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CCH Axcess Tax

Special Allocation Codes and Methods

A special allocation code is provided for each distributive share item on Schedule K-1. Many states have their own state allocation codes. You may enter special allocations for some or all shareholders. You may specially allocate some items and regularly allocate others. You may use all special allocation methods in one return with the following exception:

You may allocate income or gains to some shareholders, regardless of whether the line item is positive or negative, provided the sum of the allocated amounts equals the total amount available for allocation. Otherwise, a residual allocation will occur.

You may allocate losses to others for the SAME Schedule K-1 line item, regardless of whether the line item is a gain or a loss, provided the sum of the allocated amounts equals the total amount available. Otherwise, a residual allocation will occur.

There are seven methods you can use to allocate distributive shares other than the shareholder percentages on the Shareholder Information worksheet, or computed ratios from entries on the Changes in Shareholders' Interest worksheet. Each method is discussed in detail in the next sections: