DMI48 Base Case Questions

My interest Base Case is zero. Will I have any issues related to this or is it okay to leave this as zero?

The DMI48 software will pull the relevant InterestNet Base Case transaction entries for analysis along with the Tax Adjustments entered in DMI48 system when processing computations. You can have an empty base case file to enable global interest netting, and the software will just process the DMI48 adjustments as the only adjustments.

Can Base Case calculations be set up for individual states?

Yes. The InterestNet software allows the user to set up any state jurisdiction in addition to the federal jurisdiction. To add a state jurisdiction to the Base Case, use the Edit Data File function on the main screen. Once a jurisdiction appears in the selected jurisdiction list, the user can access the applicable state interest rate tables and add state modules to the Base Case. Please note that only one jurisdiction can be analyzed at a time. You can select the jurisdiction for analysis using the drop-down menu for Current Jurisdiction found on the main screen.

What is the purpose of the 'Start Date' field, in the InterestNet™ system?

The Start Date only applies to interest suspension periods and interest rate equalization entries where the interest may be applied differently.

Where is the option to 'Use IRS Codes'?

The option of using IRS codes can only be selected when initially adding a new module. Checking this box will enable an automated list IRS Transcript Codes.

Can you explain the functionality of the "Federal Cash Bond" option within the Interest Tables?

Under IRC Section 6603 which describes rules regarding deposits in the nature of a cash bond, overpayment interest is allowed if certain requirements are met. The applicable overpayment rates for qualifying cash bond deposits are reflected in the FED003 –Federal Cash Bond interest rate table.

What is the "Fed 002" Interest Table?

The FED 002 interest table contains the interest rates applicable to non-corporate income tax returns.

Will users have the ability add a user defined interest table for Federal, State, and Foreign jurisdictions? Is it possible to override the default interest tables, or will users need to create a new interest chart?

Users can update existing federal and state interest tables. However, any changes will be overwritten when interest rate and/or release updates are applied.  If this is a problem, then it is recommended that users create a custom interest rate table in InterestNet. Please note that when you create a custom table, you must start with a copy of the federal table.

How do I get the DMI48 system to use LCU "Hot" underpayment interest rates?

You must have an InterestNet Base Case linked to the DMI48 using the identical TIN.  The Module Desc field in InterestNet must be blank.  To activate the LCU “hot” interest rates for a specific tax year, access the Edit module function from the Update Modules screen in InterestNet. Check the box to the left of Large Corporate Underpayment Interest to activate the “hot’ interest rates for that tax year. If you want to have “hot” interest rates begin on March 1, 2006, simply enter 03/01/2006 in the window next to LCU date.

What is the 2nd LCU date for? Also, what does "LCU Amount" mean, and can that be changed?

The second LCU date allows the user to turn LCU interest off as of 12/31/1997 and retest the LCU underpayment threshold at a later date. Per IRS regulations, prior to 12/31/97 assessments could be considered in aggregate to trigger the LCU date. As of 12/31/97, there must be a single assessment to trigger the LCU rate.  If the LCU date had been triggered prior to 12/31/97 and there was not a single assessment in excess of the threshold amount, the LCU rate is turned off as of 12/31/97  It can be restarted when a single assessment, greater than the threshold amount, is made at a later time.

LCU Amount refers to the Large Corporate Underpayment threshold amount or the amount over which the “hot” interest rates would apply. “Hot” interest rates apply to amounts greater than $100,000 per IRS rules governing underpayments of tax. This amount can not be changed unless a new Run Method is imported/developed.

How do we calculate interest when we are in a Net Operating Loss position for one or more years, since interest will not accrue during the loss years.  Is there a way to distinguish between those companies included in our consolidated federal filing vs. those deconsolidated entities?

If you set up a Base Case, you can put it in as an interest suspension transaction in InterestNet.  Alternatively, you can change the interest effective date on the Tax Adjustments screen in DMI48 to a date in the future (2020). There will be no interest computed.

Could you please advise how to override interest rates in DMI48?

To override interest rates in the DMI48 or InterestNet programs, you can update existing federal and state interest tables. However, any changes will be overwritten to the published rates when quarterly interest rate and/or software updates are applied. If this is a problem, then it is recommended that users create a custom table by copying the applicable Federal or state table and then updating the new custom table. The new custom table can be assigned in the DMI48 software in the Jurisdiction screen.

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