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Form 5471 automated preparation

Form 5471 Schedule H – Current Earnings and Profits or Taxable Income

Tax adjustments are entered in a journal entry format, with 1 side impacting an income statement account and the other side impacting a balance sheet account. This produces the book/tax reconciling differences that appear on various forms. For each tax adjustment, under
Tax Return Presentation
 on the
Foreign
 tab, all TRCs and TCCs default to no selection, preventing the adjustment amounts from transferring under
TAS
 in
WTB
 for
Tax Return: 5471
 and
View by: Schedule H
 in column
Tax Adjustment
. Select a
62-xxx
 series
TRC
 to identify the
Form 5471 Schedule H
 line where the adjustment will populate. Select the related
TCC
.
TRCs flow to 5471 Schedule H as follows:
Tax Return Line
Included TRCs
2a Capital gains or losses
62-100
2b Depreciation and amortizations
62-102
2c Depletion
62-104
2d Investment and incentive allowance
62-106
2e Charges to statutory reserves
62-108
2f Inventory adjustments
62-110
2g Income Taxes
62-112
2h Foreign currency gains or losses
62-113
2i Other
62-190
5b DASTM Gain/Loss
62-114
Tax adjustments are defined within ONESOURCE Income Tax using accounts in the Federal Chart and are entered in total. For tax year 2020, E&P adjustments are reported in total on lines 1 through 5b and 5d with current earnings and profits reported by basket on lines 5(c)(i) through 5(c)(iii).
During Subpart F calculations, each Federal Chart Income Statement account in a tax adjustment is traced to the related International Summary Chart account using the Federal/International Chart Cross Reference. Once an international account is identified, the federal account amount is allocated using the basket ratios on the E&P by Basket – after Dividend Look Thru Report. If sourcing is not available (such as when a federal account is not cross-referenced to an international account or when an international account balance has been eliminated due to intercompany transaction netting), the federal account balance will be assigned to the general limitation basket.
Use the
Subpart F > Form 5471 and 8858 Reports > Form 5471 Schedule H by Basket Report
 to review the amounts that transfer to Organizer. The report mirrors the Working Trial Balance Schedule H view with data broken down by TRC (Schedule H lines 2a-2i) by row and baskets appearing as separate columns. Data in the
Total
column flows to Schedule H lines 1 & 2a-2i with the basket totals on the report line
Current Year E&P
 transferred to Schedule H lines 5(c)(i)-5(c)(iii).
When
International Compute > Transfer to US5471, US8865, US8858
 is run, amounts are pushed to the “face” of the Schedule H in Organizer (not hidden screens as is the case with Schedule C & F). FOGI balances are included in the amounts reported in the General Limitation basket on line 5(c)(i). While U.S. or treaty basket amounts (if used) flow to Schedule H lines 1 and 2a-I of the schedule, the amounts will not be reported in the basket breakdown on line 5(c). The system will generate a comprehensive edit error if GILTI and Foreign Branch Income source codes are used in a legal entity that is not a foreign partnership with at least 1 direct FTC owner.

This article applies to:

  • Product: ONESOURCE International Tax
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