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Foreign entity returns

Qualified Deficits

The
Qualified Deficits
 screen is used to reduce the amount included in the gross income of any U.S. shareholder under Section 951(a)(1)(A)(i) (Subpart F income) for any taxable year that is attributable to a qualified activity.
There are 6 system-defined source codes that are identified as qualified activities in the
Source Code Definition
 screen.
Source Code
DESCRIPTION
63
Financial Services, FPHCI, Qualified Activity
68
General Limitation Income, FPHCI, Qualified Activity
69
General Limitation Income, Insurance, Qualified Activity
70
General Limitation Income, FBC Sales, Qualified Activity
71
General Limitation Income, FBC Service, Qualified Activity
72
General Limitation Income, FBC Oil Related, Qualified Activity

Add user codes

  1. Go to
    Charts
    International Sourcing
    Source Code Definition
    Year
    Source Code Definition
     tab.
  2. To review the codes, select
    1 – Qualified Deficit
     in the
    Qualified Activity
     column.
  3. To create a code, select
    Add
    .
  4. Enter the
    Source Code
     and
    Description
    .
  5. Select the
    FTC Type
    ,
    U.S. / Foreign Source
    , and
    FDII Type
    .
  6. Select the
    Subpart F Type
     (not
    0 – Not Applicable
    ).
  7. In the
    Qualified Activity
     column, select
    1 – Qualified Deficit
    .
  8. Select
    Save
    .
  9. Go to
    Charts
    International
    Sourcing Charts
    Year
    .
  10. Select the chart.
  11. In
    Available Source Codes
    , select the code.
  12. Select
    Map
    .
  13. Select
    Save
    .

Enter Qualified Deficit information

  1. On the TAS navigation tree, select
    Foreign Entity
    Other Adjustments
    Qualified Deficit
    .
  2. Select a
    Source of Deficit
     source code from the dropdown.
  3. Enter the deficit amount in the
    Amount
     column. Enter amounts as positive numbers.
  4. Select
    Save
    .

Utilize Qualified Deficits

  1. Only current year amounts are offset by the
    Qualified Deficit
    .
  2. Utilization calculates in
    International Reports
    Subpart F Reports
    Subpart F Deemed Distribution by Source Code Report
    Deficits – 952(c)(1)(B)/(C)
    .
  3. Sec954(b)(3) Adjustments
    ,
    Section 163(j) Adjustment
    ,
    Sec954(b)(4) Adjustments
    , and
    Net Base Company Income Basket/Category Netting
     adjust income before the Qualified Deficit.

Rollover of Qualified Deficits

Balances for rollover are in
International Reports
Subpart F Reports
Rollover
Qualified Deficit Ending Balance
.

This article applies to:

  • Product: ONESOURCE Income Tax
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