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Alabama Form 41 calculation and adjustments

This topic includes notes about the calculation and adjustments for Form 41.
  • Alabama is a buildup state. Use a statement (Schedule C) to reconcile the differences from the federal amounts. UltraTax CS automatically reports common differences such as tax deduction, U.S. obligations, out-of-state munis, capital loss carryovers, or PAL carryovers. To include more adjustments, or to force amounts different than the calculated, use the Schedule C section on the ALGen screen.
  • Deductions don't always match the federal deductions.
  • Federal taxes paid are a deduction. The Expense allocation worksheets reflect federal taxes. Alabama requires taking the deduction for federal taxes on an accrual basis. It's based on the current year federal tax from Form 1041, Schedule G, rather than the amount of estimates and balance due paid or refunded.
  • State and local taxes aren't deductible.
  • Expenses allocated to exempt income (AL TE and US Obs) are deductible and are run through as an adjustment on the expense allocation.
  • Federal NOL isn't allowed. It's adjusted out of the expense allocation.
  • AL NOL isn't a deduction in itself. Form NOLF85A calculates the tax as an alternate tax method rather than including the NOL carryover as a deduction.
  • Schedules C and F are state versions of the federal forms. The functionality is the same as the federal. UltraTax CS recalculates these forms because Alabama has no passive loss limitations, and therefore no PAL carryovers. Starting in 2008, there can be depreciation differences.
  • Capital losses also don’t transfer over. They are taken in the year they happen.
  • The payments entered in
    State withholding
     field on the federal K1-3 screen automatically transfer to line 7e. UltraTax CS completes the statement for line 7e from the ALPay screen. A statement is automatically created with the name and TIN and amount per K1-3 entry. To allocate withholding to beneficiaries, you can only allocate the amount on line 7e. Enter the portion to allocate to the beneficiaries in the
    Composite payments
     statement on the ALPay screen in the Payments folder. Select
    View
    ,
    Beneficiary information
    , then the
    Federal
     tab to enter the percent for each beneficiary. If you enter less than 100%, the amount allocated is grossed for each beneficiary with a percentage. The allocated amount is limited to the amount on line 7e (each item's beneficiary amount is limited to the amount on the K1-3 screen). You can't allocate payments other than composite payments to beneficiaries.
  • The expense allocation worksheet uses the income from Form 41, Page 3, as the gross income. The expenses then calculated from the worksheet are reported back to Form 41, Page 3. The ESBT worksheet also uses these amounts in the Total column and calculates the ESBT expenses on the worksheet. This should make all the income and expense amounts transfer through the return to the beneficiaries.
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