Form 1116 Error

[blitzman7]

I am done fighting with the help desk people.

Form 1116 line 1a is supposed to be Gross Income, from a chosen category (Passive Income for me). Data coming from 1099s. The program is pulling this data from the Foreign Tax Credit Computation Worksheet; Part 1,g.1.m which is an adjusted gross income for this category. This is incorrect and needs to be fixed.

Form 1116 line 3.e is supposed to be showing gross income from all sources. I believe it should be from line #9 on the From 1040. It is showing somehow higher than line #9 on Form 1040.

This is a programming error, in my opinion and I can't get the phone people to understand this.

[MaryK4]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please respond back with the Token Number that was generated.

@blitzman7 

[blitzman7]

Token 1100973

[rogge1722]

The FTC worksheet, Part 1,g,1,m will only adjust if necessary the elements from h thru l. This is required to be done before being forwarded to form 1116, line 1a. The f1116 instructions on page 9 under the heading "Foreign Qualified Dividends and Capital Gains (Losses) require this to be done.

With regard to f1116 line 3e, gross income from all sources, from TT's on demand guidance:

Form 1116 (COPY 1) : Line 3ea
Calculated Gross income from all sources:

This is total income before deductions and is the sum of:

Form 1040, lines 1, 2b, 3b, 4b, 5b and 6b plus
Schedule 1 (Form 1040), line 1 plus
Schedule 1 (Form 1040), line 2a plus
Schedule C, line 7 (all copies) plus
All gains reported on Schedule D minus Schedule D, line 11, Subtotal Line A(Form 4797, Gain from Part I) plus
All gains reported on Form 4797 plus
Schedule E, line 3 total plus line 4 total plus
Schedule K-1 Worksheet - Estates and Trusts, Box 14 Code B : Foreign Tax Information section, line 7 (if it has a value); otherwise income reported in Part III lines 5, 6, 7 and 8 plus
Schedule K-3 - Partnerships Line B - Gross income from all sources
Schedule K-1 - Partnership Additional Information page 1, Box 11 section,Code A, line 1 (if positive) and line 3 and line 4 and Code I, line 5
Schedule K-3 - S Corporations Line B - Gross income from all sources
Schedule K-1 - S Corporation Additional Information page 1, Box 10 section, Code A, line 1 (if positive) and line 3 and line 4 and Code H, line 5
Schedule F, line 11 (all copies) plus
Form 4835, line 7 ( all copies) plus
Schedule 1 (Form 1040), line 7 plus
All positive income amounts on the Other Income Statement.

[blitzman7 · Accepted solution]

What I believe is the issue, is that TT is doing a calculation for the number to be entered into line 1a of the Form 1116. The formula that TT uses does not seem to be consistent with the instructions for the form:

How to make adjustments. To adjust your foreign source
qualified dividends or capital gain distributions, multiply your
foreign source qualified dividends or capital gain distributions
in each separate category by 0.4054 if the foreign source
qualified dividends or capital gain distributions are taxed at a
rate of 15%, and by 0.5405 if they are taxed at a 20% rate.
Include the results on line 1a of the applicable Form 1116.
You adjust your foreign source qualified dividends or
capital gain distributions taxed at the 0% rate by not
including them on line 1a.

I chose to override the adjustment and did the math per the instructions. This got me the credit and all is well. Posting this for others who might have this issue.