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Interest Apportionment

The IRS added Schedule Q to Form 5471 beginning with tax year 2020. The software transfers the Average Asset Value from Interest Apportionment Information to Form 5471 Schedule Q column (xiii) Average Asset Value.
The Interest Apportionment Information screen is used to get the information required to build the asset base for the apportionment of interest expense for the foreign entity. The screen is divided into 2 tabs, Operating Assets - Taxable & Non-Taxable and Basis in Subsidiary. During E&P, Look Through and Subpart F calculations, amounts allocated and apportioned in the Asset Sourcing Workpaper are transferred to the End of Year Taxable (From International Compute) column. The module responsible for the most recently transferred amounts is noted in the column heading after Last Compute.
During a TAS Consolidation, the system aggregates information from member binders for divisional consolidations that source at the division level. If sourcing is done at the divisional consolidation level, enter the amounts directly in the divisional consolidation’s workpaper. The sourcing indicator is located on the Binder Properties screen on the
International
tab.
To access these screens, open a binder, then on the TAS navigation tree, select
Foreign Tax Credit
, then
Interest Apportionment Information
.
The following table describes the tabs:
Operating Assets - Taxable & Non-Taxable
Use this page to:
  • Enter asset information related to the assets of the entity. The Source Code column is used to identify the type of income generated. The asset values are entered in the Beginning of the Year and End of the Year columns and the Average Asset Override
  • Enter the tax basis or Fair Market Value (FMV) of the assets (whichever is appropriate.) The system uses the average of the beginning and ending operating asset values for each source code in constructing the asset apportionment base for interest expense.
  • Information entered in this page is optional. It represents assets that generated non-taxable income for the source code selected. Amounts won’t be included in the asset apportionment base for interest expense.
  • In
    Taxable
    , in column
    Source Code
    , select each source code with amounts on the E&P By Source Code – After Dividend Look Through report.
    • For each source code, the amounts from either column
      Average Asset Override
      , or the average of columns
      Beginning of Year
       and
      End of Year (From International Computes)
      , or the average of columns
      Beginning of Year
       and
      End of Year(Override)
       transfer to Form 5471 Schedule Q column (xiii) Average Asset Value.
Basis in Subsidiaries
Use this page to enter parent's basis in stock (tax basis or FMV) and the earnings and profits of the subsidiary. Enter earnings and profits only for an entity when the tax basis value is being reported. Amounts entered on this page won't be included in the asset apportionment base for interest expense in a Foreign Entity binder.

This article applies to:

  • PRODUCT: ONESOURCE Income Tax
  • Subject: Apportionment
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