Post-86 E&P and Taxes
In a Foreign Entity, this workpaper is about keeping track of and reporting the profits and taxes of a foreign company, including any changes over time, and filling out specific forms (5471 Schedule J and P) with the required information.
The following is a breakdown of what you need to report:
- Beginning Balances in Post-86 E&P and Taxes
- Historical activity of changes to E&P and Taxes over time, categorized by:
- Basket
- Type
- Prior tax year
- Reporting requirements:
- Form 5471 Schedule J: Report the beginning balances and adjustments for line 1a (Balance at beginning of year) and Line 1b (Beginning balance adjustments).
- Exception: Don't include Pre-1987 E&P Not Previously Taxed (column c).
- Form 5471 Schedule P: Report the beginning balances and adjustments for Previously Taxed E&P in the company's functional currency (the currency used for daily transactions) for Line 1a (Balance at beginning of year) and Line 1b (Beginning balance adjustments).
Only the 959(c)(3) E&P columns can have negative amounts on the last line for column totals. Amounts in 959(c)(1) and (2) columns must sum to 0 or positive amounts for each tax year and basket combination.
For lines populated in columns for 965(a) and 965(b), the
Tax Year
column must be the same as the Year of Repatriation in the Binder Properties on the International
tab.Enter Post-86 E&P and Taxes
- To export a spreadsheet for viewing purposes, selectPrint. This will give you a spreadsheet with:
- Combined columns for Activity Type and Adjustment Description
- Combined columns for Basket number and name
- No column for Entity Number
- To export a spreadsheet for importing data, selectExport. This will give you a spreadsheet with:
- Separate columns for Activity Type and Adjustment Description
- Separate columns for Basket Number and Basket Name
- A column for Entity Number
Reports for multiple entities are printed from the
International Reports
in the top consolidation.Batch Import for the category
: International and Type: Beginning Earnings and Profits - Post 86 E&P and Taxes (2019 and Later) is available.Sections
Section | Description |
|---|---|
E&P and Tax Year Layers | Positive or negative E&P and related Taxes by Basket and tax year from this CFC. Tax Year and Made in Tax Year are the same year. Tax Year Begin is the day after the previous Tax Year End. |
Adjustments | Manual changes to prior years E&P and Taxes by basket, tax year E&P generated, and made in tax year adjusted or Adjustment Made in Current Year. |
Section 959(b) Dividends and Taxes from lower Tiers | Previously taxed E&P and related Taxes distributed from owned CFCs by basket, tax year generated, and made in the tax year of distribution. Can't be 959(c)(3) E&P. |
Subpart F | Subpart F reclassifications by basket, tax year E&P generated, and made in tax year of reclassification with negative amounts of 959(c)(3) E&P and Taxes automatically populating as positive amounts of 959(c)(2) OWN Subpart F E&P. |
GILTI | GILTI reclassifications by basket, tax year E&P generated, and made in the tax year of reclassification with negative amounts of 959(c)(3) E&P and Taxes automatically populating as positive amounts of 959(c)(2) OWN GILTI E&P. |
Dividends | E&P distributions to owners of this CFC by basket, tax year E&P generated, and made in the tax year of distribution with negative amounts for E&P and Taxes distributed. |
Section 956 | Investment in U.S. Property reclassifications by basket, tax year E&P generated, and made in tax year of reclassification, with negative amounts of 959(c)(2) and (3) E&P and Taxes automatically populating as positive amounts of 959(c)(1)(A). |
Pre-87 E&P Deficit Carryforward | 959(c)(3) E&P losses by basket, tax year E&P generated, and made in tax year of carryforward from tax years ending in 1986 and earlier that reduce E&P generated in 1987 and later. |
Post-86 E&P Deficit Carryback | 959(c)(3) E&P losses by basket, tax year E&P generated, and made in tax year of carryback from tax years ending in 1987 and later that reduce E&P generated in 1986 and earlier. |
Columns
Column | Description |
|---|---|
Adjustment Description | Unique description for Basket / Tax Year / Tax Year Made combination for each adjustment. |
Basket | Select a system-defined code with a Subpart F Type of 0 - Not Applicable or a user-defined 901(j) or Income Resourced by Treaty code from the dropdown. GILTI and Foreign Branch income codes are not valid for 5471s. |
Tax Year | Year of Tax Year Begin in YYYY format. |
Tax Year Begin | The 1st day of the tax year the E&P was generated in MM/DD/ YYYY format. Need to be the day after the previous Tax Year End. |
Tax Year End | The last day of the tax year the E&P was generated in MM/DD/YYYY format. Needs to be after the Tax Year Begin. |
Made in Tax Year | Year of Made in Tax Year Begin in YYYY format. |
Made in Tax Year Begin | The 1st day of the tax year of the E&P activity in MM/DD/ YYYY format. |
Made in Tax Year End | The last day of the tax year of the E&P activity in MM/DD/YYYY format. |
Adjustment Made in Current Year | For Adjustments only, select to populate the change in E&P on Schedule J Line 1b. |
Hovering Deficit Adjustment | For Adjustments only, select to indicate a change in a Hovering Deficit. |
959(c)(3) | The amount of Foreign Source and U.S. Source E&P and related Taxes not included in a U.S. shareholder's taxable income. |
959(c)(2) OWN | The amount of E&P generated by this CFC is already included in a U.S. shareholder's taxable income. |
959(c)(2) SUB | The amount of E&P and related Taxes distributed from an owned CFC is already included in a U.S. shareholder's taxable income. |
959(c)(1)(B) OWN | The amount of E&P generated by this CFC is related to Excess Passive Assets. |
959(c)(1)(B) SUB | The amount of E&P and related Taxes distributed from an owned CFC related to Excess Passive Assets. |
959(c)(1)(A) OWN | The amount of E&P generated by this CFC reclassified from 959(c)(2) or (3) already included in a U.S. Shareholder’s taxable income for Investment in U.S. Property. |
959(c)(1)(A) SUB | The amount of E&P and related Taxes distributed from an owned CFC is reclassified from 959(c)(2) or (3) already included in a U.S. Shareholder’s taxable income for Investment in U.S. Property. |
