Arkansas Department of Finance and Administration Forms & Instructions
Form AR1050 — Partnership Tax Instructions (master booklet)
ARKANSAS
PARTNERSHIP Income Tax
Instructions
AR1050 ATAP Simple Reasons to e-file! Please visit our secure website ATAP (Arkansas Filing Confirmation Provided Taxpayer Access Point) at www.atap.arkansas. gov. ATAP allows taxpayers or their representa- Makes Complex Returns Easy tives to log on, make payments and manage their File Federal & State Forms Together account online.
Secure ATAP features include: View account letters
Arkansas Arkansas e file file
ATAP is available 24 hours a day. (Registration is not required to make payments or to check refund status.) Mailing Address: Physical Address: State of Arkansas Partnership Income Tax Partnership Income Tax Section 1816 W 7th St, Room 2250 P.O. Box 919 Ledbetter Building Little Rock, Arkansas 72203-0919 Little Rock, AR 72201-1030 Partnership Inst. (R 8/19/2025)
CONTENTS
Tax Help and Forms.......................................................................................................... 1
Internet........................................................................................................................ 1
Phone.......................................................................................................................... 1 Forms.......................................................................................................................... 1
ATAP............................................................................................................................ 1
Address....................................................................................................................... 1
General Information....................................................................................................... 2-4
General Instructions......................................................................................................... 4
When To File............................................................................................................... 4
Extension of Time to File............................................................................................. 4
Arkansas Partnership Income Tax Return Instructions (AR1050)................................ 5
Income......................................................................................................................... 5
Deductions.................................................................................................................. 5
Partners' Share of Income........................................................................................... 5
Apportionment Instructions............................................................................................. 6
Apportionment Formula............................................................................................... 6
Change of Method....................................................................................................... 6
Schedule A - Apportionment of Income for Multistate Partnership.............................. 7
Part I: Income to Apportion.......................................................................................... 7
Part II: Apportionment Factor...................................................................................... 7
Sales/Receipts Factor................................................................................... 7-8
Schedule K - Partners' Distributive Share Items............................................................ 8
Part I: Income (Loss)................................................................................................... 8
Part II: Deductions....................................................................................................... 8
Part III: Other Information......................................................................................... 8-9
Analysis of Net Income (Loss)..................................................................................... 9
Schedule B - Additional Partnership Information.......................................................... 9
Part I: Cost of Goods Sold........................................................................................... 9
Part II: Balance Sheet................................................................................................. 9 Partnership Inst. (R 9/15/2025)
TAX HELP AND FORMS
Internet ATAP
You can access the Department of Finance and Administration's Arkansas Taxpayer Access Point (ATAP) allows taxpayers or website at www.dfa.arkansas.gov. their representatives to log on to a secure site and manage their account online. • Get current and prior year forms and instructions Access ATAP at www.atap.arkansas.gov to: • Access latest income tax info and archived news • Make Tax Payments • Get e-file information • Make Estimated Tax Payments You can e-mail questions to: • Make name and address changes • View account letters
https://www.dfa.arkansas.gov/office/tax es/income-tax-administration/partnership-llc/ (Registration is not required to make payments or to check partnership-llc-forms/ refund status.) Phone
General Information.................................................(501) 682-4775
Partnership Income Tax Section
P. O. Box 919 Representatives are available to assist callers at the number
Little Rock, AR 72203-0919 above during normal business hours (Monday through Friday from 8:00 a.m. to 5:00 p.m.) with: Be sure to apply sufficient postage or your return will not be delivered by the U.S. Postal Service. • Notices Received • Taxpayer Assistance • Amended Returns • Forms • Payment Information • Audit and Examination Walk-In Other useful phone numbers:
Tax Credits...................................... (501) 682-7106
Withholding Tax............................... (501) 682-7290 Representatives are available to assist walk-in taxpayers
Collections....................................... (501) 682-5000 with partnership income tax questions, but are not available
Revenue Legal Counsel.................. (501) 682-7030 to prepare your return.
Individual Income Tax...................... (501) 682-1100
Sales and Use Tax.......................... (501) 682-7104 No appointment is necessary, but plan to arrive before
Problem Resolution and.................. (501) 682-7751 4:00 p.m. to allow sufficient time for assistance.
Tax Information Office (Offers In Compromise) The Partnership Income Tax Office is located at:
Internal Revenue Service................ (800) 829-1040
Social Security Administration......... (800) 772-1213 1816 W. 7th Street, Room 2250 Ledbetter Building, Little Rock, AR 72201 Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m.
Forms
To obtain a booklet or forms you may:
1. Access our website at: https://www.dfa.arkansas.gov/office/taxes/income-tax-administration/ partnership-llc/partnership-llc-forms/
2. Call: (501) 682-4775
WHAT'S NEW for 2025 NOTE: The following is a brief description of Acts affecting Arkansas Income Tax and is not intended to replace a careful reading of each Act in its entirety. On April 16, 2025, Arkansas Gov. Sarah Huckabee Sanders signed Senate Bill 567 into law as Act 719 of 2025, modernizing the state's income tax apportionment for multi-state businesses.This Income Tax reform legislation will align Arkansas with 34 other states with the adoption of Market-Based Sourcing for Sales of Services and Intangibles, which is based on the location where they are delivered to the customer. It reduces the risk of double taxation and makes the state more competitive for jobs and investments in services and technology by leveling the playing field for in-state service providers. Market-Based Sourcing - adopting market-based sourcing (MBS) to replace the current cost-of-performance (COP) sourcing methodology. Apportionable Income - amended the provisions related to business income. Nexus Threshold - the bill also adopts an economic income tax nexus by establishing a $250,000 receipts threshold for non-resident corporations or partnerships without a physical presence in the state. Updates to Alternative Apportionment: section 26-51-718 to follow the MTC model for UDITPA section 18 related to alternative apportionment provisions that are expanded/clarified concerning cases where standard methods do not fairly represent a taxpayer's business activity. Apportionable Income: Replaces business and nonbusiness income definitions with apportionable and nonapportionable income. Apportionable income includes all income that is apportionable under the United States Constitution and is not otherwise allocable under the laws of this state. Telecommunications 10-Year Option - the bill allows providers of telecommunications services, internet services, and some television services to elect to use the COP sourcing method until Dec. 31, 2035. The Income Tax changes in Act 719 of 2025 are effective for tax years beginning on or after January 1, 2026. Tax rate and other important changes Act 696 of 2025. Provides an income tax exemption for USDA relief payments from the American Relief Act of 2025. Act 701 of 2025. Amends the Wood Energy Products and Forest Tax Credit incentive. Act 719 of 2025. Adopts market-based sourcing for Income Tax apportionment of multistate services and intangibles and updates other provisions to modernize Arkansas's adoption of the MTC compact. Act 838 of 2025. Amends the Natural State Opportunity Zone tax incentive. Act 881 of 2025. Creates an income tax credit incentive for relocation of a Corporate Headquarters to Arkansas. Act 882 of 2025. Creates an income tax credit incentive for modernization and automation.
IMPORTANT REMINDERS for 2025 Tax rate and other important changes Act 485 of 2023 to enhance economic competitiveness by phasing out the throwback rule amends Arkansas Code Annotated 26-51-716 and 26-5-101, Article IV to provide that sales of tangible personal property are in this state if: 1) the property is delivered or shipped to a purchaser within this state regardless of the f.o.b. point or other conditions of the sale; or 2) the property is shipped from an office, store, warehouse, factory, or other place of storage in this state and the taxpayer is not taxable in the state of the purchaser in which case the sales shall be sourced as follows: Sales Sales Tax Year Within Outside Beginning
Arkansas Arkansas
85.71% 14.29% 71.42% 28.58% 57.13% 42.87% 42.84% 57.16% 28.55% 71.45% 14.26% 85.74% 0% 100% The Act is effective for tax years beginning on or after January 1, 2024. Act 4 of the second Extraordinary Session of 2024 amends Arkansas Code Annotated 26-51-205 to reduce the maximum corporation income tax rate to 4.3% for all taxable income exceeding $11,000 for tax years beginning on or after January 1, 2024. The maximum income tax rate for corporations will remain 5.1% for all taxable income exceeding $25,000 for tax years beginning on or after January 1, 2023. For tax years beginning on or after January 1, 2016, Arkansas has adopted the due date of April 15th for calendar year filers. Arkansas Code Annotated 26-51-427 allows net operating losses occurring in tax years beginning on or after January 1, 2020 to carry forward for 8 tax years and losses occurring in tax years beginning on or after January 1, 2021 to carry forward 10 years. Net operating losses that occur in tax years beginning before January 1, 2020 carry forward 5 tax years. Arkansas Code Annotated 26-51-428 was amended to adopt Title 26 U.S.C. Section 179, as in effect on January 1, 2022, for the purpose of computing Arkansas income tax liability for property purchased in tax years beginning on or after January 1, 2022, for tax years beginning on or after January 1, 2024. The adoption of Internal Code Section 179 will result in the Arkansas Section 179 deduction being raised from $25,000 per year to $1,250,000 for tax years beginning in 2022 and for the dollar-for-dollar phaseout being raised from $200,000 to $3,130,000. The lower limits will remain in place for years beginning prior to 2022, including any carryforward of Section 179 that could not be claimed in earlier years. Please refer to the line item instructions for Depreciation and the instructions for Form AR1100REC for further details.
Partnership Inst. (R 9/19/2025)
Act 143 of 2021 amends Arkansas Code Annotated 26-51-102 to include a definition for tax practitioner and Arkansas Code Annotated 26-51-806 to require a tax practitioner who files federal income tax returns electronically to also file Arkansas returns electronically and allows DFA to waive the requirement if the requirement would cause an undue hardship on the practitioner. Partnerships that elect the PET tax should not file Form AR1050. Act 629 of 2021 amends Arkansas Code Annotated 26-51-807(a) to allow taxpayers an extension to file of one month after the extended due date for a federal income tax return for tax years beginning on or after January 1, 2021. The one month extended due date does not apply to returns for which a federal extension is not requested and does not extend the original due date. As a reminder all tax payments are due on the original return due date and interest at 10% per annum and failure to pay penalties at 5% per month will be assessed on all taxes unpaid after the original due date which is April 15 for calendar year filers and the 15th day of the fourth month after the end of a tax year that does not end in December. The Arkansas K-1 form has been developed for partnerships to report each partner's share of the partnership's income, deductions, credits, etc. The Arkansas Schedule K-1 (AR K-1) is required to be submitted. Adjustments to convert federal amounts may be necessary for a number of items including but not limited to capital gains, interest income, depreciation, Section 179 deductions, contributions and others. The amount reported for each partner should be the total Arkansas amount for an item of income, deduction or credit multiplied by the shareholders ownership percentage. ATAP - Arkansas Taxpayer Access Point Arkansas Taxpayer Access Point (ATAP) is available for the filing of most Arkansas Income Tax returns and tax payments. Federal returns and other required schedules must be attached with the ATAP filing or mailed separately to the Partnership Income Tax Section. They may be provided on CD, in PDF, or in paper form. The secure online filing, managing, and payment options of ATAP are available at www.atap.arkansas.gov. Taxpayers and their authorized representatives will be able to view and manage their Income Tax activity including other tax activity such as Individual Income Tax, Sales Tax, Withholding Tax, and other taxes administered by DFA. Accountants and attorneys must obtain permission from their clients to access and view their client's accounts. ATAP is a web-based service that will give taxpayers, or their designated representative, online access to their tax accounts, and offers the following services: Register a business, file a return online, file a return using XML return upload, change a name, change an address, amend a return, make a payment, store banking information for use during payment submission, view tax period financial information (tax, penalty, interest, credits, balance, etc.), view payment received, view recent account activity, view correspondence from the department. If you are currently enrolled with our online systems to either make payments or file a return electronically, you will need to sign up in ATAP to take advantage of the enhanced services. To correctly process payments on ATAP, make sure you are choosing the correct type of payment and applying it to the correct tax year.
Arkansas Partnership Income Tax Return Instructions
(AR1050) CAUTION: Report only trade or business activity income on page 1 of the AR1050. Do not report section 179 deductions, charitable contributions, net rental real estate income, other rental activities, royalties, capital gains (losses), interest, dividends, and other income on these lines. P1, column B of the AR1050 should include trade or business activity on an Arkansas basis. All other separately stated items such as interest, dividends, capital gains, etc. should be reported on Schedule K, P3, which will be further reported on each partner's AR K-1.
INCOME
Line 17. Enter the amount of bad debts. You may deduct bad debts when they become worthless or make Line 4. Enter gross receipts or sales from all business a reasonable addition to a reserve for bad debts. operations other than those listed on lines 7 Attach schedule. through 10. Line 18. Enter the cost of incidental repairs that do not add Line 5. Complete Schedule B, Part I on P4 of AR1050. to the value of the property or appreciably prolong Enter on line 5 the amount shown on line 7 of its life. Schedule B, Part I. Line 19. Enter the allowable amount for depreciation of Line 6. Subtract cost of goods sold, line 5, from gross business property. Attach schedule AR1100REC receipts or sales, line 4 and enter the difference. to reconcile any differences between federal and state amounts. Line 7. Enter the income from any other partnerships or fiduciaries of which is defined as business
NOTE: Arkansas has adopted IRC section 179 income for the filing partnership. Partnership in its entirety, effective January 1, 2022. income received from activities in this state is to be allocated to this state as opposed to Line 20. Depletion: Enter the amount of depletion. Attach apportionment per ACA 26-51-802(c)(2). Attach schedule. schedule/federal schedule. Line 21. Retirement plan, etc.: Enter the contributions made Line 8. Enter the net profit/loss received from farming. by the partnership for its common-law employees Attach federal Schedule F. under a qualified retirement plan. Attach schedule. Line 9. Enter the ordinary gains or losses from the sale, Line 22. Enter any other trade or business deductions not exchange, or involuntary conversion of assets included in lines 12 through 21. Attach schedule. used in a trade or business activity. Line 23. Add lines 12 through 22 and enter the total. Line 10. Enter any other taxable income not included on lines 6 through 9. Attach statement or schedule. Line 24. Subtract line 23 from line 11 or Schedule A Part II, line 8. Line 11. Add lines 6 through 10 and enter the total. PARTNERS' SHARES OF INCOME
DEDUCTIONS
NOTE: A completed Schedule K is required to calculate Do not list deductions here if they have already been included each partner's distributive share items. An AR K-1 on lines 4 through 10. for each member of the partnership is also required to be attached to this return. Line 12. Enter the amount of salaries and wages paid. Enter each partner's name, address, tax ID number, and Line 13. Enter the amount of payments or credits to a share of the business net income, whether distributed or not. partner for services. If the distributed income is determined on a basis other than a Line 14. Enter rent paid on business property. percentage basis, attach an explanatory statement. Line 15. Enter the amount of interest paid on business indebtedness to others. Line 16. Enter taxes paid or incurred on business property for carrying on a trade or business. Partnership Inst. (R 8/19/2025)
SCHEDULE A - INSTRUCTIONS Apportionment Formula
APPORTIONMENT INSTRUCTIONS
In general, taxpayers with income derived from activities both within and without the State are required For Taxpayers with Income from Sources Within to apportion Business Income and allocate the and Without the State Nonbusiness and Partnership income. For tax years Multistate partnerships should complete Part I and Part II of beginning on or after January 1, 2021, all multistate Schedule A. The net income or loss from Part II, line 8 should partnerships should use the single sales factor be reported on line 24 column B of AR1050. column A of the only, unless required to use an approved alternative AR1050 should be completed by multistate partnerships. apportionment method. However, column B, lines 4-23 will not be completed for multistate partnerships. Financial Institutions must use the single sales factor Business income is defined in ACA 26-51-701(a) as income as outlined in Arkansas Codes Annotated 26-51-1403. arising from transactions and activity in the regular course of Construction companies, pipelines, private railcar the taxpayer's trade or business and includes income from operators, bus lines and trucking companies, airlines, tangible and intangible property if the acquisition, management television and radio broadcasting companies, and and disposition of the property constitute integral parts of the publishers will use sales factor only as modified in the taxpayer's trade or business operations. In essence, all income regulations. Railroads operating within and without which arises from the conduct of trade or business operations the State may use either single sales factor or of a taxpayer is business income. Income of any type or class three-factor double-weighted sales apportionment and from any source is business income if it arises from method beginning tax years effective January 1, transactions and activity occurring in the regular course of a 2023. Requirements for apportionment formulas of the trade or business. In general, all transactions and activities of the taxpayer's economic enterprise as a whole constitute the businesses listed in this paragraph (except for financial taxpayer's trade or business and will be considered "Business institutions) are contained in the Arkansas Corporation income" unless otherwise excluded by Arkansas law. ACA 26- Income Tax Regulations which may be obtained from 51-701(e) defines nonbusiness income as all income other than business income. Unitary Determination of Intangible Income: Interest, dividends (less than 80% directly owned), rents, royalties and gains and losses from multistate partnerships are apportionable to Arkansas if a unitary business relationship exists between the intangible income and the State of Arkansas. Generally, a unitary business relationship will exist when an activity conducted in one state benefits and is benefited by an activity conducted in another state.
SCHEDULE A - APPORTIONMENT OF from an office, store, warehouse, factory or other place of INCOME FOR MULTISTATE PARTNERSHIP storage in Arkansas to a taxpayer that is not taxable in the state of the purchaser.
Part I: Income to Apportion
Beginning January 1, 2024, a percentage of sales to which Line 1: Enter total ordinary business income/loss from the throwback rule applies as taxable to Arkansas and a federal 1065. percentage as taxable to the destination state, with the amount taxable to the destination state increasing each Line 2: Enter any added adjustments and attach schedule. year as the amount taxable to Arkansas decrease. Additions should be any other income not listed on lines 4-10 of the AR1050 that constitute business The percentages will be as follows: income that should be apportioned. Use this line to remove any allocable income (loss). Amounts • 2025: 71.42% to Arkansas and 28.58% to the destination sourced to Arkansas will be directly allocated in state. Part II, line 7. Line 3: Other Sales/Receipts Line 3: Enter any deducted adjustments and attach schedule. Subtractions should be any other Items such as d. capital & ordinary gains, e. dividends, f. deductions not listed on lines 12-22 of the AR1050 interest, g. rents, h. royalties, and i. services will be reported that constitute business deductions that should be in the appropriate boxes. For j. other business gross receipts, apportioned. Deduction adjustments should also attach schedule. include income that is to be allocated to Arkansas (e.g. income from other partnerships) and will be Gross receipts from transactions other than sales of tangible added back after apportionment on Schedule A personal property are attributed to Arkansas if: line 7. Line 4: Line 1 plus line 2 less line 3 = line 4, Total 1) The income producing activity is performed entirely within Apportionable Income. Continue to Part II. Arkansas or, 2) If the income producing activity is performed both inside and outside of Arkansas, the income reportable to
Part II: Apportionment Factor
Arkansas is determined by calculating the property, payroll, and sales factor excluding sales from transactions other than the Column A is for Amounts in Arkansas; column B is the Total sale of tangible personal property and applying the resulting Everywhere; column C is the Percentage of column (A)÷(B). percentage to the Arkansas sales factor numerator for gross Calculate all percentages to six (6) places beyond whole receipts from transactions other than sales of tangible personal percentages. Example 26.123456%. property. (k) Total Sales/Receipts: (Add Lines 1a through 3j). Sales/Receipts Factor: The receipts factor is a fraction, the Divide Line 3k in Column A by Line 3k in Column B to arrive numerator of which is the total sales of the taxpayer in this State at the percentage for Line 3k in Column C. during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. The Line 4: Alternative Apportionment Percentage: If the method of calculating receipts for purposes of the denominator partnership is subject to special industry and alternative is the same as the method used in determining receipts for apportionment, check the box and enter the percentage from purposes of the numerator. The receipts factor shall include Form AR-718, Line 5, Column C. only those receipts which constitute business income and are included in the computation of the apportionable income base Line 5: Enter Percentage Attributable to Arkansas: Enter for the taxable year. Arkansas requires receipts to be gross the percentage from Line 3k, Column C. If required to complete receipts instead of net receipts. form AR-718, enter percentage from AR-718, Column C, Line 5. Line 1. Sales/Receipt Part C - Arkansas Taxable Income (a) Enter Destination Shipped from Within Arkansas: Sale Line 6: Enter Income Apportioned to Arkansas. (Part I, Line of property that is delivered or shipped by a seller located in 4) x (Part II, Line 5). Arkansas to a purchaser located in Arkansas. Line 7: Enter Direct Income Allocated to Arkansas: (b) Enter Destination Shipped from Without Arkansas: Sale Include non-business income and partnership income/ loss of property that is delivered or shipped to a purchaser located that are sourced to Arkansas. Arkansas Regulation 1.26in Arkansas regardless of the f.o.b. point or other conditions 51-802(b) requires partnerships to directly allocate other of the sale. partnership Arkansas income or loss received rather than including partnership income and apportionment factors in Line 2: Origin Sales From Arkansas the partnership's apportionment formula. The partnership income received should be deducted on Part I, Line 3 (Deduct (c) Enter Origin Shipped from Within Arkansas to Other Adjustments). Partnership losses should be added on Part Non-Taxable Jurisdictions: Sales of property that is shipped I, Line 2 (Add Adjustments). The partnership income or loss
sourced to Arkansas should then be entered on Part C, Line is not to be reported on this line. Report tax-exempt interest 2 Add: Direct Income Allocated to Arkansas line. income on line 16a or b of Part III. Line 8: Net Income or Loss: Add or subtract line 7 from line 5. Dividends 6. Enter the amount here and on P1, line 24, Arkansas column. Enter taxable dividends including any qualified dividends. 6. Royalties SCHEDULE K - PARTNERS' DISTRIBUTIVE
Part II: Deductions
AR-KREC MUST be attached reconciling differences between Total and Arkansas amounts. For multistate filers 11. Section 179 deduction subject to apportionment/allocation, Schedule AR1100ADJ must be attached itemizing the appropriate add/deduct Figure the partnership's section 179 expense deduction. Report adjustments to apportionable income. If additional adjustments the allowable amount on the Arkansas column. Attach Form were made outside the scope of these schedules, attach a 4562. Note: The partnership does not take the deduction itself supplemental schedule. but instead passes it through to the partners on AR K-1. Part I: Income (Loss) 12a. Cash charitable contributions 1. Ordinary business income (loss) Enter any cash charitable contributions made by the partnership. Enter the amount from P1, line 24 of the AR1050. Do not include rental activity income (loss) or portfolio income (loss). 12b. Non-cash charitable contributions Enter any non-cash charitable contributions made by the 2. Net rental real estate income (loss) partnership. Enter the net income (loss) from rental real estate activities. 12c. Other deductions Attach federal Form 8825. Enter any allowable deductions. Identify the type of deduction 3. Other net rental income (loss) in the space provided. If there is more than one type of deduction, attach a detailed schedule that identifies each by Enter net income from rental activities other than those reported type and amount. on federal Form 8825. Attach statement showing how you calculated net rental income (loss). 4. Interest income Enter taxable portfolio interest. Tax-exempt interest income
Part III: Other Information
SCHEDULE B - ADDITIONAL PARTNERSHIP INFORMATION 13. Guaranteed payments
Part I: Cost of Goods Sold
Enter any guaranteed payments to partners. 14. Credits To compute the cost of goods sold, answer all questions and If the partnership has any applicable Arkansas-sourced credits enter the amount listed on line 7 of Schedule B on line 5, P1, allocated to partners, enter them here. of AR1050. NOTE: Recent legislation may have amended, increased, or Part II: Balance Sheet extended some of the provisions for Tax Credits. Use of any credit is subject to the limitations and carryover The balance sheet is to report the assets and liabilities at the provisions provided by the respective Arkansas statute. beginning and end of the tax year. The amounts should agree A summary of the Tax Credit Programs can be found with the partnership's books and records. Attach a statement at: www.dfa.arkansas.gov If you have any questions, explaining any differences. please contact the Tax Credits/Special Refunds Section at (501) 682-7106. 15. Items affecting partners basis Enter any relevant items of information affecting the partner(s) basis as a result of activities from the partnership in the taxable year. 16a-c. Tax-exempt interest income Enter any interest income that is tax exempt on 17a, as well as other tax-exempt income on 17b. Nondeductible expenses are to be entered on 17c. 17a-b. Distributions of cash and marketable securities Enter the amount of partnerships distributions of cash, marketable securities on 18a, and other property on 18b.
18a-c. Investment income Enter the investment income, expenses, and other items and amounts. Analysis of Net Income (Loss) 19. Net income (loss) Combine Schedule K, lines 1 - 10. From the result, subtract the sum of Schedule K, lines 11 through 12c. Partnership Inst. (R 8/8/2024)
Source: official text