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International Charts

About Sourcing Charts

Sourcing charts allow you to customize the presentation of the Income and Assets Sourcing Workpapers by selecting the system and user-defined source codes to display as columns.
Since the Sourcing Workpaper employs a spreadsheet look and feel, customizing the source codes that appear as columns facilitates data entry and review.
A sourcing chart, once defined, is available for all binders created for that tax year. Sourcing Charts can be developed for specific operations, geographic locations, or any other income category. Multiple Sourcing charts can be created for a given year.

Create a sourcing chart

  1. Select
    Charts
    ,
    International Sourcing
    .
  2. Select
    Add Chart
    .
  3. Enter a unique name for the sourcing chart.
  4. Verify the correct
    Year's
     selected.
  5. To copy an existing source chart, select the sourcing chart from
    Copy from
     field.
  6. Select
    Save
    .

Data entry for a sourcing chart

  1. On the Sourcing Chart list, open the appropriate chart.
  2. Select from the
    Available Source Codes
     list.
  3. Select
    Map
    .
  4. When the process is complete, selected source codes will display in the
    Assigned Source Codes
     list.
  5. Select
    Save
    .

International sourcing

System and user defined source codes are used to allocate and apportion account balances or specific classes or groups of income in the Sourcing Workpaper.
Source codes differentiate income between Subpart F and non-Subpart F income, Section 904(d) basket, passive income categories for high tax kickout calculations, 863(b) income, and U.S. and foreign source income for Section 904(h) calculations.

Passive source grouping

User-defined passive source codes are combined into one or more groups. Select
Charts
, then
International Sourcing
, then
Passive Source Grouping
.
In all years, the groupings are used during FTC calculations to group user-defined source codes which represent passive foreign source income with other such source codes for purposes of applying the high-tax kickout rules.
High-taxed income's any income (tested after allocation of expenses) that would otherwise be passive income but isn't treated as such because the sum of foreign income taxes paid and deemed paid with respect to that income exceeds the tentative U.S. income tax liability with respect to that income. This exclusion ensures the separate limitation for passive income segregates low-taxed, passive income from high-taxed, passive income, avoiding substantial averaging within the passive basket. Through
Passive Source Grouping
, you instruct the system to group income items together to treat them as 1 unit to determine if such items, as grouped, are high-taxed income.
For tax years 2020 and later, you can map the user-defined Passive Subpart F source codes to the specific Subpart F FPHCI types on Form 5471 Schedule Q, lines 1a-1f and also map them to the specific Withholding Tax group on Form 5471 Schedule Q, line B. Then you can also map them for U.S. Source Income or Foreign Source Income on Form 5471 Schedule Q, line C.
note
Passive source groupings roll over to the next year.

Create a passive source group

  1. Select
    Charts
    , then
    International Sourcing
    , then
    Passive Source Grouping
    .
  2. Select the
    Year
     and then
    Add Group
    .
  3. Select the Subpart F Income Group from the following:
    • DIRRA – Dividends, Interest, Rents, Royalties and Annuities
       to transfer to line 1a.
    • NGCPT – Net Gain from Certain Property Transactions
       to transfer to line 1b.
    • NGCT – Net Gain from Commodities Transactions
       to transfer to line 1c.
    • NGCG – Net Foreign Gain Currency
       to transfer to line 1d.
    • IEQI – Income Equivalent to Interest
      to transfer to line 1e.
    • NPC – Income from Notional Principal Contracts
       to transfer to line 1f.
    • PILOD – Payments in Lieu of Dividends
       to transfer to line 1f. or
    • PSC – Personal Service Contracts
       to transfer to line 1f.
  4. Select the
    Withholding Group
     from one of the following:
    • 1 – Withholding Tax of 15% or Greater
      ,
    • 2 – Withholding Tax Less than 15% but Greater than 0
      ,
    • 3 – No Withholding or Other Foreign Tax
      , or
    • 4 – No Withholding but Subject
      to Other Foreign Tax
      .
  5. Enter the
    Passive Group Name
     indicating the
    Subpart F
     and
    Withholding Tax
     groups and whether the source is
    U.S.
     or
    Foreign
    .
  6. Select
    Save
    .
  7. Repeat adding groups until you've created all the groups you need.
  8. Select the user-defined
    Passive Source Code
    .
  9. Select the
    Passive Groups
    .
  10. Select
    Map
    .
  11. Repeat until you've mapped all the user-defined
    Passive Source Codes
    .
  12. Select
    Save
    .

Add a source code for passive source grouping

  1. Select
    Charts
    , then
    International Sourcing
    , then
    Source Code Definition
    . The window opens with the Source Code Definition selected.
  2. Select the
    Year
     from the dropdown.
  3. Select
    Add
    .
  4. Each column has a dropdown arrow to select the option for the row.
    1. In the FTC Type column, select
      3-Passive Income
      .
    2. In the Subpart F Type column, select
      2-FPHCI
      .
  5. Select
    Save
    .

This article applies to:

  • PRODUCT: ONESOURCE Income Tax
  • Return type: international

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