Knowledge Base Solution - How is the Schedule K-1 line 14I expenses calculated for the 1116 (Foreign Tax Credit) in a 1041 return using interview forms?

How is the Schedule K-1 line 14I expenses calculated for the 1116 (Foreign Tax Credit) in a 1041 return using interview forms?

Ratably allocated deductions are distributed by default using the computed foreign distribution percentage. Ratably allocated deductions include any deductions included on the 1041 Page 1, Line 16 with the exception of Interest expense (1041 Page 1, Line 10).
- Formula: To determine the amount of ratably allocated deductions that are allocable to foreign income, take the total foreign gross income (Form 1116 Line 3d + Foreign gross income distributed on the Schedule K1) divided by the total all source income (Form 1116, Line 3e). That amount is then multiplied by the expenses (Form 1116, Line 3c) to get the ratably allocated deductions allocable to foreign income. That is then multiplied by the beneficiaries foreign distribution percentage to get the amount on the beneficiaries Schedule K-1s.
  - There is an option to exclude ratably allocated deductions on the beneficiaries Schedule K1 by going to P-3A, Form 1116 - Foreign Tax Credit Miscellaneous Options and E-Filing Info.
    - In Boxes 37 and 38 - X to exclude ratably allocated deductions from distribution to beneficiaries, enter X.

Note: To see the calculation on the 1116 - Foreign Tax Credit, follow the steps below.

Go to K-5 - Beneficiary, Grantor or Owner's Specific Allocation.
- In Box 30 - Beneficiary Number, enter the beneficiary number.
  - In Box 36 - Foreign Tax, enter zero.

Solution Id	000225162/000068899
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