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Figure the allowable deduction for a minister's Schedule C expenses

According to IRS Publication 517, you should reduce expenses related to a minister's Schedule C income (for example, payments for marriages, baptisms, and funerals) by the minister's percentage of tax-free income.
UltraTax CS uses Worksheets 1 and 2 from Publication 517 to figure the deductible portion of a minister's Schedule C expenses. You can find the worksheets in the Clergy folder in Form view.
Follow these steps to figure the deductible portion of Schedule C expenses.
  1. Enter the minister's Schedule C income and expenses in the
    C
     screen in the Business folder.
  2. Mark the
    Minister, clergy, or religious worker
     checkbox on the
    C
     screen.
    note
    The calculation of deductible expenses includes any Schedule C input screen units marked with
    Minister
    .
  3. If the minister needs to pay self-employment (SE) tax, leave the
    Self-employment code
     on the
    C
     screen blank. Otherwise, enter
    Code 2 (Minister [Exempt])
     if the minister is exempt from SE tax.
  4. Enter the minister's parsonage and allowance items, if necessary.
  5. Select Form view to view the clergy worksheets.
  6. UltraTax CS completes Worksheet 1 to show the percentage of tax-free income, if any, and then transfer that percentage to Worksheet 2, line 4. Then, the nondeductible portion of expenses calculates on line 6.
  7. The portion of nondeductible expenses calculates on Schedule C, Page 2, under Part V, as a negative expense. This amount transfers as a negative expense (for example, addback) to Schedule C, Line 27.

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