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Lacerte > 04Tax > Fiduciary > US > Form 1116

Problem

When the taxpayer receives qualified dividends and/or has a capital gains distributions adjustment, lines 1 and 17 of the AMT version of Form 1116, if generated, may be incorrect.

Qualified dividends and capital gain distributions are incorrectly being adjusted using an adjustment factor of 0.4286 instead of 0.5357. In addition, the adjustment calculation may not be triggered under the correct conditions.

Solution

1. Manually calculate the correct values for lines 1 and 17 for each AMT version of Form 1116, as well as the correct Foreign Tax Credit for AMT purposes.

2. To correct line 1, make an adjusting entry in "Gross Income Within Country" (Screen 36, code 9) so that the correct amount appears on line 1. Manually correct the statement that supports line 1.

3. To correct line 17, make adjusting entries in "Adjustments to foreign source taxable income" (Screen 36, code 46) so that the correct result appears on line 18 of Form 1116. Manually correct lines 16 and 17 as necessary.

4. Override the calculated AMT tax credit in "AMT Foreign Tax Credit [O]" (Screen 40, code 23).

5. Process and print the corrected Form(s) 1116-AMT.

Note: After processing a correct return, remove any adjusting or override entries to ensure the accurate future processing and proforma of this client.

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