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Foreign entity returns

E-file form 8990 specified group parent

We added the calculation of the Section 163(j) interest expense adjustment under the CFC Group Election to the international product for tax year 2023.
The calculated total amounts under
Specified Parent / Stand-alone Entity Name: U.S. Specified Parent
 in the
Section 163(j) Group Member Detail Report
 under
Section 163(j) Business Interest Expense
 in the Subpart F Reports, aren't automatically transferred to the U.S. parent for inclusion in the e-file.
To comply with IRS requirements, you'll need to create the XML for Form 8990 for a Specified Group Parent in a placeholder binder and then attach it to the federal e-file. The IRS requires that you use the name
Specified Group Parent
 with an all 0s EIN.
Create a new page for creating the placeholder e-file and attach the e-file to the federal 1120 return with the following information:
The
e-file
 for
Form 8990, Limitation on Business Interest Expense Under Section 163(j)
 for the
Specified Group Parent
 is created in a placeholder binder; modified to include Form 8990 lines for the
CFC Group;
 and attached to the
e-file
 of the
top consolidation
.
  1. Select
    Add Binder
     to create a placeholder binder. Don't assign a federal chart of accounts to the binder.
  2. Create the binder as a
    corporate single entity
     and assign it to a
    Specified Group Parent
     with an
    EIN 00-0000000
     with the same
    Return Type
     as the owner of the 5471 forms.
  3. Open the binder. In the Tax Accounting System (TAS) navigation tree, select
    Compute
    .
  4. Select
    Refresh Entity: Company Information and Fiscal Year and Incorporation
    then select
    Compute.
  5. In
    Organizer
    , select
    General Information
    , then
    Questions
    .
  6. In
    Schedule K
     under
    23 Section 163(j) Election
     for the question
    Did the corporation have an election under section 163(j) for any real property trade or business or any farming business in effect during the tax year
     , select
    Yes.
  7. Under
    24 Excess Business Interest Expense
     for the question
    Does the corporation satisfy one or more of the following?
    , select
    Yes
    .
  8. In
    Organizer
     select
    Informational Forms
    , then
    Limitation on business interest expense
    .
  9. In
    Adjustments
    , under
    Options,
    select
    Force print
    .
    1. In
      Business Interest Expense
       for
      Current year business interest expense (total)
      ,
      Disallowed business interest expense c/f from prior year
      , and
      Floor plan financing interest expense
      , enter the amounts.
    2. Under
      Taxable Income
       , enter the amount.
    3. In
      Taxable Income
      , under
      Additions
      , enter the amounts for:
      1. Any item of loss or deduction which is not properly allocable
      2. Any business interest expense not from a pass-through entity
      3. Amount of any net operating loss deduction under section 172
      4. Amount of qualified business income deduction under section 199A
      5. Deduction allowable for depreciation, amortization, or depletion
      6. Amount of any loss or deduction items from a pass-through entity
    4. For
      Other Additions
      , enter the description and amount.
    5. Under
      Reductions
       enter the description and amount for:
      1. Any items of income or gain not properly allocable to a trade or business
      2. Business interest income not from a pass-through entity
      3. Amount of any income or gain from a pass-through entity
      4. Current year business interest income
      5. Multiply adjusted taxable income by the applicable percentage
      6. Business interest income
      7. Current year business interest deduction
    6. For
      Other reductions
      , enter the description and amount.
  10. In
    Organizer
    , select
    Balance Sheet/M1-M2-M3
    , then the
    Schedule M1 / M2
     tab.
  11. n
    Reconciliation (M-1)
    , for
    Options
    , select
    Suppress the print of Schedules L, M-1, and M-2 if total receipts for the tax year and total assets at the end of the tax year are less than $250,000
    .
  12. In
    Organizer
    , select
    Balance Sheet/M1-M2-M3
    , then
    Schedule M-3
    , then select the
    Schedule M-3
    tab.
  13. In
    Sch M-3 Options
    , for
    Compute Options
    , in
    Option to Compute Schedule M-1 and/or Schedule M-3,
     select
    Compute Sch M-1 only.
  14. In
    Organizer
    , select
    General Information
    , then the
    Basic Return Information
     tab.
  15. In
    Return Information
     under
    Signing Officer
    , enter the same information in the fields as the filing entity.
  16. In
    Organizer
    , select
    Federal E-file
    .
    1. Select
      Enable federal e-file
       and enter the
      EFIN
      of the filing entity.
    2. Select
      Large Taxpayer
      .
    3. In
      Signature Option
      , select
      Form 8879 – Practitioner PIN
      .
    4. If you select
      Form 8879 – Practitioner PIN
      under
      PIN Entered By
      , select
      Officer
      .
    5. For
      PIN Information
      , select
      Randomly generate officer and ERO PIN.
  17. In
    Organizer
    , select
    Compute
    , then
    Full Recompute
    .
  18. Select
    Federal E-file
    , then
    Create E-file,
    and select
    Create Federal E-file
    .
  19. Select
    E-file Viewer
    , then
    Tax Return
    .
  20. elect
    FEDERAL
     for
    Full XML
    , then select
    Download
    .
  21. Open the downloaded XML file with a text editor.
    1. Select
      CTRL F
       and in the Search enter
      <IRS8990
      .
    2. Under
      <IRS8990 documentId="IRS8990">
      add the following rows. Enter
      true
       for yes or
      false
       for no between the > and <.: 
                              <ForeignEntityName>                                                                                <BusinessNameLine1Txt>Specified Group Parent</BusinessNameLine1Txt>                                                                                       </ForeignEntityName>                                                                       <EIN>000000000</EIN>                                                                       <CFCGroupElectionInd>true</CFCGroupElectionInd>                                            <FrmFldBySpcfdGrpParentInd>true</FrmFldBySpcfdGrpParentInd>                                <SafeHarborElectionInd>false</SafeHarborElectionInd>
    3. Under the
      </ReturnHeader>
       on line
      <ReturnData documentCnt="2">
      , change the count from
      2
       to
      1
      . 
      <ReturnData documentCnt="1">
    4. Delete lines
      <IRS1120 documentId="IRS1120">
       through
      </IRS1120>.
    5. Save
      and close the file. Do
      Save As
       a TXT file.
  22. In the top consolidation filing entity, in
    Organizer
    , select
    Federal E-file
    .
  23. In
    International
     select
    Third Party XML
    , then
    Attach Third Party XML Files
    and select
    Attach Third Party XML File
    .
    1. Select
      ADD
      .
    2. For
      Attachment Jurisdiction,
      select
      Third Party XML File
      .
    3. Select
      Browse for File
      .
    4. Select the updated XML file.
    5. Under
      Attachment Description
      for
      Attachment Title
      , enter
      Specified Group Parent Form 8990
      .
    6. Select
      Upload
      , then
      OK
      , then
      Done
      .
    7. Under
      Forms Included in Third Party XML
       under
      Diagnostic Messaging
      , select
      All
      .
    8. Select
      PDF attachments related to the third party XML added to this return, Form 1120, Schedule N completed,
      and
      Form 1118, Schedule J completed.
    9. Under
      Validate Third Party XML Files (Mandatory),
      select
      Validate Third Pary XML File
      .
  24. In
    Federal E-file
     in
    Create E-file
    , select
    Create International XIT File
    , and then, select
    Create Domestic XDM File,
    and select
    Create Aggregated E-file.

This article applies to:

  • Product: ONESOURCE International Tax
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