculate a percentage of the tax-exempt income share of indirect expenses and an indirect portion for each type of expense. The total amount of each expense is displayed, including the allocation to an income type and indirect less the tax-exempt portion. When the application calculates the amounts used on the Allocation of Expenses by Income Type using the gross or net allocation method, it uses these amounts.
Example
Using the partnership's business income in the first example, page 2 of the worksheets will show $700 as a direct allocation of Other deductions.
Allocation of expenses by income worksheet
- Accounting basis. This worksheet allocates the non-corpus expenses against the portion of income considered part of accounting income. Net income amounts on this worksheet are available for allocation to beneficiaries on Form 1041, Schedule B, line 9 as income required to be distributed currently.
- Tax basis. This worksheet allocates the expenses against the income categories considered part of the distributable net income. Net income amounts on this worksheet are available for allocation to beneficiaries on Form 1041, Schedule B.
Example
Using the partnership's business income in the first example, the expense allocated to interest and dividends on the Tax basis worksheet will match what is reported on the Partnership / S Corporation worksheet. None of the income or expense is reported on the Accounting Basis Worksheet because the activity is considered corpus as a default. The income and expense is reported on the Accounting Basis Worksheet if you enter distributions on Screen K1-3 or you enter an X in the Include income reported from pass-through entity instead of distributions in accounting income field on Screen Dist in the Allocation folder.
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