Foreign Tax Credit Section of K-1

[Birmingham]

How to enter into Lacerte? 

Example below:

B  3700 (I assume no need to enter)

C  2400 ( I assume no need to enter as US resident)

F 500 (I assume you enter that as the foreign source income)

I  170  (do you need to allocate to foreign income by 500/3700)

J   2500 (do you need to allocate to foreign income by 500/3700))

M  200 ( do you add it to the results of J)

Q 100  (what do you do if you have both accrued and paid)

the instructions for Form 1116 are not clear to me.

Thanks

[Jack4]

Hi, Birmingham. We have an article on how to enter these items on the K-1 screen. Click below for access to the article.

https://proconnect.intuit.com/community/individual/help/entering-foreign-transactions-from-line-16-f... 

[Birmingham]

That article does not truly answer the question. Please take another look 

[Jack4]

Hi, Birmingham. Items I and J should already be allocated to the foreign income. So no need to allocate further. Item M should be added to item J and the total entered in the Other foreign Deductions apport. or Allocated box on the foreign input grid.

For foreign tax paid and also accrued, we recommend combining the amounts and enter the result in the Foreign Tax Withheld (US Dollars) box on the input screen.

Hope this helps!

[Birmingham]

Thanks, Jack. Can you shed some light on the $5,000 exception for allocating interest expense? I am also  confused by the less than 10% limited partner  exception to that exception.  Please bear with me....I am three days from my first vacation of 2021!

Also, is there really a need to list by country on the 1116?

[Jack4]

Hi, Birmingham. I believe you're referring to the business interest expense limitation. This calculation limits the amount of business interest expense that can be deducted. However, most taxpayers (partners) are exempt if they are considered a small business. I believe the threshold is less than $50M of gross receipts from the business. If this is the case, there is no need to file Form 8990 or limit the interest expense.

As an alternative to entering all countries, you can select Other Country (OC) from the country field and you can combine the amounts.

[Birmingham]

After reading the 1116 instructions, if a client is a US citizen or resident  then entries in box 16 C should be ignored for Lacerte purposes and box 16 F should be used for foreign source income. True?

Thanks