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Screen F-2 - Farm - Income and Expenses (1040)
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Overview
Use this screen to enter cash and accrual income items and expenses for farm activities.
Use the State allocation spreadsheet for UltraTax CS/1040 multi-state processing for the F-3 screen. Enter all multi-state data at the federal level via the State allocation spreadsheet for each unit of a single entity.
With the State allocation spreadsheet, multiple C, F, Rent, and 4835 screens won't be needed at the federal return level for a single entity to affect multiple-state processing. In addition, individual allocation percentages and allocated net income amounts, in total, aren't required to foot with the federal amount, so individual state's law differences can be conveniently taken into consideration.
note
Unlike income allocations, passive activity and section 179 carryover amounts apply to all residency statuses for CA, HI, KY, MA, MT, and WI, and part-year resident and nonresident statuses for NY.
For more information, see Processing multiple-state returns.
Source data entry
Use the UltraTax CS Source Data Entry utility to enter data on facsimile versions of forms your clients submit for the preparation of their tax returns. Once the facsimile forms are completed, you can export the data to and transfer it into your client data files via the data sharing feature. For more information including a list of available facsimiles, see UltraTax CS Source Data Entry overview.
Expenses
Enter all farm expenses in this section.
Car and truck (Force)
Enter an amount in this field, including
0
(zero) if applicable, if you want to override the calculated amount from the Auto Worksheet for car/truck expenses.Conservation expenses
The amount you enter in this field is limited to 25% of the gross farm income; the remainder will carryover to next year.
Carryover from prior years
Enter the amount of conservation expenses carried over from the prior year.
Depreciation (Force)
If you retrieve depreciation expense using tax code 616 or manually enter the expense amount here, the amount in this field is used rather than the amount calculated on Form 4562.
Employee benefits
Enter employee benefits for the Schedule F activity, including premiums used for the Small Employer Health Insurance Premiums credit. The portion of the credit calculated on Form 8941 related to the Schedule F activity will automatically reduce the amount of employee benefits reported on Schedule F, line 15. Use the 8941 screen in the Farm folder to enter Small Employer Health Insurance Premiums credit information related to the Schedule F activity.
Interest - Other
In addition to amounts entered in the attached statement, the line for Interest - Other on Schedule F may also report OID (original issue discount) from the CODI screen that is associated to the Schedule F activity. One-fifth of previously deferred OID is to be included as an expense for the associated activity beginning in 2014 through 2018. The CODI screen is located in the Elections folder.
Labor Hired
The application doesn't automatically allocate the allowable employment credit to the various activities. Enter the amount of labor hired, less any allowable credit.
Rent / lease - other
The amount calculated is added on the Auto Worksheet for vehicle rentals to any amount entered in this field.
Taxes
Use the statement to enter tax information.
Enter
13
in the Code
field to indicate the taxes are attributed to the Unincorporated Business Franchise Tax. Amounts with code 13
don't transfer to the UltraTax CS/1040-DC the F screen in the Taxes statement.Enter
11
in the Code
field to indicate the LLC tax paid. Amounts entered with code 11 are subtracted from the activities expenses on the California 540/540NR return.note
Total taxes reported on Schedule F, line 29 may be reduced (but not below 0) by the buyer's part of real estate taxes identified with code
1
(Real estate taxes paid; reduce real estate taxes deducted) on the Sale screen in the Farm or Review folder. When reimbursements of tax exceed the total taxes paid a diagnostic message is issued.Michigan:
Enter 1
in the State use
field to indicate taxes are attributable to taxpayer's principal residence and qualify as taxes used to calculate the state's property tax credit.Illinois:
Enter 1
in the State use
field to indicate taxes are attributable to taxpayer's principal residence. This amount is included in the total tax and business tax fields on Schedule ICR.Other expenses
Please note that you should only use tax code 634 to retrieve amortization amounts into the attached statement if you don't have amortization amounts in a corresponding Form 4562 in the application; otherwise, the amortization amounts appear twice when you print the statement. A custom fieldview is available in the statement attached to this field.
Preproductive period
Enter the preproductive period expenses that are being capitalized. The amount entered prints as a negative number in other expenses with the description 263A.
Expenses not includible in excess farm loss calculation
Enter an amount in this field representing any expenses included above that aren't includible in the excess farm loss calculation, such as any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought involving the farming business.
Elect to capitalize carrying charges
Use the statement attached to this field to enter expense information when electing to capitalize carrying charges. The tax election automatically prints with the return. If the return is being filed electronically, the tax election will be included in the electronic file.
note
If you make this election in the F screen, don't make the same election in the Elect screen in the Elections folder, as duplicate elections may print. Expenses entered in the statement don't automatically transfer to the asset module. Capitalized amounts should be entered separately in the asset module to receive proper tax treatment.
Small taxpayer safe harbor election
Enter a description of each eligible property for which the taxpayer is applying the safe harbor provision under IRC Regulation 1.263(a)-3(h). For purposes of this election, in general, a small taxpayer is defined as an individual whose average annual gross receipts for the 3 preceding tax years is less than or equal to $10 million. Under the safe harbor, the taxpayer may deduct (rather than capitalize) certain amounts paid for improvements made to the eligible building property. The election automatically prints and is included it in the contents of the e-file, when filing electronically. The election is applied on a year-by-year basis, and once made, the election is irrevocable.
note
The small taxpayer safe harbor election must be filed with the return and applies only to the current tax year. Therefore, if data was entered in this statement in the prior year, the information automatically proformas to the subsequent tax year. An FYI diagnostic is produced when proforma'd election information is present. If the election doesn't apply for the current tax year, remove the data in the statement.
Suppress carry of home office interest...
If the taxpayer uses the same house on multiple 8829 screens, enter
X
in this field to suppress the transfer of interest and taxes to Schedule A, and enter the allowable home mortgage interest in the A screen.Net inc for home office #1 / #2
You can enter expenses for business use of the home for 2 separate offices in the same tax year. Use these fields to enter the force amount of net income applicable to each home office. These amounts are used to calculate the limitation of expenses on the Form 8829, Expenses for Business Use of Your Home. These amounts are used in the calculation of the simplified method for expenses for the business use of your home as applicable.