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Foreign entity returns

Allocable Interest Expense

Instead of apportioning the amounts by source code, interest expense can be allocated.
note
Allocated Interest Expense isn't included in Form 1118, Schedule H, then apportioned interest expense.

Add federal accounts and adjustments

  1. Go to
    Charts
    Federal
    Accounts & Adjustments
    YYYY
     and select the chart.
  2. Select
    Add Account
    .
    • For
      Account Number
      , enter
      TAX41-500.ALLOC
      .
    • For
      Account Description
      , enter
      Allocable Interest Expense
      .
    • For
      Tax Return Code (TRC)
      , select
      41-500 – Interest
      .
    • For
      Tax Combination Code
      , select the code.
  3. Select
    Save
    .
  4. In the
    Charts of Adjustments
     tab, select
    Reclass
    , then select the chart.
  5. Select
    Add Adjustment
    .
    • For
      Adjustment Number
      , enter the code.
    • For
      Adjustment Description
      , enter
      Reclass to Allocable Interest Expense
      .
    • For
      Available Accounts
      , select the
      interest expense
      ,
      intercompany interest expense
      , and
      allocable interest expense accounts
      .
    • Select
      Add
      .
  6. Select
    Save
    .

Cross reference federal to international accounts

  1. Go to
    Charts
    International
    Summary Accounts
    YYYY
     and select the chart.
  2. Select
    Add Account
    .
    • In
      Account Type
      , select one of the following:
      • 5100 – Interest – Allocable To Specific Property
      • 5110 – Interest – Allocable under Reg 1.861-10(e)
      • 5120 – Interest – Allocable under Reg 1.861-10T
    • In the
      Account Number
       field, enter
      TAX41-500.ALLOC
      .
    • In the
      Description
       field, enter
      Allocable Interest Expense
      .
    • Select
      Save
      .
  3. Go to
    Charts
    International
    Chart of Accounts Cross Reference
    YYYY
    Federal COA,
     and select the chart.
    • In
      International COA
      , select the chart.
    • For
      International Account
       (Federal TRC / TCC / Account), select
      TAX41-500.ALLOC
      .
    • For
      Federal COA
      , select
      TAX41-500.ALLOC
      .
    • Select
      Map
      .
    • Select
      Save
      .

Update payor and recipient amounts

  1. Go to
    TAS
    Adjustments
    Reclass Adjustments
    [Adjustment number]
    .
    • In the payor, debit account
      TAX41-500.ALLOC
       and credit intercompany interest expense and interest expense.
    • In the recipient, debit intercompany interest income and credit non-intercompany interest income.
    • Select
      Save
      .
  2. Go to
    TAS
    Compute
     and select
    Compute
    .
  3. In the payor in
    Foreign Entity
    Income Sourcing
    account TAX41-500.ALLOC
     account, populate
    BAL
     for 1 source code.
    • Populate
      [##.##%]
       or amounts for other source codes.
    • Select
      Save
      .
  4. In the payor in
    Foreign Entity
    Look-Thru Transactions
    Intercompany Payments
    Interest, Rent, Royalties
     tab, delete the intercompany payment.
  5. Select
    Save
    .
  6. In the recipient in
    Foreign Entity
    Look-Thru Transactions
    Intercompany Receipts
    Interest, Rent, Royalties
     tab, delete the intercompany receipt.
  7. Select
    Save
    .

This article applies to:

  • PRODUCT: ONESOURCE Income Tax
  • Return type: international

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