Identifying business income and activities on Individual OH Schedule IT-SBD and Form IT-2023/IT NRC Information in ProConnect Tax

• For Schedule C and Schedule F Farm activities:
  • When apportionment data isn't entered, the program assigns an apportionment percent to the activity based on the state sourcing of income for those activities.
  • The program uses apportionment data entered under State and City Apportionment input section for those activities to calculate an apportionment percent. To enter the Apportionment:
    1. Go to Input Return ⮕ Income ⮕ Business Income (Sch C) or Farm Income (Sch F, 4835)
    2. Select the State & Local tab.
    3. Scroll down to the State and City Apportionment section and make any applicable inputs in this section

• For rentals and pass-through activities:
  • When apportionment data isn't entered, the program assigns an apportionment percent to the activity based on the state sourcing of income for those activities.
  • The program uses apportionment data entered in the Apportionment section to calculate an apportionment percent for those activities. To enter the Apportionment:
    1. Go to Input Return ⮕ State & Local ⮕ Income
    2. Select OH Bus. Inc. Alloc. and Apport.
    3. Make applicable inputs for the apportionment for the activity

• Capital or ordinary gains entered in the pass-through entity screens is automatically considered business income and associated with the corresponding activity.
• Gains recognized on the sale of assets that have been entered in the Depreciation screen are automatically associated with the corresponding business.
• Gains recognized on the sale of assets that have been entered in the Dispositions screen are automatically associated with the business activity indicated in:
  1. Go to Input Return ⮕ Income ⮕ Dispositions ⮕ Schedule D/4797/etc
  2. Select the Details button for the asset.
  3. Select the Less Common Scenarios tab.
  4. Scroll to the Corresponding Activity Information - Passive (8582) / At-Risk (6198) / Investment Tax (8960) / Qualified Business Income (QBI)
  5. Make inputs in the Form number of related activity and Activity name or number for the applicable business activity

• Only interest income entered in the pass-through entity screens is automatically considered business income and associated with the corresponding activity.
• Other interest income that should be considered business income must be manually tied to a business activity in:
  1. Go to Input Return ⮕ State & Local ⮕ Income
  2. Select OH Bus. Inc. Alloc. and Apport.

• Only dividend income entered in the pass-through entity screens is automatically considered business income and associated with the corresponding activity.
• Other dividend income that should be considered business income must be manually tied to a business activity in:
  1. Go to Input Return ⮕ State & Local ⮕ Income.
  1. Select OH Bus. Inc. Alloc. and Apport.

• Each rental activity entered in the Rental and Royalty Income (Sch E) input screen is considered a separate business activity.
• To combine all the rentals into one activity:
  1. Go to Input Return ⮕ State & Local ⮕ Income
  1. Select OH Bus. Inc. Alloc. and Apport.
  2. Select the Nonbusiness Income link in the upper right corner.
  3. Check the box Report rentals as one activity.
  4. Check the box Report rentals as non-business income to exclude the rentals from the business income calculations.

• The SE tax and Keogh deduction are automatically associated with a business activity based on a ratio of SE income from that activity to total SE income.
• The SE health Insurance deduction is only automatically associated with a business activity if there's an entry in:
  1. Go to Input Return ⮕ Deductions ⮕ Adjustments to Income.
  2. Select the Health Insurance tab
  3. Make any applicable entries in this screen

The Ohio depreciation adjustment is only automatically allocated to the first Schedule C activity.

Interest income that should be considered business income and wasn't entered in the pass-through entity screens must be manually associated with the appropriate business activity(s) using the corresponding input:

1. Go to Input Return ⮕ State & Local ⮕ Income
2. Select OH Bus. Inc. Alloc. and Apport.

Dividend income that should be considered business income and wasn't entered in the pass-through entity screens must be manually associated with the appropriate business activity(s) using the corresponding input on: 

1. Go to Input Return ⮕ State & Local ⮕ Income
2. Select OH Bus. Inc. Alloc. and Apport.

• Gains must be manually entered with the appropriate business activity(s) if:
  They weren't entered in the pass-through entity screens, sold through the depreciation screen, or sold through the Dispositions screen with the appropriate indicator.
• To manually associate gains with business activity(s):
  1. Go to Input Return ⮕ State & Local ⮕ Income
  1. Select OH Bus. Inc. Alloc. and Apport.
  2. Make any applicable inputs on this screen

• If the Ohio depreciation adjustments aren't associated with the first Schedule C, then they must be manually associated with the appropriate business activity(s) using the corresponding input on: 
  1. Go to Input Return ⮕ State & Local ⮕ Income
  1. Select OH Bus. Inc. Alloc. and Apport.
  2. Make any applicable inputs on this screen