1040-US: Allocating income to states in the state allocation spreadsheet (for Screens C, E, F, and 4835)

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Question

How do I allocate federal net income to the applicable states displayed in the State allocation spreadsheet? (Screens C, E, F, and 4835)

Answer

Two methods (percentage or amount) of allocation can be used to allocate federal net income to the applicable state(s) displayed in the State allocation spreadsheet.

Note: 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). Amount fields that are not shaded are considered enabled for the applicable state.

  • Percentage: Enter a percentage in XXX.XX format in the first field available on the State allocation spreadsheet. Select the state to which this percentage applies from the drop-down list. Click the Apply button. UltraTax CS will automatically calculate the amounts attributable to that state and display the amounts in the spreadsheet. The percentage entered for that particular state will appear below the state name for easy reference. If enabled, individual item amounts can be changed (overwritten) on the spreadsheet from the calculated amount. Note that carryover amounts are not multiplied by the percentage. Carryover amounts, when applicable to the state, should be entered individually.
  • Amount: In cases where a percentage of the federal amounts do not apply, individual item amounts, if enabled, may be entered on the spreadsheet for the applicable state. Zero (0) is a valid entry and will prevent the state amount from defaulting to the federal calculated amount. If an individual item amount field is left blank, the federal amount, if present will be used in the state's calculation.

    Ohio Note: If Ohio amounts are entered instead of a percentage of federal, additional data entry is required. In the Ohio system, go to Screen BusApp in the Income and Adjustments folder. For the purpose of calculating Form IT-2023, it is necessary to enter either an Ohio apportionment ratio, or the factors for apportionment of business income.

Build-up states that report or otherwise calculate income from these Schedules C, E, and F and Form 4835 activities on an amount by amount basis may be allocated using a percentage only, while passive carryover amounts may be allocated by entering the state specific carryover amounts within the State allocation spreadsheet.

Other states, which are typically AGI states that require net activity amounts only, may be allocated by percentage or by entering the net amount of activity income / allowable loss attributable to the specific state.

Note: Passive activity carryover amounts are disabled for AGI states except Kentucky, Montana, New York, and Oregon.

New York Note: Amounts entered for part-year resident and nonresident New York taxpayers are used to complete Form IT-182, Passive Activity Loss Limitations, basis and at-risk worksheets. Only New York source amounts are used to complete Form IT-182. Therefore, the calculation may differ from federal Form 8582.

Montana Note: Montana-sourced passive activity losses should be entered in the State allocation spreadsheet.

Kentucky Note: Kentucky-sourced passive activity losses, basis, and at-risk amounts should be entered in the State allocation spreadsheet.

Connecticut Note: Connecticut-sourced passive activity losses and basis amounts should be entered in the State allocation spreadsheet.

The State allocation spreadsheet may be printed in a report format for future reference. Click the Print or Preview button on the lower portion of the spreadsheet. If licensed, you can also print to FileCabinet CS.

Related topic: State allocation spreadsheet FAQs (1040)

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