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Screen F-3 - Farm - Passive, Other Information (1040)
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Qualified Business Income Deduction
Qualified business income (Force)
To calculate the Qualified Business Income, UltraTax CS uses the Schedule F, line 34 - Net farm profit or loss amount, then includes various additions and deductions such as self-employment related deductions. To view the calculated amount, see the Qualified Business Income Calculation Worksheet for Schedule F. To use an amount other than the default, enter an amount in this field. Enter zero if the activity does not have any qualified income.
For more information, see Self-employment related deductions from qualified business income (1040)
W-2 wages (Force)
The calculation for the Qualified Business Income Deduction uses the Schedule F, line 22 - Labor hired amount. Enter an amount in this field to use an amount different than the default. W-2 wages for the trade or business are used on Form 8995-A, Qualified Business Income Deduction.
Qualified property
Enter the amount of the unadjusted basis of qualified property used in this trade or business. When you use the asset module, the amount calculates and transfers to this field. This amount is used only on Form 8995-A, Qualified Business Income Deduction.
Portion of QBI allocable to qualified payments received from cooperative
If the farming business is a member of a specified agricultural or horticultural cooperative, enter the qualified business income allocable to qualified payments received from the cooperative. The amount entered here is on Form 8995-A, Qualified Business Income Deduction – Schedule D – Special Rules for Patrons of Agricultural or Horticultural Cooperatives.
Domestic Production Activities Deduction under section 199A(g) allocated from cooperative
Enter the DPAD allocated from the agricultural or horticultural cooperative, if any. The amount is used on Form 8995-A, Qualified Business Income Deduction, line 38.
Regulation 1.199A-4 aggregation grouping number
To include this trade or business in a grouping for the qualified business deduction under the rules of Regulation Section 1.199A-4, enter a group number. Use the same code for all the trade or businesses in the same group. UltraTax CS will combine all group members into one calculation. Form 8995-A, Qualified Business Income Deduction, Schedule B – Aggregation of Business Operations is produced only when Form 8995, Qualified Business Income Deduction Simplified Calculation is not used.
Passive Activity, Other Carryover and Other Information
State allocation
If the following are true, select Allocation to access the State allocation spreadsheet: Client has at least one state return; you are viewing Client Organizer or input screen data entry; in the 4835 and F screens, the
Description
field has data; in the C screen, the Principal business
field has data; in the Rent screen, the Property kind/location
field has data.Two methods (percentage or amount) of allocation can be used to allocate federal unit net income to the applicable states displayed in the State allocation spreadsheet.
note
Amount fields applicable to one state may not be applicable to another state. Those amount fields that do not apply to a particular state have been disabled (shaded). Amount fields that are not shaded are considered enabled for the applicable state.
- Percentage:Enter a percentage in XXX.XX format in the first field available in the State allocation spreadsheet. Select the state to which this percentage applies from the fieldview. Select the Apply button. UltraTax CS automatically calculates the amounts attributable to that state and display the amounts in the spreadsheet. The percentage entered for that particular state will appear below the state name for easy reference. If enabled, individual item amounts can be changed (overwritten) on the spreadsheet from the amount calculated by UltraTax CS.
- Amount:In cases where a percentage of the federal amounts do not apply, individual item amounts, if enabled, may be entered in the spreadsheet for the applicable state. Zero (0) is a valid entry and will prevent the state amount from defaulting to the federal calculated amount. If an individual item amount field is left blank, the federal amount, if present, will be used in the state's calculation.
Build-up states that report or otherwise calculate income from these Schedules C, F, E, and Form 4835 activities on an amount by amount basis may be allocated using a percentage only, while passive carryover amounts may be allocated by entering the state specific carryover amounts within the State allocation spreadsheet.
Other states, which are typically AGI states that require net activity amounts only, may be allocated by percentage or by entering the net amount of activity income/(allowable loss) attributable to the specific state.
note
Passive activity carryover amounts are disabled for AGI states other than Arkansas, Kentucky, Montana, New York, and Oregon. Unlike income allocations, passive activity and section 179 carryover amounts apply to all residency statuses for CA, HI, KY, MA, MT, OR, and WI, and part-year resident and nonresident statuses for NY.
The State allocation spreadsheet may be printed in a report format for future reference. Select the Print or Preview button in the lower portion of the spreadsheet. If licensed, you can also print to FileCabinet CS.
note
UltraTax CS allows you to enter
0
(zero) in all of these fields.Passive activity code
Enter the appropriate activity type code in the field provided. The available codes are listed in the table that follows.
Code | Result |
|---|---|
1 | Other passive activity |
3 | No limitation applied (Default) |
When there are passive carryovers from farm activities coded
3
, UltraTax CS considers them to be former passive activities. Income and losses from former passive activities are reported as follows:- If the current-year net income is less than the prior-year suspended losses, both prior-year suspended losses and current-year net income are reported on Form 8582.
- If the current-year net income is equal to or greater than the prior-year suspended losses neither amount is reported on Form 8582.
- If there is a current-year net loss only the prior-year suspended losses are reported on Form 8582.
In addition, please note the following:
- UltraTax CS treats the passive portion of farm activities with a passive code of3as other passives.
- Passive losses from this entity receive tax shelter farm treatment. UltraTax CS recalculates any gain or loss by taking into account all AMT adjustments and preferences and any AMT prior-year unallowed losses. If the amount is a gain, it is included on the Form 8582 AMT version. If the amount is a loss, it is not included on the Form 8582 AMT version. Calculated AMT losses are carried forward.
Aggregation group
To include this activity in a passive grouping, enter the aggregation group number in this field. Units with the same aggregation number are reported as one item on the statement worksheets for Form 8582. All of the entities in an aggregation must have the same passive code. Farm activities should not be grouped with non-farm activities.
note
Non-passive activities (code 3) cannot be part of an aggregate grouping. Use aggregation groups for Form 8582 passive activity purposes only. Each member of an aggregation group must have the same passive activity code. See Form 8582 instructions and IRS regulations for more information about proper groupings.
Reg. 1.469-4(d)(1) group
Enter a unique group number to include this activity in a Regulation 1.469-4(d)(1) grouping of a rental activity within a trade or business activity. When grouping activities under Reg. 1.469-4(d)(1), do not use a number that has been used in the Aggregation group field.
The entire group is nonpassive for reporting purposes. Each member of the activity must use passive activity code 3, that is nonpassive. Since the group is nonpassive, the group income does not report on Form 8582 and is not considered net investment income for Form 8960 purposes. The income or loss reports on the appropriate forms and schedules used regularly.
note
- Use Group disclosure code to make any required disclosures for the Reg. 1.469-4(d)(1) group.
- Use the aggregation grouping when the entire activity is considered rental real estate or other rental. Forms 8582 and 8960 will complete as necessary.
Group disclosure code
Enter the appropriate code applicable to this member of a passive activity aggregation group or Reg. 1.469-4(d)(1) group. The available codes are listed in the fieldview and the table that follows:
Code | Disclosure |
|---|---|
1 | New grouping |
2 | Addition to existing group |
3 | Regrouping |
UltraTax CS uses the code and the Aggregation group to produce the statement required by Rev. Proc. 2010-13. Under Rev. Proc. 2010-13, written disclosure statements are required to be filed with the tax return for the year in which two or more activities are grouped together for the first time (essentially serving as the election to group those activities), or for a year in which changes are made to existing groupings, including when a new activity is added to an existing group.
note
- No disclosure is required to be made to pre-existing groupings that remain unchanged. Once a grouping has been started, any change to the group must be disclosed per Rev Proc 2010-13. Careful tax planning is needed regarding if and when to group activities. Consult Form 8582 instructions, Rev Proc 2010-13, IRS Publication 925, and Thomson Reuters Checkpoint for more information on grouping activities.
- The group disclosure code can be used for the aggregation group and the Reg. 1.496-4(d)(1) group. Do not use the same group number for one type of group that is already entered for another grouping.
Significant participation hrs
Enter significant participation hours, if applicable, in this field.
- If significant participation hours are less than 100 for an activity, UltraTax CS considers the activity passive. It is not considered to be a significant participation activity.
- If total significant participation activity hours on the return are greater than 100 but less than 500, UltraTax CS treats the overall losses from the SPAs as passive. Overall income from these activities is recharacterized as non-passive.
- If total significant participation activity hours on the return are over 500, UltraTax CS does not perform the calculation for theSignificant participation hoursfield. The determination of the passive or non-passive character of the entity or business is not determined by UltraTax CS. You must code the activities' character.
Election history
Use the attached statement to record details about the elections taken for this Schedule F unit. The statement includes the following fields.
- Description:Enter a brief description of the election taken.
- Tax Year:Enter the tax year the election was taken.
- Effective Period:Enter the election's effective period. Some elections are perpetual, while others only cover the tax year taken.
- Comments:Enter any additional information about the election. For example, enter information about an election that was revoked.
note
- Enter the election number assigned to the election in the year it was taken. Learn how to view and edit tax elections to find a table of election numbers or review a list of all 1040 elections available.
- To print an election report, enterXin thePrint election reportfield inElect, located in theElectionsfolder.
- Election information proformas to theElection Historystatement.
- Non-activity-based elections are in theElection Historystatement in theElectscreen, located in theElectionsfolder. Activity-basedElection Historystatements are in the following locations to trackDescription,Tax Year,Effective Period, andComments.ScreenFolder1099RRetirement4835-2Farm RentalC-3BusinessF-3FarmRent-2Rent & Royalty8697, ACA TaxTaxesK1-7K1 1065, 1120SMortgIntItemized
Passive Activity Carryovers
Enter last year's regular and AMT passive-loss carryovers for this activity. This information proforma'd from last year's data, if applicable. If the AMT fields are blank, UltraTax CS assumes there are no AMT carryovers. To enter state-related passive activity carryover amounts, use the St CO screen or use the State allocation spreadsheet.
Section 179 carryover
Enter last year's section 179 carryover for this activity. In future years, this information will proforma automatically. To enter state-related section 179 carryover amounts, use the St CO screen or select the Allocation button in the F-3 screen and use the State allocation spreadsheet.