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Understanding allocation versus apportionment in ProConnect Tax

by ProConnect Tax Online Updated 7 months ago

In the business modules, and sometimes in the individual module, states will determine the amount of income produced in the state based on an apportionment factor.

Throughout the Expand Detail input, you'll see some items which will allow you to allocate dollar amounts to each state, while other inputs don't have this option.

ProConnect will have allocation fields available for states that support allocation. If you are unable to allocate to a specific state then the state should have an apportionment screen.

Apportionment involves three factors:

  • Sales - The sales factor is generally made up of gross receipts.
  • Property - The property factor is generally calculated from depreciable assets.
  • Payroll -  The payroll factor is generally made up of salaries and wages.

Many input items (such as passthrough K-1 income) are involved in the apportionment percentage.  Therefore, ProConnect Tax won't allow the sourcing of these amounts.

Apportionment adjustments can be made in the state & local screens:

  • Individual - Screens will vary by state. From the Input Return tab, go to State & Local Income. Very few individual states calculate an apportionment formula.
  • Partnership - From the Input Return tab, go to State & Local Apportionment.
  • Corporate - From the Input Return tab, go to State & Local Apportionment.
  • S-Corporate - From the Input Return tab, go to State & Local Apportionment.
  • Exempt - From the Input Return tab, go to State & Local Apportionment.

The apportionment input options will vary by state. These input differences will directly correlate with each state's apportionment formula(s) described within the state's form instructions.

ProConnect Tax

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