About 863(b) percentages

An 863(b) percentage tells the system what fraction of income allocated to a particular general limitation source code's foreign source.
The 863(b) percentage is calculated as an average of the percentages entered for both sales and assets. The 863(b) sales percentage represents the percentage of taxable income deemed to be foreign source. The 863(b) asset percentage is the percentage of property that's located within a foreign country for purposes of allocating gross income derived from the sale of personal property.
When creating an 863(b) group, a sales and asset percentage must be assigned to it. User-defined general limitation source codes with an FTC Type of “4 - General Limitation” or “12 - FOGI - General Limitation”, may belong to an 863(b) group. If one of these source codes isn't assigned to a group, zero (0) gets used as the 863(b) percentage.

Create an 863(b) group and assign source codes

  1. Select
    Charts
    ,
    International
    ,
    Sourcing Chart
    .
  2. Select the year.
  3. Select
    863(b)
    .
  4. Select
    New Group
    .
  5. Enter a unique name for the group.
  6. Enter the fraction of income and property derived from foreign sources for the Section 863(b) Sales Percentage and Section 863(b) Asset Percentage.
  7. Select
    Save
    .
  8. The new group appears in the
    Sec. 863(b) Percentage Groups
    list. To reveal the source codes assigned to a group, select the applicable folder.
  9. To assign user-defined source codes to a group, select the source code from the
    Unassigned Source Codes
    area, select the appropriate group in the
    Sec. 863(b) Percentage Groups
    area, and select
    Add
    .
  10. Select
    Save
    and then
    Close
    .
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