Form 5471 Schedule E part I section 1 - Taxes for which a Foreign Tax Credit is Allowed
Subpart F Calculations: Tax Payment and Refund Allocation
During Subpart F calculations, the system processes tax payment and refund information as follows:
- Data Entry:
- Enter tax payment/refund information in theCurrent Year Taxes Paid/Accruedscreen at a transaction/payment level. Data is associated with a specific tax account in the International Summary chart.
- If the total functional currency tax entries for an account differ from the account balance in the Income Sourcing Workpaper by more than the rounding amount in the Charts (Binder Properties), the system generates a comprehensive edit error during Subpart F calculations.
- You can import data for groups of entities using the Batch Process.
- Allocation Process:
- The system allocates this information to baskets using ratios derived from the associated account.
- These ratios are found in the "E&P by Basket – after Dividend Look Thru Report."
- Data Transfer:
- When you runInternational Compute \ Transfer to US5471, US8865, US8858, the system performs the following actions: a. Transfers line-by-line details to the Organizer. b. Populates the "face" of the Schedule E Part I section for each basket.
- Currency Code Assignment (Tax Years 2020 and Later):
- ONESOURCE utilizes country/currency relationships from the Exchange Rate Chart.
- It automatically sets the three-letter currency code in column h (Local Currency in which tax Is Payable).
- This code corresponds to the country listed in column c (Country or US Possession to which tax is paid).
Divisional Consolidation and Tax Data Entry
For foreign divisional consolidations set to enter Sourcing, Apportionment, and Tax data at the Division level:
- Data Aggregation:
- Information from the members' Current Year Taxes Paid/Accrued screens is aggregated during TAS Consolidation.
- The aggregated result is then transferred to the divisional consolidation.
- You cannot edit the Current Year Taxes Paid/Accrued screen for a divisional consolidation sourcing at the Division level.
- Go to Binder Properties, thenInternationaltab to review source settings. Use the International Data Entry report which you can find in the Top Consolidation. (Foreign Tax Credit, then International Reports, then International Data Entry Reports, then Binder Properties: Foreign Entity)
During Subpart F calculations, the individual detail lines are allocated to baskets using the basket ratios for the associated account on the E&P by Basket – after Dividend Look Thru Report. If an allocation ratio is unavailable, the transaction will be assigned to the general limitation basket. Use the following 2 reports to review the allocation of tax payments to baskets.
- Subpart F, Form 5471
- 8858 Reports: Form 5471 Schedule E / Form 8858 Schedule J by Basket Report
When you run the
International Compute \ Transfer to US5471, US8865, US8858
, line-by-line detail is pushed for each basket to the front of the Schedule E Part I section in Organizer (not “hidden” screens as is the case with Schedule C & F). During the transfer of each row, the application uses the country/currency relationships in the Exchange Rate Chart to set the three-letter currency code for column h (Local Currency in Which Tax Is Payable) to the one related to the country in column c (Country or US Possession to which tax is paid). The application will not check the column g (If taxes are paid on U.S. Source income) box. If column g needs to be checked for any transactions, use Organizer and then select the
INTL Transfer Options > Schedule E & E-1
option to prevent further transfer to the Organizer.FOGI balances are included in the amounts reported in the general limitation basket. US basket and 901(j) amounts will not flow to the form. An E&P module comprehensive edit error will be generated if GILTI and Foreign Branch Income source codes are used in a legal entity that is not a foreign partnership with at least one direct FTC owner.
note
Before transferring new results, the International Compute deletes all existing information in the schedule. If you enter manual overrides in Organizer, you must select the
Schedule E & E-1
option on the INTL Transfer Options page in Organizer on the 5471 navigation tree to prevent additional transfers to the schedule from International Computes. If you do not check the box, you will lose any Organizer overrides you entered (even if the Organizer field is locked) the next time the International Compute \ Transfer to US5471, US8865, US8858 is run for the binder.Rows that require manual data entry
The international application does not capture all the information requested on Schedule E-1. You must manually enter data for the following rows and it is retained for all baskets other than a Section 901(j) basket during subsequent transfers:
- 2. Adjustment for foreign tax redetermination
- 3a. Taxes unsuspended under anti-splitter rules
- 3b. Taxes suspended under anti-splitter rules
- 5a. Taxes carried over in nonrecognition transactions
- 5b. Taxes reclassified as related to hovering deficit after nonrecognition transaction
- 7. Other adjustments
- 12. Taxes on amounts reclassified to section 959(c)(1) E&P from section 959(c)(2) E&P
- 13. Other
