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Screen C-2 - Profit or Loss From Business - Expenses (1040)
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Overview
Use the State allocation spreadsheet for 1040 multi-state processing for the C-2 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 will not 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, are not 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
The UltraTax CS Source Data Entry utility enables you 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 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.
Schedule C - Expenses
Car and truck (Force)
Enter an amount in this field if you want to override (force) the calculated amount from the Auto Worksheet for car / truck expenses. Please note that you must use the Auto screen or the asset module to answer the vehicle questions on Schedule C, Page 2 or Form 4562, Page 2, as applicable.
Depletion (Force)
Enter an amount if you want to override (force) the calculated depletion from the UltraTax/Oil & Gas module. If you are not using the UltraTax/Oil & Gas module, and are entering a working interest directly in the C screen, enter the depletion amount here. UltraTax CS does not calculate any limitations or tax preferences based on amounts entered in this field.
note
You can also use tax code 812 to retrieve depletion.
Depreciation (Force)
If you retrieve depreciation expense using tax code 813 or manually enter the expense amount here, UltraTax CS uses the amount in this field rather than the amount calculated on Form 4562. If no depreciation expense should appear on Schedule C, enter
0
(zero) in this field.Employee benefits
Enter employee benefits for the Schedule C 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 C activity will automatically reduce the amount of employee benefits reported on Schedule C, line 14. Use the 8941 screen in the Business folder to enter Small Employer Health Insurance Premiums credit information related to the Schedule C activity.
Rent - other
The amount calculated on the Auto Worksheet for vehicle rentals is added to any amount you enter in this field.
Taxes / licenses
UltraTax CS does not automatically allocate the allowable credits to the various activities. Enter the amount of taxes paid, less any allowable credit, in this field.
note
Total taxes reported on Schedule C, line 23 may be reduced (but not below zero) 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 Business or Review folder. A diagnostic message is issued when reimbursements of tax exceed the total taxes paid.District of Columbia:
Enter 13
in the Code
field attached in this statement to indicate the taxes are attributed to the Unincorporated Business Franchise Tax. Amounts with code 13
do not transfer to UltraTax CS C-2 screen in the Taxes statement.California:
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.Meals
Enter 100 percent of the expensed meals. UltraTax CS calculates the allowable deduction. Use the
Meals (100% Subj to 50% lmt)
field for all meals subject to the regular 50-percent limitation. Use the Meals (100% subject to DOT 80% limit)
field to enter amounts for individuals subject to the Department of Transportation (DOT) hours of service limitation.Wages
UltraTax CS does not automatically allocate the allowable jobs credit to the various activities. Enter the amount of wages paid, less any allowable jobs credit, in this field.
Other expenses
Use the statement to record other expense information that transfers to Schedule C, Page 1, line 27a, and to Part V of Schedule C. A custom fieldview is available in the statement.
Elect to capitalize carrying charges
Enter expense information in the statement 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 C screen, do not make the same election in the Elect screen in the Elections folder, as duplicate elections may print. Expenses entered in the statement do not 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 three 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. UltraTax CS will automatically print the election and include 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 annually 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 does not apply for the current tax year, remove the data from the statement.
Suppress carry of Form 8829 interest and taxes to Schedule A
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 two separate offices in the same tax year. Use these fields to enter the force amount of net income applicable to each home office. UltraTax CS uses these amounts to calculate the limitation of expenses on Form 8829, Expenses for Business Use of Your Home. Also, UltraTax CS uses these amounts in the calculation of the Simplified Method for Expenses for Business Use of Your Home, as applicable.