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Foreign entity returns

Foreign Entity Computes Process in Organizer

The
E&P
,
LT
,
SUBF
tabs control the Foreign Entity computes that analyze the sourcing of earnings and profits, process intercompany transactions (Look Through), and calculate subpart F income and deemed paid tax credits. All foreign entities listed on the Top Consolidation binder's International Members screen are available to select.
There are three separate modules for these computes:
  • E&P
  • Look Through
  • Subpart F
You must successfully complete the E&P computes prior to running the Look Through or Subpart F computes. After the E&P computes are completed, you can run either the Look Through computes or the Subpart F computes. If the Look Though computes are by-passed (have not been completed prior to running Subpart F), interest, rent, and royalty intercompany income will not be reallocated and will reflect the sourcing from the E&P module. Results from the foreign entity calculations flow to the foreign forms when you select the
Transfer to US5471, US8865 and US8858
 (Organization Chart) option on the
Compute
screen.
The Foreign Entity computes determine separate limitation characterization for Look Through payments with regard to the following:
  • Priority rules for multiple Look Through payment types with a single CFC
  • Netting rules for back-to-back look through payments
  • Elimination of payments within circular transaction chains
  • All payment types between CFCs, across unlimited chains of ownership, and back to U.S. entities.
  • Maintains dynamic reconciliation of payments and associated withholding taxes among multiple look-through payors and payees in their respective functional currency.
The Foreign Entity computes also determine Subpart F exceptions and calculate inclusions after all limitations and adjustments such as:
  • The de minimis exception and the full inclusion rule
  • The high tax exception under both the item of income and pooling methods
  • Same country exception
  • Exclusion of previously taxed E&P through tiers of CFCs
  • Subpart F limitation to current year earnings and qualified deficits limitation
  • Recharacterization for Subpart F previously limited to current E&P
  • Maintenance of E&P and tax pools by previously taxed character
  • Calculation of exchange gain or loss by separate foreign tax credit category for PTI remittances
The current status of calculations (Computed, Error or blank is never executed) for each entity and module is displayed when you open the screen. The
Status
 field documents the date and time of the last compute and the user who executed it.

Selecting Calculations to Run

  1. Select the box next to the entity number.
  2. Hold down the
    SHIFT
    and
    CTRL
    keys to select a group of entities.
  3. Click
    Select from Binder Group
     to automate selecting binders.
Find
 searches the
Entity Number,
Entity Name
 and
Binder Name
 columns for a matching a string of text. Click
Next
 until you locate the desired entity. Click a column heading to sort the list of entities in ascending or descending order based on the contents of that column.

Selecting Calculations to Run

  1. Check the box to the left of each module.
  2. Click
    Compute
    .
  3. If you select multiple modules, selecting
    Cancel Compute
     tells the program to cancel any pending (successive) calculations after the current calculation module finishes. For example, if you select E&P and Look Through for calculation and then click
    Cancel Compute
     while E&P is running, the Look Through calculation will not be performed. If errors are identified during computes, a hyperlink to that module's error report appears at the bottom of the screen.

Module Compute Status

  • Pending
     - Indicates a calculation has been queued for execution (all calculations selected in the screen can be canceled at this point)
  • Started
     - Comprehensive edits (pre-compute validations) are running
  • Computing
     - Calculations are running
  • Error
     - An error was identified in one or more of entities -- review the Comprehensive Error Log
Computes were successful; however, a preceding module has been calculated after this date. Calculation results may not be accurate.
Once you select
Compute
, the entity grid is filtered to display only the selected entities. While calculations are running, the status for each module will be updated to reflect the progress of the compute.
When calculations are complete, you can display all entities by selecting
Refresh
.
Closing and opening the screen also displays all entities again after computes are done.

Reviewing Error Logs and Diagnostics

If there was an error during a compute, a message appears to tell you where it is located.
  1. On the TAS navigation tree within a foreign binder, select the
    Foreign Entity > International Reports
    .
  2. Open the folder for the compute type with the error.
  3. Click the
    Error Log
     report.
  4. View the report for a description of the error. The error log will indicate the company number of the binder that contains the error.
  5. After making the change, perform another international compute.

This article applies to:

  • PRODUCT: ONESOURCE Income Tax
  • Subject: Organizer
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