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Consolidations

Pre-consolidation steps

Before you set up the consolidated return, you'll need to prepare the division and elimination returns and enter required information in each return’s Organizer.

General guidelines for preparing division returns

  • In the
    Organizer
    General Information
    Basic Return Information
    Entity Information
    Entity type
     pane for Entity Type (1065 only), select
    Division
  • Complete the required entries for each return.
  • Consistently enter amounts at the same level of detail (in the Organizer) for all returns to ensure that white paper supporting statements correctly reflect dollar amounts and to prevent override. For example, if you enter dividends at the lowest level for 1 division, you'll need to enter dividends at the same level for every other member with dividends.
  • Clear any overriding entries to avoid unexpected results when consolidating. If you use overrides, the underlying detail necessary for accurate limitations during consolidation might be ignored, even when an override agrees with the detail.
  • Make sure each division is in balance. If not, the consolidated return will also be out of balance.
  • Since the divisional consolidation return is the return that is actually filed, the partnership name should not refer to Top or Consolidated Return and Lower Tier Partnerships or similar designations.
  • Even though eliminations might not apply, an elimination return is required to complete the consolidation process.
  • You'll need to enter partner information, including transfers, special allocations, and time segment allocations on the divisional consolidation return. Partnership information doesn’t consolidate.
  • Special allocation codes are assigned on the divisional consolidation return.
  • Section 179 limitations are computed on the divisional consolidation return and Schedule K is based on the combined amounts.
  • Schedules K-1 are computed based on the divisional consolidation return partner information and Schedule K items and amounts.
  • Enter Schedule M-3 and Form 8916-A information at the division level.
  • The Schedule M-1 detail rolls up from the division returns to the divisional consolidation return. Make Schedule M-1 entries at the division level.
  • Enter the Schedule M-2 detail at the Partnership level, where partner capital is reconciled.
  • Activity information will roll up to the Divisional Consolidation upon consolidation.
  • Activity numbers on a consolidated return might differ from the activity number on the divisions. Each time the Consolidate button is selected, the activity numbers on the consolidated return will change unless suppressed. To suppress the activity numbers from changing on subsequent consolidations, go to
    Organizer
    Consolidations
    Step 3
    Print Options
     and select
    Suppress transferring activities from divisions
    .
  • For each type of activity, don’t duplicate the “unique number used to tie gains/losses.” This applies across divisions. For example, don’t enter 111 on a rental activity on division 1 and also on a rental activity on division 2. Use unique numbers on each activity type across all divisions.

TCC descriptions and codes

TCC Codes are assigned at the division level and roll up to the divisional consolidation level. In some areas, such as Other Income, assigning distinct TCC Codes lets you make Special Allocations directly to values that transfer from the division level.You can enter TCCs on the Ordinary Income and Deductions and Schedule K Organizer screens.  For consistency, create a common list of TCC descriptions that can be imported into each entity. (This is an optional process for some applications and mandatory for others.) The TCC Descriptions should contain a breakdown of income and expense items that refer to the entity that creates them.

Full recompute

Select
Compute
, then
Full Recompute
 to perform a full recompute. Before you consolidate, you'll need to perform a full recompute on each return on the same version of the application. If you completed some returns on a prior version, you'll need to recompute those returns on the latest version of the software. You can compute All Divisions from Divisional Consolidation return in
Organizer
Consolidations
Step 3
Consolidation Summary
Compute all Divisions Now
.

This article applies to:

  • Product: ONESOURCE Income Tax
  • Return type: 1065 Partnership
  • Subject: Consolidations

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