How to Manage Multiple Activities in a Return

How to Manage Multiple Activities in a return

In UltraTax, Lacerte, and CCH Axcess, you can import into multiple activities for forms 8825, 1040 Schedule C and 1040 Schedule E.  In order to do so, your data must conform to the required import format.

General Ledger Setup

There are two types of multi-activity setups in the general ledger: vertical and horizontal.

Vertical Setup:

Activities are broken out on the Chart of Accounts level.  In other words, each activity has its own set of general ledger accounts.  Here’s an example of how this would look in the COA:

Horizontal Setup:

Activities are broken out using the general ledger’s reporting dimensions like Classes in Quickbooks or Tracking codes in Xero.  Here’s an example of how this is presented on the P&L:

Tax file requirements

Tax filing products require that this be imported in a ‘vertical’ format?  Meaning, each box on the tax form needs its own row in the Tallyfor tax file.  

The tax file contains a column that indicates the activity number for each row.  By default, this is set to ‘1’.  For items on the 8825/SchC/SchE, this tells the filing product to put the data into Activity 1.  Editing this column gives you the ability to place data in additional activities.  

Sample Tallyfor tax file (UltraTax):

Edited Tallyfor tax file (UltraTax):

Trial Balance setup

The trial balance in Tallyfor needs to be vertically organized.  If you’re working with one that isn’t please use the steps below.  Otherwise, skip to the next section.

Converting Classes and Tracking codes to COA accounts

This is essentially an exercise in turning columns into rows.  There are myriad methods using Excel that can be employed to do this quickly.  The end goal is to convert financials that look like this:

Into a trial balance that looks like this:

Recommendations:

• Export a the Balance Sheet and a SEGEMENTED Income Statement from the General Ledger
• Copy+Paste into the Tallyfor Excel Trial Balance Template
• For the accounts pertaining to the multiple activities, use either a number or naming system that will be easy to sort.  This will be very helpful when it comes time to edit the tax file from Tallyfor.
  • The most common practice is to prepend either the account number or account name with a number that corresponds to the activity number in your tax product.  
• If you only have a few accounts that map to the multi-activity lines, you can also use the tax labels in Tallyfor to edit the account names

Mapping and Grouping in Tallyfor

• Complete the return in Tallyfor as you normally would
• In most instances, you will want to avoid using Groups with any of the accounts that map to the multi-activity lines.
• Once complete, hit the Download for Tax button

Editing and importing your tax file

• Open the tax file from Tallyfor
• Sort the tax file on either Account Numbers or Account Names (whichever one you used to identify the accounts that belong to the multi-activity lines)
• After sorting, locate the column filled with ‘1’
• For the multi-activity lines, change the 1 to match the desired activity in your tax product
• Save and import as you normally would

Tallyfor Workpapers

Your workpapers in Tallyfor will present the multiple activities in a vertical fashion, just like in the trial balance.