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Question

What are the Allocation buttons used for on the various activity screens?

Answer

Screens C, C-2, F, F-2, K1, K1-2, K1-3, K1T, K1T-2, Rent, and Rent-2 have an allocation spreadsheet attached for you to enter state amounts. Rather than accessing each state to enter differences or entering multiple units of an activity screen for a single activity, you can enter all data at the federal level for each state in a single unit.

To access the allocation spreadsheet, the following conditions must be present.

• The client being processed must have at least one state attached.
• You must have Input Screen Data Entry view selected.
• For Screen F, data must exist in the Description field for the unit.
• For Screen C, data must exist in the Principal business or profession field for the unit.
• For Screens K1 and K1T, data must exist in the Name field for the unit.
• For Screen Rent, data must exist in the Description field for the unit.

When these conditions have been met, choose View > Allocation, click the Allocation button, or press CTRL+B to access the allocation spreadsheet. For information on exporting and importing the allocation information to an Excel spreadsheet, see Using the Excel Export / Import utility for multi-state allocation information.

Primary state behavior

The postal code entered on Screen C, F, K1, K1T, or Rent, regardless of residency, is 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 allocation spreadsheet.

For Alabama, Arkansas, California, Hawaii, New Jersey, Pennsylvania, and Wisconsin, the State, if different fields on Screen K1 or K1T are used to fill in the first column of the spreadsheet. If an amount is not entered in the State, if different field on Screen K1 or K1T, UltraTax CS uses the federal amount to process income for the primary state.

If the primary state for that unit is not the state in the State of residency field on Screen 1041, a second primary state appears in the allocation spreadsheet if the resident state is attached and is 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 allocation spreadsheet.

All other attached states for this client appear in the allocation spreadsheet, in alphabetical order as secondary states. These nonresident processed states are automatically assigned zero in every applicable spreadsheet amount field. Income is not transferred to that state from this unit until an amount is entered or a percentage is allocated for a secondary state.

If the postal code represents a state that is not attached to the return, the amounts entered in the State, if different fields are reported as Other next to the last column in the spreadsheet. The last column in the spreadsheet represents federal amounts which may be used for reference only while entering data in the allocation spreadsheet. In this case, the primary state is the state in the State of residency field on Screen 1041 if that state is attached to the client. If the resident state is not attached, the first alphabetically attached state being processed is considered the primary state.

Total Source

The following states are listed twice, once as State Name Total Source and once as State Name State Source: Alabama, Arkansas, California, Hawaii, Pennsylvania, and Wisconsin. The allocation for Total Source income is for state law differences that affect the total income amount, such as depreciation. Both Total Source and State Source are used for state processing.

Other features available in the 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. Amounts that do not apply to a particular state are inactive. Each section of Screens K1, K1-2, K1-3, K1T, and K1T-2 is assigned a separate Allocation Spreadsheet tab for ease of data entry. Screens C, C-2, F, F-2, Rent, and Rent-2 have only one tab for data entry.

• Percentage: Enter a percentage in XXX.XXXX format in the first field available on the allocation spreadsheet. Select the state to which this percentage applies. Click the Apply button. All federal amounts present for this unit appear in the selected state's column, multiplied by the percentage entered for that state. The percentage entered for that state also appears below the state name for future reference. Specific amounts can be changed from the calculated amount.
• Amount: In cases where percentages of federal amounts do not apply, specific amounts may be entered for the applicable state. Zero is a valid entry and prevents the state amount from defaulting to the federal amount. If an amount field is blank, the federal amount, if present, is used in the state's calculation.

Related topic: 1041-US: State processing FAQs

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