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Federal input screens

Screen C - Profit or Loss from Business (1040)

Overview

Use the State allocation spreadsheet for UltraTax/1040 multi-state processing for the C screen. Enter all multi-state data at the federal level via the State allocation spreadsheet for each unit of a single entity.
With the State allocation spreadsheet, individual allocation percentages and allocated net income amounts, in total, are not required to foot with the federal amount, so individual state's law differences can be conveniently taken into consideration.
Use the St CO screen to enter the percentage of federal net income or the amount of net income attributable to a specific state for Schedules C, E, F, and Form 4835 activities. This screen is also used to enter state-specific (California, Hawaii, Kentucky, Massachusetts, Montana, New York, and Wisconsin only) passive (regular and AMT) and section 179 carryover information (including Alabama and New Hampshire) for Schedules C, E, F, and Form 4835 activities. Information entered in this screen automatically transfers to the state for use in state-specific calculations. For more information, access the input screen help for the state by pressing F1 from within a state input screen.
For all states, other than New Jersey (for resident income purposes), Michigan, Oklahoma, and South Carolina (for reporting out-of-state income), allocations apply
only
 to part-year resident and nonresident processed states.
At-Risk Limitation
Enter amounts that are at-risk in the 6198 screen. See the overview of the 6198 screen for further information.
Auto and Home Office Expenses
Enter all home office and car / truck information in the asset module even if using the standard mileage method.
Source data entry
The UltraTax CS Source Data Entry tool enables you to enter data on facsimile versions of forms your clients submit for the preparation of their tax returns. Once the facsimile forms are completed, you can export the data and transfer it into your client data files via the data sharing feature.

Schedule C - General Information

Note that if the business entered in this unit of the C screen is jointly owned and the qualified joint venture rules are met (see the IRS instructions for Schedule C), the taxpayer and spouse must file a separate Schedule C with their share of income and expenses.
UltraTax CS automatically enters the next available number in this field. You can replace this number, but you can't leave the field blank. UltraTax CS uses this information to get and coordinate information for the business unit activity. For example, these fields enable linking of information (such as income or loss, sales, credits, and asset detail) for the at-risk and passive calculations.
If you are processing a state return, enter the two-character postal code for the state to which this unit belongs. This code is used by the various state applications to help determine in-state and out-of-state amounts.
Use the St CO screen to enter the percentage of federal net income or the amount of net income attributable to a specific state for Schedules C, E, F, and Form 4835 activities. This screen is also used to enter state-specific (California, Hawaii, Kentucky, Massachusetts, Montana, New York, and Wisconsin only) passive (regular and AMT) and section 179 carryover information (including Alabama and New Hampshire) for Schedules C, E, F, and Form 4835 activities. Information entered in this screen automatically transfers to the state for use in state-specific calculations. For more information, access the input screen help for the state by pressing F1 from within a state input screen.
The principal business or profession you enter in this field prints on Schedule C, line A and is used as the unit description. This is a mandatory entry.
In the statement, enter the state use code for processing the 1040 state return and the ID number for the state return selected.
Code
Description
State number
2
Form IT-204-LL: NY
State number is not doesn't apply.
3
Form 568: CA
Enter the 7, 9, 10, 11 or 12 digit SOS file number. If no number has been assigned, enter
None
,
None 1
.
4
FAE 170: TN
Enter a Tennessee account number. If no number has been assigned, enter
None
,
None 1
.
5
Form 725: KY
Enter a Kentucky 6-digit LLC account number
7
Form 05-158: TX
Enter a 10-digit SOS file number
8
Tax identification number: HI
Enter Hawaii general/excise use a 12-digit tax identification number. Don’t include letters or dashes.
9
Form LC: KS
Enter up to a 7-digit business entity ID number. If no number has been assigned, enter
None
.
10
Qualified oil & gas activity: MI
State number doesn't apply
11
Personal service income: SC
State number doesn't apply
12
Form PPT: AL
Enter a 6-digit SOS file number
13
Form RI-1065: RI
Enter the 9-character SOS ID number
14
Form BT Summary (LLC): NH
Enter the 9-character Department Identification Number (DIN), format NL and 7 numbers
15
Form LLC Annual Report: MA
Enter the 9-digit ID number assigned by the Secretary of the Commonwealth
16
LLC Franchise Tax Report: AR
Enter the 9-digit Arkansas filing number
17
Form MTA: NY
State number doesn't apply
19
Forms PHL NPT/BIRT: PA
Enter the 7-digit Philadelphia account number
20
Schedule CT-EITC: CT
Enter the 10- to 13-digit state Tax ID number
21
Schedule DE: WI
State number doesn't apply
To activate AR, CA, KS, KY, MA, NC, NH, NY, PA, TN, and TX LL/LLC returns, select
File
, the
Client properties
, the state tab, and mark the checkbox for the form/return in the
Other return(s)
 section.
UltraTax CS uses the code you enter in this field to determine in-city and out-of-city income. After you select a city code from the dropdown, UltraTax CS automatically fills out the
City name
 field.
For more information, access the input screen help for the city by pressing F1 from within a city input screen.
To access the State allocation spreadsheet, you need to meet the following conditions for the current client.
  • The client being processed needs to include at least 1 state return.
  • You need to be viewing Client Organizer Data Entry or Input Screen Data Entry.
  • For the 4835 and F screens, data must exist in the
    Description
     field.
  • For the C screen, data must exist in the
    Principal business
     field.
  • For the Rent screen, data must exist in the
    Property kind/location
     field.
When these conditions have been met, access the spreadsheet by selecting the Allocation icon in this screen.
2 methods (percentage or amount) of allocation can be used to allocate federal unit net income to the states displayed in the State allocation spreadsheet.
  • Percentage:
     Enter a percentage in XXX.XX format in the 1st field available in the State allocation spreadsheet. Select the state to which this percentage applies from the dropdown. 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 following the state name for easy reference. If enabled, individual item amounts can be changed (replaced) on the spreadsheet from the amount calculated by UltraTax CS.
  • Amount:
     In cases where a percentage of the federal amounts don’t apply, individual item amounts, if enabled, may be entered in the spreadsheet for the 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
Print
 or
Preview
 in the lower portion of the spreadsheet. If licensed, you can also print to FileCabinet CS.
Enter the principal business or professional activity code in the field provided, use the Business code search lookup, or use the dropdown to make your selection. The business code description will be displayed in the C screen.
UltraTax CS defaults to the home address if the address fields are left blank.
If you entered code
3
 in the
Accounting method
 field, enter the other method here. UltraTax CS prints the information on line F of Schedule C next to the
Other (specify)
 checkbox.
There is no default for this field. Enter the code that represents the method of inventory.
If you entered code
3
 in the
Inventory method
 field, enter the explanation in the attached statement.
Use this statement to enter the explanation if there is a change in determining costs, valuations, or quantity between opening and closing inventory. When you enter information in the statement, UltraTax CS marks the
Yes
 checkbox on line 34 of Schedule C, and the explanation prints with the return.
Enter
2
 in this field if the taxpayer didn’t materially participate in this activity. The default is
1
 for yes.
If the taxpayer made any payments during the year that would require them to file any Forms 1099 for this activity, enter
1
 for
Yes
. If no payments were made that require filing Forms 1099, enter
2
 for
No
. See the General Instructions for Certain Information Returns, issued by the IRS, to find a chart showing which Forms 1099 must be filed. Separate specific instructions for each Form 1099 are also available from the IRS.
This field is available for data entry if
1
 for
Yes
 is entered in the
Payments were made that require filing Form(s) 1099
 field.
Enter
X
 in this field if the Schedule C is for a minister, clergy, or religious worker and expenses for this unit must be reduced by the amount allocable to the tax-free allowance. Additional data may be required in the Clergy screen, located in the Taxes folder, to calculate exclusion accurately, excess allowance, and ramifications to self-employment tax. For additional information, refer to the help for the
Clergy
 screen by pressing F1 from any field in that screen.
Leave this field blank to have the activity be subject to self-employment tax.
UltraTax CS assumes that the income from a Schedule C activity is not included in net investment income expense for Form 8960 unless the following is true.
  • C screen
    Self-employment code
     field is
    3
  • C screen
    Material participation?
     field is
    2
     or the C-3 screen
    Passive activity code
     field is
    1
Enter a code in this field to assign the net investment income treatment for this activity if it is different from the default treatment. Enter
1
 if the income from this trade or business should be included in the calculation of net investment income on Form 8960. Enter
2
 if the income should not be included.
Enter the amount of nonspecified health insurance premiums paid with the insurance plan established or considered to be established with this activity. However, if specified premiums were obtained via the Health Insurance Marketplace, see the following notes section. UltraTax CS automatically calculates the self-employed health insurance deduction for Schedule 1, line 17, of the 1040 (or 1040NR) return.
Use the attached statement to enter eligible long-term care insurance premiums paid on behalf of the taxpayer, spouse, and/or dependents paid with this Schedule C. The deduction is limited based on the age of the taxpayer, spouse, or dependents as designated by the code entered in the statement. Codes are available within the statement to identify for whom the premium was paid. UltraTax CS then verifies the age of the taxpayer or spouse from the date of birth information that you entered in the 1040 screen. For premiums paid on behalf of dependents, choose code
3
,
4
,
5
,
6
, or
7
. UltraTax CS limits each entry as required. See the following limitation table.
Age
Limitation
40 or under
$450
41-50
$850
51-60
$1,690
61-70
$4,510
71 or older
$5,640
UltraTax CS applies the deductible amount to the Self-Employed Health Insurance Worksheet based on the entry in the
T, S, J
 field at the top of the C screen. If you select
J
 from the
T, S, J
 field, the deductible premium amount is split equally between the taxpayer and spouse. The Self-Employed Health Insurance Deduction Worksheet showing the calculation prints when necessary. The amount not allowed as a deduction for Schedule 1, line 16 of the Form 1040 return automatically transfers to Schedule A as a medical deduction.
The codes that are available in the
State Use
 field in the attached statement are specific to the state postal code entered in the
State
 field. If state use codes don't apply to the entered state, state use codes aren't available.
A dropdown is available for this field when
X
 is entered in the
Statutory employee
 field in the W2 screen. The dropdown will list any W-2 for which the
Statutory employee
 field is marked and applies to the taxpayer or spouse filing the Schedule C (based on the entry in the
T, S
 field). The employer name and amount of wages will be listed for each W-2. The wages for a selected W-2 will be reported on Schedule C, line 1, and are combined with the employee business expenses entered in Schedule C, Part II. The net statutory employee wages transfer to Form 1040, Schedule 1, line 3, and line 1, Salaries and wages, is reduced by the amount in this field. The amount of wages on the selected W-2 aren't subject to self-employment tax.
This amount transfers to Schedule C, line 1 and is combined with employee business expenses entered in Part II of Schedule C. The net statutory employee wages transfer to Schedule 1, line 3 and Form 1040, line 1, Salaries and wages, is reduced by the amount in this field. Any amount entered will override the wages listed for the W-2 selected in the
W-2 unit # for statutory employee
 field.
The income from this input screen is treated as 100 percent foreign when a Form 2555 allocation code is present. If income from this activity is not 100 percent foreign earned income, enter the foreign percentage. The Form 2555 Allocation Worksheet only allocates and reports the foreign portion of this activity.
This field is used to allocate the income between the U.S. and foreign earned income (reported on Form 2555 Allocation Worksheet). Income calculated as foreign earned during the assignment is used to calculate the Form 2555 exclusion. Foreign income earned before, during, and after the assignment is reported, less any exclusion, by Form 1116 as eligible for the foreign tax credit. UltraTax CS uses this activity's allocation code to allocate any related self-employment income.
Additional information is required in the 1116, 1116-2, 1116-3, 2555, and 2555-2 screens to report this activity on Forms 1116 and/or 2555. Refer to the input screens for further information.
If the taxpayer is married, files a separate federal return, and resides in one of the following community property states - AZ, CA, ID, LA, NM, NV, TX, WA, or WI (or for registered domestic partners, files a Single or Head of Household federal return, and resides in CA, NV or WA) - use this field to identify whether or not the business income/loss is generated from community property. Enter a
1
 if the trade or business is community property and classified as the taxpayer's business. Enter a
2
 if the trade or business is community property and classified as the spouse's business. Enter
N
 if the trade or business is non-community property. Business activity units indicated as community property will be allocated 50/50 to the taxpayer and the spouse when 2 separate clients are created via the Filing Status Optimization tool with the Split income according to Community Property rules option enabled.
For married filing separate individuals, self-employment tax is imposed on the spouse carrying on the trade or business. Therefore, when the community property is designated as the taxpayer's business, UltraTax CS reports the net profit or loss from the spouse's identical Schedule C/C-EZ as taxable community income on Schedule SE line 3 with the literal "Comm Prop TxInc." When the community property is designated as the spouse's business, UltraTax CS reports the net profit or loss from the spouse's Schedule C/C-EZ as exempt community income on Schedule SE line 3 with the literal "CommProp Exempt." If the taxpayer has no other SE income, and Schedule SE is not required, the literal "Exempt Comm Prop Inc" will print on Form 1040, line 56 (or Form 1040-NR line 54).
Enter
X
 to indicate that this Schedule C activity was not active for the current tax year. UltraTax CS ignores any data entered in the activity's input screens and asset detail. This unit will proforma to next year. When activity resumes, clear this field.
Enter
1
 for a complete disposition of the activity. Prior-year passive suspended losses are released and the activity, plus any other related input screens, will be deleted during next year's proforma process. If the activity has any passive activity credit carryforwards, the activity will proforma to keep the passive credits available to use against other passive income, per Form 8582-CR.
Enter
2
 if this is a passive activity sold on an installment basis. UltraTax CS treats installment dispositions as follows.
  • UltraTax CS calculates any allowed losses for the current tax year by multiplying the overall loss by the ratio of current-year gain recognized, divided by unrecognized gain as of the beginning of the tax year. Losses in excess of the allowed amount are suspended and proforma'd to the following tax year.
  • When the gain recognized in the current year exceeds the current and carryforward losses, all losses are allowed in the current year. Also, any other related input screens are deleted during next year's proforma process. Any activity that is coded
    2
     with no passive loss carryovers, plus any other related input screens, will be deleted during next year's proforma process.

Income

Enter a description and amount for gross receipts and sales for the activity as needed. Gross receipts for Schedule C for this activity may also come from the 1099M or 1099NEC screen, in the Business folder, by marking the
Report income on Schedule C as Gross receipts
 field. You may enter information in this field and in the 1099M screen. The amounts from the 1099M or 1099NEC screen will be reported on the Schedule C, line 1. The following fields in the 1099M or 1099NEC screen will be reported as Schedule C gross receipts when the
Report income on Schedule C as Gross receipts
 field is marked.
  • 1 Rents
  • 2 Royalties
    , when the
    Royalties qualify for capital gain treatment
     field is blank.
  • 3 Other income
  • 5 Fishing boat proceeds
  • 6 Medical and health care payments
  • 10 Gross proceeds paid to an attorney
    , when the
    Do not include box 10 proceeds as other income
     field is blank
The following field in the 1099NEC screen will be reported as Schedule C gross receipts when the
Report income on Schedule C as Gross receipts
 field is marked.
  • 1 Nonemployee compensation
Federal Withholding
The federal withholding entered in this field is also used for certain states that calculate a "federal tax adjustment" for a taxpayer and spouse (split return); this amount (for state allocation purposes), will go to the taxpayer or spouse based on the overall activity's T/S/J code at the top of the screen.
State Withholding
State withholding may be entered in the statement attached to this field. If state withholding is present, to indicate who was issued Form 1099-K with state withholding, also enter a T or S in the T/S/J column and the state postal code associated to the state withholding in the Withholding State column. Many states include withholding records in the state electronic file or on withholding forms, and additional information related to the withholding may be required and entered at the state level. Entering a T/S/J code or postal code here doesn’t modify the state source income for the activity. Use the Multi-state allocation spreadsheet to allocate the activity income and use the T, S, J field to indicate to whom the activity income or loss belongs.
Use the attached statement to record other income information that transfers to Schedule C, Page 1, line 6. A custom dropdown is available in the attached statement.
Federal Withholding
The federal withholding entered in this field is also used for certain states that calculate a "federal tax adjustment" for a taxpayer and spouse (split return); this amount (for state allocation purposes), will go to the taxpayer or spouse based on the overall activity's T/S/J code at the top of the screen.
State Withholding
State withholding may be entered in the statement attached to this field. If state withholding is present, to indicate who was issued Form 1099-B with state withholding, also enter a T or S in the T/S/J column and the state postal code associated to the state withholding in the Withholding State column. Many states include withholding records in the state electronic file or on withholding forms, and additional information related to the withholding may be required and entered at the state level. Entering a T/S/J code or postal code here doesn’t modify the state source income for the activity. Use the Multi-state allocation spreadsheet to allocate the activity income and use the T, S, J field to indicate to whom the activity income or loss belongs.
Use these fields to enter amounts required to complete Form 4797, Part IV, Recapture Amounts Under section 179 and 280F(b)(2) When Business Use Drops to 50% or Less. The recapture amount is reported as other income on Schedule C, line 6.
In the
Section 179 expense deduction allowable in prior years
 and
Sec 179 recomputed depreciation
 fields, enter amounts to calculate the section 179 recapture.
In the
Section 280F (Force) expense deduction allowable in prior years (Force)
 and
Sec 280F (Force) recomputed depreciation
 fields, enter amounts to override (force) UltraTax CS-calculated amounts, if necessary.

Cost of Goods Sold

If you leave the
Beginning
 and
Ending inventory
 fields blank and enter amounts in any of the other
Cost of Goods Sold
 fields, zeros are entered for the beginning and ending inventory amounts.
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