This article applies to:

Product: ONESOURCE Income Tax
Return type: international

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

Go to

Charts
Federal
Accounts & Adjustments
YYYY

and select the chart.

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.

Select Save
.

In the Charts of Adjustments
tab, select Reclass
, then select the chart.

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
.

Select Save
.

Cross reference federal to international accounts

Go to

Charts
International
Summary Accounts
YYYY

and select the chart.

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
.

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

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
.

Go to

TAS

Compute

and select Compute
.

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
.

In the payor in

Foreign Entity
Look-Thru Transactions
Intercompany Payments
Interest, Rent, Royalties

tab, delete the intercompany payment.

Select Save
.

In the recipient in

Foreign Entity
Look-Thru Transactions
Intercompany Receipts
Interest, Rent, Royalties

tab, delete the intercompany receipt.

Select Save
.

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This article applies to:

Allocable Interest Expense

Add federal accounts and adjustments

Cross reference federal to international accounts

Update payor and recipient amounts