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Screen F-3 - Farm - Passive, Other Information (1040)

Qualified Business Income Deduction

To calculate the Qualified Business Income, UltraTax CS uses the Schedule F, line 34 - Net farm profit or loss amount, then includes various additions and deductions such as self-employment related deductions. To view the calculated amount, see the Qualified Business Income Calculation Worksheet for Schedule F. To use an amount other than the default, enter an amount in this field. Enter zero if the activity does not have any qualified income.
For more information, see Self-employment related deductions from qualified business income (1040)
The calculation for the Qualified Business Income Deduction uses the Schedule F, line 22 - Labor hired amount. Enter an amount in this field to use an amount different than the default. W-2 wages for the trade or business are used on Form 8995-A, Qualified Business Income Deduction.
Enter the amount of the unadjusted basis of qualified property used in this trade or business. When you use the asset module, the amount calculates and transfers to this field. This amount is used only on Form 8995-A, Qualified Business Income Deduction.
If the farming business is a member of a specified agricultural or horticultural cooperative, enter the qualified business income allocable to qualified payments received from the cooperative. The amount entered here is on Form 8995-A, Qualified Business Income Deduction – Schedule D – Special Rules for Patrons of Agricultural or Horticultural Cooperatives.
Enter the DPAD allocated from the agricultural or horticultural cooperative, if any. The amount is used on Form 8995-A, Qualified Business Income Deduction, line 38.
To include this trade or business in a grouping for the qualified business deduction under the rules of Regulation Section 1.199A-4, enter a group number. Use the same code for all the trade or businesses in the same group. UltraTax CS will combine all group members into one calculation. Form 8995-A, Qualified Business Income Deduction, Schedule B – Aggregation of Business Operations is produced only when Form 8995, Qualified Business Income Deduction Simplified Calculation is not used.

Passive Activity, Other Carryover and Other Information

If the following are true, select Allocation to access the State allocation spreadsheet: Client has at least one state return; you are viewing Client Organizer or input screen data entry; in the 4835 and F screens, the
Description
 field has data; in the C screen, the
Principal business
 field has data; in the Rent screen, the
Property kind/location
 field has data.
Two methods (percentage or amount) of allocation can be used to allocate federal unit net income to the applicable states displayed in the State allocation spreadsheet.
  • Percentage:
     Enter a percentage in XXX.XX format in the first field available in the State allocation spreadsheet. Select the state to which this percentage applies from the fieldview. Select the Apply button. UltraTax CS automatically calculates 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 amount calculated by UltraTax CS.
  • Amount:
     In cases where a percentage of the federal amounts do not apply, individual item amounts, if enabled, may be entered in 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.
Build-up states that report or otherwise calculate income from these Schedules C, F, E, 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.
The State allocation spreadsheet may be printed in a report format for future reference. Select the Print or Preview button in the lower portion of the spreadsheet. If licensed, you can also print to FileCabinet CS.
Enter the appropriate activity type code in the field provided. The available codes are listed in the table that follows.
Code
Result
1
Other passive activity
3
No limitation applied (Default)
When there are passive carryovers from farm activities coded
3
, UltraTax CS considers them to be former passive activities. Income and losses from former passive activities are reported as follows:
  • If the current-year net income is less than the prior-year suspended losses, both prior-year suspended losses and current-year net income are reported on Form 8582.
  • If the current-year net income is equal to or greater than the prior-year suspended losses neither amount is reported on Form 8582.
  • If there is a current-year net loss only the prior-year suspended losses are reported on Form 8582.
In addition, please note the following:
  • UltraTax CS treats the passive portion of farm activities with a passive code of
    3
     as other passives.
  • Passive losses from this entity receive tax shelter farm treatment. UltraTax CS recalculates any gain or loss by taking into account all AMT adjustments and preferences and any AMT prior-year unallowed losses. If the amount is a gain, it is included on the Form 8582 AMT version. If the amount is a loss, it is not included on the Form 8582 AMT version. Calculated AMT losses are carried forward.
To include this activity in a passive grouping, enter the aggregation group number in this field. Units with the same aggregation number are reported as one item on the statement worksheets for Form 8582. All of the entities in an aggregation must have the same passive code. Farm activities should not be grouped with non-farm activities.
Enter a unique group number to include this activity in a Regulation 1.469-4(d)(1) grouping of a rental activity within a trade or business activity. When grouping activities under Reg. 1.469-4(d)(1), do not use a number that has been used in the Aggregation group field.
The entire group is nonpassive for reporting purposes. Each member of the activity must use passive activity code 3, that is nonpassive. Since the group is nonpassive, the group income does not report on Form 8582 and is not considered net investment income for Form 8960 purposes. The income or loss reports on the appropriate forms and schedules used regularly.
Enter the appropriate code applicable to this member of a passive activity aggregation group or Reg. 1.469-4(d)(1) group. The available codes are listed in the fieldview and the table that follows:
Code
Disclosure
1
New grouping
2
Addition to existing group
3
Regrouping
UltraTax CS uses the code and the Aggregation group to produce the statement required by Rev. Proc. 2010-13. Under Rev. Proc. 2010-13, written disclosure statements are required to be filed with the tax return for the year in which two or more activities are grouped together for the first time (essentially serving as the election to group those activities), or for a year in which changes are made to existing groupings, including when a new activity is added to an existing group.
Enter significant participation hours, if applicable, in this field.
  • If significant participation hours are less than 100 for an activity, UltraTax CS considers the activity passive. It is not considered to be a significant participation activity.
  • If total significant participation activity hours on the return are greater than 100 but less than 500, UltraTax CS treats the overall losses from the SPAs as passive. Overall income from these activities is recharacterized as non-passive.
  • If total significant participation activity hours on the return are over 500, UltraTax CS does not perform the calculation for the
    Significant participation hours
     field. The determination of the passive or non-passive character of the entity or business is not determined by UltraTax CS. You must code the activities' character.
Use the attached statement to record details about the elections taken for this Schedule F unit. The statement includes the following fields.
  • Description:
     Enter a brief description of the election taken.
  • Tax Year:
     Enter the tax year the election was taken.
  • Effective Period:
     Enter the election's effective period. Some elections are perpetual, while others only cover the tax year taken.
  • Comments:
     Enter any additional information about the election. For example, enter information about an election that was revoked.
Enter last year's regular and AMT passive-loss carryovers for this activity. This information proforma'd from last year's data, if applicable. If the AMT fields are blank, UltraTax CS assumes there are no AMT carryovers. To enter state-related passive activity carryover amounts, use the St CO screen or use the State allocation spreadsheet.
Enter last year's section 179 carryover for this activity. In future years, this information will proforma automatically. To enter state-related section 179 carryover amounts, use the St CO screen or select the Allocation button in the F-3 screen and use the State allocation spreadsheet.
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