N-20 Instructions — Hawaii Partnership Return (composite mechanism for nonresident partners)

# STATE OF HAWAII-DEPARTMENT OF TAXATION

2024 INSTRUCTIONS FOR FORM N-20 (REV. 2024) Partnership Return of Income (Section references are to the Internal Revenue Code (IRC) unless otherwise specified.) (NOTE: References to "married" and "unmarried" are also references to "in a civil union" and "not in a civil union," respectively.) ATTENTION: Hawaii has not adopted the increased ex - pensing deduction under IRC section 179 (Ha - waii limit is $25,000) or the "bonus" deprecia - tion provisions. Hawaii has not adopted the domestic activities production deduction under IRC section 199. Where To Get Tax Forms Hawaii tax forms, instructions, and schedules may be obtained at any taxation district office or from the Department of Taxation's website at tax. hawaii.gov, or you may contact a customer ser - vice representative at: 808-587-4242 or 1-800- 222-3229 (Toll-Free). Changes You Should Note Act 50, Session Laws of Hawaii (SLH) 2024 - This act amends the pass-through entity (PTE) tax credit for taxable years beginning after December 31, 2023 by (1) adding a definition for "qualified member;" (2) repeal - ing the definition for "direct member" and "in - direct member;" (3) amending the PTE level tax rate to 9%; and (4) amending the credit by allowing certain qualified members to use the credit against their net income tax liability in subsequent years until exhausted. Act 75, SLH 2024 - This act amends Hawaii Income Tax Law under chapter 235, Hawaii Revised Statutes (HRS), to conform to certain provisions of the IRC, as amended as of De - cember 31, 2023. Act 135, SLH 2024 - This act amends the tax credit for research activities by (1) repealing the provision that made references to the base amount in the Internal Revenue Code inapplicable to the tax credit for research ac - tivities and allowed the credits for all qualified research expenses to be taken without regard to previous years' expenses; (2) narrowing the qualifying criteria for the credit to appli - cants who are small business registered in the State; and (3) extending the sunset date of the credit to December 31, 2029. Effective for taxable years beginning after December 31, 2023. Act 169, SLH 2024 - This act amends the mo - tion picture, digital media, and film production income tax credit (film credit) by (1) requiring productions to provide evidence of reason - able efforts to comply with all applicable re - quirements to qualify for the film credit; (2) requiring taxpayers to be given notice of and an opportunity to cure requirements for the film credit within 30 days of receiving the notice. This act shall take effect on January 1, 2025 Purpose of Form Form N-20 is used to report the income, deductions, credits, gains, and losses from the operation of a partnership. Form N-20 for 2024 is an infor - mation return for the calendar year 2024 or other fiscal year beginning in 2024.

# Filing Requirements

If your partnership is an electing PTE, Form N-20 along with all schedules, attachments, and other documents MUST be filed electronically for taxable years beginning after December 31, 2022, unless you obtain a waiver. Use Form L-110, Electronic Filing or Payment Exemption Application, to apply for a waiver. Failure to file electronically and/ or submit an electronic funds transfer may result in cancellation of the election for PTE taxation.

# Who Must File

Every partnership, including limited liability companies treated as partnerships for federal in - come tax purposes, unless expressly exempted, shall, for its taxable year, make a return of in - come on Form N-20 stating specifically the items of gross income and allowable deductions, and such additional information as required below. The partnership return shall include the income, deductions, and credits attributable everywhere together with the income, deductions, and credits attribut - able only to Hawaii. If the return is filed on behalf of a syndicate, pool, joint venture, or similar group which group was created on or after January 1, 1958, a copy of the agreement, together with all amendments thereto, should be attached to the return, if not already filed.

# When and Where to File

Returns must be filed on or before the 20th day of the fourth month following the close of the tax - able year. If this date falls on a Saturday, Sunday, or legal holiday, the due date for the return is ex - tended to the next business day. If you are enclosing a check or money order with your tax return, mail your return with pay - ment to: P.O. Box 1530 Honolulu, HI 96806-1530 If you are not enclosing a payment with your tax return, mail your return to: P.O. Box 3559 Honolulu, Hawaii 96811-3559 If you are filing your return after the prescribed due date, the refund shown may be limited or disallowed due to the statute of limitations. In general, a claim for refund or credit for overpaid income taxes must be filed within three years after the return is filed for the taxable year, within three years of the due date for filing the return, or within two years from when the tax is paid, whichever is later. For purposes of determining whether a refund or credit is allowed, taxes paid on or before the due date of the return (e.g. estimated tax payments) are con - sidered paid on the due date of the return, without considering an extension of time to file the return. Private delivery services. Hawaii has ad - opted the IRC provision to allow documents and payments delivered by a designated private deliv - ery service to qualify for the "timely mailing treated as timely filing/paying rule." The Department of Taxation (Department) will conform to the Internal Revenue Service (IRS) listing of designated pri - vate delivery service and type of delivery services qualifying under this provision. Timely filing of mail which does not bear the U.S. Post Office cancel - lation mark or the date recorded or marked by the designated delivery service will be determined by reference to other competent evidence. The pri - vate delivery service can tell you how to get written proof of the mailing date. Six-month automatic extension of time to file. Section 18-235-98, Hawaii Administrative Rules, allows an automatic six-month extension of time to file a return without filing an application for extension. This extension does not include an ex - tension of time to pay. File Form N-201V, Business Income Tax Payment Voucher, to make a payment (if applicable).Form N-201V may be filed and payment made electronically through the States Internet portal at hitax.hawaii.gov. Rounding Off to Whole Dollars The Department is requiring taxpayers to round off cents to the nearest whole dollar for all dollar entries on the tax return and schedules. To do so, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example: $1.39 becomes $1 and $2.69 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, schedule, or worksheet, you may choose to use one of two methods. Once a method of rounding is estab - lished, you must use the same method through - out the return. The first method is to include the cents when adding and round off only the total. The other method is to round off each entry. For example: You received two 1099-INT forms, one showing interest of $50.55 and one showing interest of $185.73. For rounding method 1, show your total interest as $236 ($50.55 + $185.73 = $236.28 rounded to $236). For rounding method 2, show your total interest as $237 ($50.55 rounded to $51 + $185.73 rounded to $186 = $51 + $186 = $237). Recordkeeping The partnership records must be kept as long as they may be needed for the administration of any provision of the IRC. Usually, records that support an item of income, deduction, or credit on the partnership return must be kept for three years from the date the return is due or is filed, whichever is later. Keep records that verify the partnership's basis in property for as long as they are needed to figure the basis of the original or replacement property. Copies of the filed partnership returns should also be kept as part of the partnership's records. They help in preparing future returns and in mak - ing computations when filing an amended return. Amended Return If, after filing its return, the partnership be - comes aware of any changes it must make to income, deductions, credits, etc., it should file an amended Form N-20 and an amended Schedule K-1 for each partner. Check the box on Form N-20 at Item E(3), page 1. Give a corrected Schedule K-1 (Form N-20) to each partner. Check the box at Item F(2) on each Schedule K-1 to indicate that it is an amended Schedule K-1. Fill in the return with

all of the correct information and attach a com - pleted Schedule AMD, Explanation of Changes on Amended Return, to the amended return. Also, attach all schedules, forms, and attachments re - quired to file a complete return. An electing PTE cannot file an amended return to revoke their PTE election. All PTE elections are irrevocable. An electing PTE who would like to re - quest a refund for an overpayment of the PTE tax paid must file their request for refund on or before the due date prescribed, including an extended due date if an extension has been granted. Change in Federal Taxable Income In general, a change to your federal return, whether it is made by you, or by the IRS, must be reported to the State of Hawaii. 1) Section 235-101(b), HRS, requires a report (an amended return) to the Department if the amount of IRC taxable income is changed, corrected, adjusted or recomputed as stated in (3). 2) This report must be made: a) Within 90 days after a change, correction, adjustment or recomputation is finally determined. b) Within 90 days after a federal amended re - turn is filed. c) At the time of filing the next income tax re - turn, if earlier than set forth in a) or b). 3) A report within the time set out in (2) is re - quired if: a) The amount of taxable income as returned to the United States is changed, corrected, or adjusted by an officer of the United States or other competent authority. b) A change in taxable income results from a renegotiation of a contract with the United States or a subcontract thereunder. c) A recomputation of the income tax imposed by the United States under the IRC results from any cause. d) An amended income tax return is made to the United States. 4) The report referred to above shall be in the form of an amended Hawaii income tax return. 5) The statutory period for the assessment of any deficiency or the determination of any refund attributable to the report shall not expire be - fore the expiration of one year from the date the Department is notified by the taxpayer or the IRS, whichever is earlier, of such a report in writing. Before the expiration of this oneyear period, the Department and the taxpayer may agree in writing to the extension of this period. The period so agreed upon may be further extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. Protective Claim A protective refund claim is a claim filed to protect a taxpayer's right to a potential refund based on a contingent event for a taxable period for which the statute of limitations is about to expire. A protective claim is usually based on contingencies such as pending litigation or an ongoing federal income tax audit or an audit in another state. For more information see Tax Facts 2021-2. Information Returns Every partnership must file information returns if it makes payments of rents, commissions, or other fixed or determinable income totaling $600 or more to any one person in the course of its trade or business during the calendar year. It must report interest payments if they total $10 or more. Use Form N-196, Annual Summary and Transmittal of Hawaii Information Returns, to summarize and send information returns to your respective taxation district office. For more information about filing information returns and exceptions, see the instructions for Form N-196. Paying the Tax The partnership must pay the tax due (line 23, page 2) in full on or before the 20th day of the fourth month after the end of the tax year. Amounts due on any Schedule PTE(s) (line 17a, page 2) attached to the partnership's return are also due at this time. This extension does not include an extension of time to pay. If the partnership cannot pay the full amount that is owed, you can ask to enter into a payment agreement once you receive a billing notice for the balance due. Please be aware that penalty and interest continue to accrue on the unpaid tax amount even though you have not yet received a billing notice. Payments will be accepted and applied to the partnership's tax liability; however, to ensure the partnership's payments are applied correctly, your check or money order must have: (1) the partnership's name as shown on the return clearly printed on the check, (2) the partnership's federal employer identification num - ber (FEIN), and (3) the tax year and form number being filed (e.g. 2024 N-20). If a payment is being made with this return, attach your check or money order on the front left side of Form N-20. Form N- 201V is no longer required when making a pay - ment with your return.

# Estimated Tax

If a partnership is an electing PTE for the tax - able year, submit Form N-201V with payment to the Department. Estimated payments are paid in four installments. These installments are due on or before the 20th day of the fourth, sixth, and ninth months of the tax year and on or before the 20th day of the first month following the taxable year. See the instructions for line 20a and Form N-201V for more information. Form N-201V can be filed and payment made electronically through the State's Internet portal at hitax.hawaii.gov. Electronic Funds Transfer (EFT) Section 231-9.9, HRS, authorizes the Depart - ment to require those taxpayers whose tax liability exceeds $100,000 during the past year to pay the tax by EFT instead of by check. The Department reviews the filing records of taxpayers and will mail notices to taxpayers who met this criterion. Any taxpayer who does not meet this criterion may still voluntarily pay by EFT. If an EFT payment is dis - honored, a $25 service fee will be assessed. For more information on paying taxes by EFT, see tax. hawaii.gov/eservices/ and Tax Information Re - lease Nos. 95-6 and 99-1. Failure for PTEs to submit by EFT shall result in cancellation of the election for PTE taxation.

# Penalty and Interest

Late Filing of Return - The penalty for failure to file a return on time is assessed on the tax due at a rate of 5% per month, or part of a month, up to a maximum of 25%. Failure to Pay Tax After Filing Timely Return - The penalty for failure to pay the tax after filing a timely return is 20% of the tax unpaid within 60 days of the prescribed due date. Failure to Timely Pay by EFT - The penalty for failure to timely pay by EFT is 2% of the total tax unless you obtain a waiver. Use Form L-110, Electronic Filing or Payment Exemption Application, to apply for a waiver. Interest at the rate of 2/3 of 1% per month or part of a month shall be assessed on unpaid taxes and penalties beginning with the first calendar day after the date prescribed for payment, whether or not that first calendar day falls on a Saturday, Sunday, or legal holiday. Attachments Attach schedules in alphabetical order and other forms in numerical order. To assist us in processing the return, please complete every applicable entry space on Form N-20. Do not attach statements and do not write "See attached" in lieu of completing the entry spaces on the form. An entity that elects to be classified as a part - nership by filing federal Form 8832 with the IRS shall attach a copy of that form to the entity's Form N-20 covering the first taxable year in which the entity carries on business in Hawaii, derives in - come from sources in Hawaii, or makes distribu - tions that are received by a partner who is either a resident of Hawaii or carries on business in Hawaii and is subject to Hawaii income taxation. If the partnership is an electing PTE, attach the PTE election Form N-362E with all required signature(s) and Schedule PTE at the back of the return. If you need more space on the forms or schedules, attach separate sheets. Use the same ar - rangement as the printed forms. Show the to - tals on the printed forms. Put the partnership's name and Federal Employer Identification Number (FEIN) on each sheet. Also, be sure that each separate sheet clearly indicates the line or section on the printed form to which the information relates. Payments In some instances, payments may have to be made with the Form N-20. The amount on line 24 may be paid through Hawaii Tax Online at hitax. hawaii.gov or Form N-201V may be filed to make a payment. Withholding of Taxes on the Income of Nonresident Partners Partnerships are required to withhold and pay to the State on behalf of their nonresident partners an amount equal to the highest marginal tax rate applicable to individuals, currently 11%, multiplied by the amount of the partner's distributive share of income attributable to the State reflected on the partnership's return for the taxable period.

Definitions a. Partnership. The term "partnership" in - cludes a limited partnership, syndicate, group, pool, joint venture, or other unincorporated organization, through or by which any business, financial operation, or venture is carried on, and that is not, within the meaning of the federal IRC, a corpora - tion, trust, estate, or sole proprietorship. If an organization more nearly resembles a corporation than a partnership or trust, it is considered an associa - tion taxed as a corporation. Important factors in determining whether a partnership exists include: 1. The parties' conduct in carrying out the provisions of the partnership agreement; 2. The testimony of disinterested persons; 3. The relationship of the parties; 4. The abilities and contributions of each; and

5. The control each has over the partnership income and the purposes for which the income is used. A joint undertaking merely to share expenses is not a partnership. Mere co-ownership of property that is maintained and leased or rented does not constitute a partnership. However, if the co-owners provide services to the tenants, a partnership ex - ists. Some partnerships may be excluded com - pletely or partially from being treated as partner - ships for federal income tax purposes upon the election of all of the members. See Specific Instructions below for more information. b. General Partner. A general partner is a member of the organization who is personally li - able for the obligations of the partnership. c. Limited Partner. A limited partner is one whose potential personal liability for partnership debts is limited to the amount of money or other property that the partner contributed or is required to contribute to the partnership. d. Limited Partnership. A limited partnership is a partnership composed of at least one general partner and one or more limited partners. e. Nonrecourse Loan. Nonrecourse loans are those liabilities of the partnership for which none of the partners have any personal liability. f. Limited Liability Company. A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Unlike a partnership, none of the members of an LLC are personally liable for its debts. An LLC may be classified for federal income tax purposes as a disregarded entity, partnership, or a corporation, depending on elections made by the LLC and the number of members. Chapter 428, HRS, allows LLCs to operate following proper approval from the Department of Commerce and Consumer Affairs (DCCA), Business Registration Division. Hawaii conforms to the federal standards in determining whether an LLC is classified as either a partner - ship or a corporation following proper approval by the DCCA. g. Electing Pass-Through Entity. An electing pass-through entity means a qualified PTE that elects PTE taxation for the taxable year. h. Qualified Member. A qualified member means a member of an electing pass-through en - tity that is an individual, trust, or estate. i. Qualified Pass-Through Entity. A qualified PTE means a PTE that is eligible to elect PTE taxation for the taxable year. Use of Instructions for Federal Form 1065 - In an effort to streamline Hawaii's partnership return instructions, the discussion of certain top - ics already discussed in the federal instructions for Form 1065, U.S. Partnership Return of Income, will not be repeated. Please refer to the federal instructions for discussions on the following topics which Hawaii conforms to: - Termination of the Partnership; - Accounting Methods; - Accounting Periods; - Elections Made by the Partnership; - Elections Made by Each Partner; - Partner's Dealings With Partnership; - Contributions to the Partnership; - Dispositions of Contributed Property; - Recognition of Precontribution Gain on Certain Partnership Distributions; - Unrealized Receivables and Inventory Items; and - Passive Activity Limitations. Net Operating Loss Deduction A partnership is not allowed the deduction for net operating losses (See section 703(a)(2) (D)) unless the partnership is an electing PTE. The electing PTE's net operating losses may be carried forward as long as the entity continues to elect to be taxed as a PTE every taxable year until exhausted. The electing PTE's net operating loss is not allowed as a deduction from the partner's gross income. Signatures General Partner or LLC Member Form N-20 is not considered a return unless it is signed. One general partner or LLC member must sign the return. If a receiver, trustee in bankruptcy, or assignee controls the organization's property or business, that person must sign the return. Paid Preparer's Information If someone prepares the return and does not charge the partnership, that person should not sign the partnership return. Generally, anyone who is paid to prepare the partnership return must sign the return and fill in the other blanks in the Paid Preparer's Information area of the return. Individual preparers may furnish their alternative identifying number for in - come tax return preparers (PTIN) instead of their social security number. The preparer required to sign the partnership's return MUST complete the required preparer information and: • Sign the return in the space provided for the preparer's signature. Paid preparers may sign original returns, amended returns, or re - quests for filing extensions by rubber stamp, mechanical device, or computer software program. • Give the partnership a copy of the return in addition to the copy to be filed with your taxation district office. The partnership may authorize the Department to discuss its tax return with its paid preparer by checking the "Yes" box above the paid preparer's signature. Checking "Yes" will allow the Depart - ment to contact the paid preparer to answer any questions that may arise during the processing of the partnership's return. This designation does not allow the paid preparer to call the Department for information about the processing of the return or for other issues relating to the return. This des - ignation does not replace Form N-848, Power of Attorney.

# Specific Instructions

These instructions follow the line numbers on the first page of Form N-20 and on the schedules that accompany it. Specific instructions for most of the lines have been provided. Those lines that do not appear in the instructions are self-explanatory. File only one return for each partnership. Mark "duplicate copy" on any copy you give to a partner. If a syndicate, pool, joint venture, or similar group files Form N-20, a copy of the agreement and all amendments must be attached to the re - turn, unless a copy has already been filed. Under section 761(a), an investing unincorporated orga - nization or one participating in the joint production, extraction, or use of property under an operating agreement or an organization of dealers in securities for a short period for the purpose of under - writing, selling, or distributing a particular issue of securities may elect not to be treated as a partnership. Make the election by attaching a statement to Form N-20 for the first year for which the partner - ship wants the exclusion. Fill in applicable lines and schedules. Amended Return Checkbox If you are amending a return previously filed, check the AMENDED Return box. IRS Adjustment Checkbox If you are filing an amended return due to an IRS adjustment, check the IRS Adjustment box in addition to the AMENDED return box and file an amended Schedule K-1 for each partner. Check the box on Form N-20 Item E(3) and (4) on page 1. Give a corrected Schedule K-1 (Form N-20) to each partner. Check the box at Item F(2) on each Schedule K-1 to indicate that it is an amended Schedule K-1. Fill in the return with all of the cor - rect information and attach a completed Sched - ule AMD, Explanation of Changes on Amended Return, to the amended return. Also, attach all schedules, forms, and attachments required to file a complete return. Electing PTE Checkbox Partnerships may make a yearly irrevocable election to pay taxes at the PTE level and the election shall be binding on all partners who are qualified members of an electing PTE and whose distributive shares and guaranteed payments are subject to PTE taxation for the taxable year. If the Partnership elects to be taxed at the PTE level for the taxable year, check the box on Form N-20 Item E(5) "Electing PTE" on page 1. Sched - ule PTE(s) must be attached to Form N-20 if the partnership is an electing PTE. Address Change If your mailing address has changed, you must notify the Department of the change by complet - ing Form ITPS-COA, Change of Address Form, or log in to your Hawaii Tax Online account at hitax. hawaii.gov. Failure to do so may prevent your address from being updated, any refund due to you from being delivered (the U.S. Postal Service is not permitted to forward your State refund check), and delay important notices or correspondence to you regarding your return. Name, Mailing Address, Federal Employer I.D. Number and Hawaii Tax I.D. Number The partnership may use its legal or trade name on all tax returns and other documents filed. Print or type the partnership's legal name and mailing address on the appropriate line. If this is a foreign address, enter the information in the fol - lowing order: city, province or state, country, and postal code. Do not abbreviate the country name. Show the Federal Employer I.D. Number in item A on page 1 of Form N-20 and the Hawaii Tax I.D. Number in item D. Lines 1 - 9 Enter on lines 1 through 9 the requested amounts as they appear on the partnership's federal return. Writing "See attached federal return" on Form N-20 and attaching a copy of the partnership's Form 1065 is not acceptable.

You are NOT required to attach a copy of the partnership's federal return (Form 1065) to Form N-20. If this is a return of a partnership with trade or business activities in several states, including Hawaii, and the ordinary income or loss from trade or business activities reported on this return is determined using separate ac - counting, attach a schedule of the partner - ship's Hawaii trade or business activities in - come and expenses. Enter on lines 1 through 9 applicable amounts from this schedule instead of from the partnership's federal return. Amounts received by a qualified high technol - ogy business as royalties and other income de - rived from patents, copyrights, and trade secrets owned by the qualified high technology business and developed and arising out of a qualified high technology business are excluded from Hawaii income. Expenses related to this income are de - ductible. "Qualified high technology business" means a business conducting more than 50% of its activities in qualified research. "Qualified re - search" means (1) the same as in section 41(d) of the Internal Revenue Code; (2) the development and design of computer software for ultimate commercial sale, lease, license or to be otherwise marketed, for economic consideration. With respect to the software's development and design, the business shall have substantial control and retain substantial rights to the resulting intellectual property; (3) biotechnology; (4) performing arts products; (5) sensor and optic technologies; (6) ocean sciences; (7) astronomy; or (8) nonfossil fuel energy-related technology. All income earned and proceeds de - rived from stock options or stock, including stock issued through the exercise of stock options or warrants, from a qualified high technology busi - ness or from a holding company of a qualified high technology business by an employee, officer, or director of the qualified high technology business, or investor who qualified for the high technology business investment tax credit is excluded from income. If the partnership is a qualified high technology business and has included royalties and other income derived from patents, copyrights, and trade secrets the partnership owns in the income reported on line 1, these amounts should be included in the deductions shown on line 14c. If the amount reported on line 14c includes these royalties and other income from patents, copyrights, and trade secrets, these amounts should be identified by at - taching a separate schedule or listing.

# Line 11a

List deductions taken for federal tax purposes but not allowed, or allowable only in part, for Ha - waii tax purposes. For example, deductions con - nected with income not taxable for Hawaii purposes or section 199 domestic activities deduction.

# Line 11b

Caution: Include only ordinary gains or losses from the sale, exchanges, or involuntary conversion of assets used in a trade or business activity. Ordinary gains or losses from the sale, exchange, or involuntary conversion of rental activity assets will be reported separately on Schedules K and K-1, generally, as a part of the net income (loss) from the rental activity. If the partner does not materially participate in the trade or business, the gains or losses reported on line 11b will be subject to the passive activity rules.

# Line 11c

Enter the portion of the Hawaii jobs credit claimed, applicable to current year new employees that is reported on Schedule K line 20.

# Line 11d

As noted on page 1 of these instructions, Ha - waii has not adopted federal "bonus" depreciation provisions. If a depreciation deduction is claimed for Hawaii tax purposes, the partnership must: (a) complete a federal Form 4562 for Hawaii tax pur - poses using the federal depreciation guidelines in effect before the adoption of the "bonus" depreciation provisions, (b) attach the completed federal Form 4562 to the Hawaii tax return, (c) make the necessary adjustments to the Hawaii tax return for the depreciation difference between federal and Hawaii, and (d) attach to the Hawaii tax return any worksheet showing the computation of the adjust - ments. The partnership must also keep records of the differences in the asset's depreciable basis for federal and Hawaii tax purposes.

# Line 17a - Pass-Through Entity Tax

If the partnership is not an electing PTE for the taxable year, line 17a does not apply to the part - nership. Electing PTEs are liable for the income tax on the sum of all qualified members' distributive shares and guaranteed payments multiplied by 9%, with no sperate tax rate for capital gains. At - tach Schedule PTE(s), showing all the qualified members' shares of qualified net income and cal - culated PTE tax amount reported on line 17a.

# Line 17b - Interest due under the look-back method for completed long-term contracts

If the partnership used the look-back method under IRC section 460(b)(2) for certain long-term contracts, complete federal Form 8697, Inter - est Computation Under the Look-Back Method for Completed Long-Term Contracts. If you will owe interest on an unpaid amount, calculate the amount due using the rate of 2/3 of 1% per month, or part of a month, beginning the first calendar day after the date prescribed for payment whether or not that first calendar day falls on a Saturday, Sunday, or legal holiday. Include the amount of interest due on line 17b. Attach Form 8697 with a check made payable to "Hawaii State Tax Collector" to Form N-20. Write the partnership's FEIN, day - time phone number, and "Form 8697 interest" on the check. If you are due a refund, do not attach Form 8697 to your Form N-20. Instead, file federal Form 8697 separately with the Department. Com - plete the signature section of federal Form 8697 following the instructions for the signature section of Form N-20. File federal Form 8697 by the date you are required to file your Form N-20 (including extensions).

# Line 18 - Nonresident Withholding distributed to Nonresident Partners

Enter on line 18 the total tax amount with - held from nonresident partners that is reported on Schedule NP, line 2. Attach Schedule NP with Form N-20.

# Line 20a - Estimated Tax Payments

Estimated taxes which are paid by the part - nership as an electing PTE should be made on Form N-201V. See the instructions for PTEs later in these instructions for more information. Form N-201V can be filed and payment made electroni - cally through the State's Internet portal at hitax. hawaii.gov. Any amount that was paid on partnership's Form N-201V for the tax year should be indicated on line 20a.

# Line 23 - Tax Due

Subtract the amount on line 20c from the amount on line 19 and enter the difference on line 23. If this amount is zero or less, enter 0. If this amount is more than zero, pay this amount by certified or cashier's check made payable to "Hawaii State Tax Collector" and attach the check to the front left side of Form N-20 or electronically through the State's Internet portal at hitax.hawaii. gov. If the partnership cannot pay the full amount that is owed, you can ask to enter a payment agreement after you receive a billing notice for the balance due. Please be aware that penalty and interest continue to accrue on the unpaid tax amount even though you have not yet received a billing notice. Payments will be accepted and ap - plied to the partnership's tax liability; however, to ensure that the partnership's payments are applied correctly, your check or money order must have: (1) the partnership's name as shown on the return clearly printed on the check, (2) the partnership's FEIN, and (3) the tax year and form number being filed (e.g. 2024 N-20).

# Line 24 - Amount of Payment

Enter the amount of your payment on line 24. If you are paying by check or money order, attach your check or money order to the front left side of Form N-20 and make sure your check or money order is payable to "Hawaii State Tax Collector." For Amended Returns Line 25 - Amount paid (overpaid) on original return Check the box on Form N-20 Item E(3) "Amended Return" to indicate that this is an amended return. Complete the partnership's amended return using corrected amounts. Attach a completed Schedule AMD, Explanation of Chang - es on Amended Return, to the amended return. Also, attach all schedules, forms, and attachments required to file a complete return. Enter on line 25 that amount paid on the part - nership's original return (from line 23 on the original return) or the amount overpaid (from line 21 of the original return). Place a minus sign, "-", before the amount of any overpayment. Line 26 - BALANCE DUE (REFUND) with amended return If no amount was entered on line 25, enter on line 26 the amount, if any, from line 22 or line 23 of the amended return. If there is an amount on line 25 and that amount is: a. A payment and there is an amount on line 21 of the amended return, add these amounts and enter the total on line 26 with a minus sign, "-", before the amount. b. A payment and there is an amount on line 23, subtract the amount on line 25 from the amount on line 23 and enter the difference on line 26. If the difference is a negative amount, show the negative amount on line 26 with a minus sign, "-". c. An overpayment and there is an amount on line 21, consider the amount on line 21 a negative amount and subtract the amount on line 25 from the amount on line 21, and enter the difference on line 26. If the difference is a negative amount, show the negative amount on line 26 with a minus sign, "-". If there is an overpayment on the amended return, do NOT enter this amount as a refund on line 21. d. An overpayment and there is an amount on line 23, subtract the amount on line 25 from the

amount on line 23, and enter the result on line 26. This is the amount the partnership owes on its amended return. If the partnership has an amount due on its amended return, make the check or money order payable to "Hawaii State Tax Collector" and attach the check or money order to the front left side of Form N-20.

# Schedule D Capital Gains and Losses

Purpose of Schedule.- Use Schedule D (Form N-20) to report the sale or exchange of capital assets, except capital gains (losses) that are specially allocated to any partners. For detailed information, see the instructions on Schedule D (Form N-20). Schedule K and Schedule K-1 Partners' Share of Income, Credits, Deductions, etc. Purpose Schedule K is a summary schedule of all the partners' shares of the partnership's income, deductions, credits, etc. Prepare Schedule K-1 in triplicate. A copy of each partner's K-1 must be attached to the Form N-20 filed with the Department, one copy to be sent to each partner, and one copy retained for the partnership's files. Although the partnership is not subject to in - come tax, the members are liable for income tax on their shares of the partnership income, whether or not distributed, and must include their share on their tax returns. The total amount of the distributive share items (columns b and c) reported on each line on all of the partners' Schedules K-1 should equal the amount reported on the same line of Schedule K of Form N-20 through line 32. Complete Schedule K-1 for each partner. Schedules K and K-1 have the same line numbers through line 32 to make it easier for the partner - ship to prepare Schedule K-1. In addition, Sched - ule K-1 has questions A through F and item G. Additional copies of Schedule K-1 are available from your district tax office. Attributable to Hawaii Each partnership must state specifically the income attributable to the State and the income attributable everywhere with respect to each partner. Ordinary income or (loss) from trade or busi - ness activities shall be attributed to the State by the use of the apportionment of business income allocation provisions of the Uniform Division of In - come for Tax Purposes Act (UDITPA), section 235- 29, HRS. Business income shall be apportioned to this State by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three. If the denominator of the property factor, payroll factor, or sales factor is zero, the denominator of the fraction in section 235-29, HRS, is reduced by the number of fac - tors with a zero denominator, and the numerator of that fraction shall not include any factor with a zero denominator. The property factor is a fraction, the numerator of which is the average value of the partnership's real and tangible personal property owned or rented and used in this State during the tax period and the denominator of which is the average value of all the partnership's real and tan - gible personal property owned or rented and used during the tax period. Property owned by the part - nership is valued at its original cost. The average value of property shall be determined by averaging the values at the beginning and ending of the tax period. The use of monthly values may be required if necessary to properly reflect the average value of the partnership's property. Property rented by the partnership is valued (or capitalized) at eight times the net annual rental rate. Where property is rented for less than a 12 month period, the rent paid for the actual period of rental shall constitute the annual rental rate for the tax period. The pay - roll factor is a fraction, the numerator of which is the total amount paid in this State during the tax period by the partnership for compensation, and the denominator of which is the total compensation paid everywhere during the tax period. The sales (or gross receipts) factor is a fraction, the numerator of which is the total sales of the partnership in this State during the tax period, and the denomi - nator of which is the total sales of the partnership everywhere during the tax period. If this apportionment does not fairly represent the extent of the partnership's business activity in this State, the partnership may request the use of separate accounting, the exclusion of one or more of the factors, the inclusion of one or more addi - tional factors, or the use of any other method to accurately reflect the partnership's business activity in the State. Complete Schedules O and P (Form N-20) to show this computation. Other items are attributed as follows: • Net rents and royalties from real property located in Hawaii are attributed to Hawaii. Federal Form 8825 may be attached to Form N-20 as a schedule of expenses. • Net rents and royalties from tangible personal property are attributed to Hawaii if and to the extent that the property is utilized in Hawaii. • Capital gains and losses from sale of real property located in Hawaii are attributed to Hawaii. • Capital gains and losses from sales of tan - gible personal property are attributable to Hawaii if the property had a situs in Hawaii at the time of the sale. • Interest and dividends are attributed to Ha - waii if the partnership's commercial domicile is in Hawaii. • Patent and copyright royalties are attributed to Hawaii if and to the extent that the patent or copyright is utilized by the payor in Hawaii. • Intangible property is attributed to Hawaii if it is used in Hawaii. • Services are attributed to Hawaii if it is used or consumed in Hawaii. Amounts received by a qualified high technology business as royalties and other income derived from patents, copyrights, and trade secrets owned by the qualified high technology business and de - veloped and arising out of a qualified high technology business are excluded from Hawaii income. Expenses related to this income are deductible. How Income Is Shared Among Partners Income (loss) is allocated to a partner only for the part of the year in which that person is a member of the partnership. The partnership will either allocate on a daily basis or divide the partnership year into segments and allocate income, loss, or special items in each segment among the persons who were partners during that segment. (See section 706(c)(2) for more information and for the ter - mination of a partner's interest.) Allocate shares of income, gain, loss, deduc - tion, or credit among the partners according to the partnership agreement for sharing income or loss generally. If the partners agree, specific items may be allocated among them in a ratio different from the ratio for sharing income or loss generally. For instance, if the net income exclusive of specially allocated items is divided evenly among three partners but some special items are allocated 50% to one, 30% to another, and 20% to the third partner, report the special items on the appropriate line of the applicable partner's Schedule K-1 and the total on the appropriate line of Schedule K instead of on the numbered lines on page 1 of Form N-20 or Schedule D. If the partnership agreement does not provide for the partner's share of income, gain, loss, de - duction, or credit, or if the allocation under the agreement does not have the substantial economic effect, the partner's share is determined according to the partner's interest in the partnership. (See section 704(b).)

# Specific Instructions

(Schedule K only) Enter the total distributive amount for each applicable items listed. (Schedule K-1 only) Prepare and give a Schedule K-1 to each per - son who was a partner in the partnership at any time during the year. Schedule K-1 must be provided to each partner on or before the day on which the partnership return is required to be filed. Note: Generally, any person who holds an interest in a partnership as a nominee for another person is required to furnish to the partnership the name, address, etc., of the other person. On each Schedule K-1, enter the names, ad - dresses, and identifying numbers of the partner and partnership and the partner's distributive share of each item. For an individual partner, enter the partner's social security number. For all other partners, en - ter the partner's FEIN. (However, if a partner is an individual retirement arrangement (IRA), enter the identifying number of the custodian of the IRA. Do not enter the social security number of the person for whom the IRA is maintained.) If a taxpayer and spouse each had an interest in the partnership, prepare a separate Schedule K-1 for each of them. If a taxpayer and spouse held an interest together, prepare one Schedule K-1 if the two of them are considered to be one partner. Note: Space has been provided after line 38 of Schedule K-1 for you to provide information to the partners. This space may be used in lieu of attachments. Question A.-Is This Partner a General Partner? Question A must be answered for all partners. If a partner holds interests as both a general and limited partner, attach a schedule for each activity which shows the amounts allocable to the part - ner's interest as a limited partner. Question B.-What Type of Entity Is This Partner? State on this line whether the partner is an individual, a corporation, a fiduciary, a partner - ship, an exempt organization, or a nominee (custodian). If the partner entity is an LLC and it is treated as other than a disregarded entity for state income tax purposes, the partnership must enter the LLC's classification for state income tax purposes (that is, a corporation or partnership). If the partner is a nominee, use one of the following codes after

the word "nominee" to indicate the type of entity the nominee represents: I-Individual; C-Corporation; F-Fiduciary; P-Partnership; E-Exempt Organization; or IRA-Individual Retirement Ar - rangement. Item C.-Partner's Profit, Loss, and Capital Sharing Percentages. Enter in item C(ii) the per - centage existing at the end of the year. However, if a partner's interest terminated during the year, enter in item C(i) the percentages that existed im - mediately before the termination. When the profit or loss sharing percentage has changed during the year, show the percentage before the change in item C(i) and the end of year percentage in item C(ii). If there are multiple changes in the profit and loss sharing percentage during the year, attach a statement giving the date and percentage before each change. "Ownership of capital" means the portion of the capital that the partner would receive if the partnership was liquidated at year end by the distribution of undivided interests in partnership assets and liabilities. Item D.-Partner's Share of Liabilities. Enter each partner's share of nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other liabilities. If the partner terminated his or her interest in the partnership during the year, enter the share that existed immediately before the total disposition. In all other cases, enter it as of the end of the year. If the partnership is engaged in two or more different types of at-risk activities, or a combina - tion of at-risk activities and any other activity, at - tach a statement showing the partner's share of nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other liabilities for each activity. See sections 465(c)(2) and (3) to determine if the partnership is engaged in more than one at-risk activity. If a partnership is engaged in an activity sub - ject to the limitations of section 465(c)(1), give each partner his or her share of the total pre-1976 losses from the section 465(c)(1) activity (i.e., film or video tape, section 1245 property leasing, farm, or oil and gas property) for which there existed a corresponding amount of nonrecourse liability at the end of each year in which the losses occurred. Items E.-Publicly Traded Partnerships. If the box in Item E is checked, you are a partner in a publicly traded partnership and must follow the rules for Publicly Traded Partnerships. See federal Partner's Instructions for Schedule K-1 (Form 1065) for more information. Item G.-Reconciliation of Partner's Capital Account. If you are not required to complete Item L on Schedule K-1 (Form 1065), you are not re - quired to complete Item G on Schedule K-1 (Form N-20). Note: The partnership must maintain a State Accumulated Adjustments Account. Box b - Report in this box the capital contribu - tions as reported on the partnership's books. Box c - Enter in this box the sum of the amounts on lines 1 through 11, column c of this Schedule K-1 and any nontaxable income. Box d - Enter in this box the sum of the amounts on lines 12 through 15 and 30a, column c of this Schedule K-1 and any disallowed deductions. Box e - Report in this box the withdrawals and distributions as reported on the partnership's books. Box f - The amount to enter in this box is the sum of the amounts from boxes a, b, and c less the sum of the amounts from boxes d and e. (Schedules K and K-1 unless otherwise noted) Income (loss)

# Line 1

Enter the partner's share of the ordinary in - come (loss) reported on Form N-20, line 16. If line 16 is a loss, enter the partner's full share of the loss. If the partner holds interests in the partner - ship both as a general partner and as a limited partner, enter the total loss for all interests held in the partnership. Enter the loss without reference to the adjusted basis of the partner's interest in the partnership or the partner's amount at risk. Line 1 should reflect the total ordinary income (loss) from all trade or business operations.

# Line 4

Enter: (1) the guaranteed payments to partners for salaries and interest deducted by the partner - ship and included on Form N-20, line 9; and (2) the guaranteed payments to partners that the partnership is required to capitalize, such as payments or credits to a partner for services rendered in orga - nizing a partnership.

# Line 10

Enter the net section 1231 gain (loss) from Schedule D-1, line 8. Do not include net gain or loss from involuntary conversions due to casualty or theft. Report net gain or loss from involuntary conversions due to casualty or theft on line 11.

# Line 11

Enter any other items of income, gain, or loss not included on lines 1 through 10, such as: a. Gains from the disposition of farm recapture property (see Schedule D-1) and other items to which section 1252 apply. b. Recoveries of bad debts, prior taxes, and delinquency amounts (section 111). c. Gains and losses from wagering (section 165(d)). d. Any income, gain, or loss to the partnership under section 751(b). e. Net gain or loss from involuntary conversions due to casualty or theft. Give each partner a schedule that separately shows each part - ner's share of the amount to be reported on federal Form 4684, Casualties and Theft. Deductions

# Line 12

Enter the total amount of charitable contribu - tions, and each amount subject to the 50%, 30%, and 20% limitations paid by the partnership during the tax year. Attach an itemized list that separately shows the partnership's charitable contributions subject to the 50%, 30%, and 20% limitations. If the partnership made a qualified conserva - tion contribution under section 170(h), also include the fair market value of the underlying property before and after the donation, the type of legal in - terest contributed, and describe the conservation purpose furthered by the donation. Give a copy of this information to each partner.

# Line 13

A partnership may elect to expense part of the cost (up to $25,000) of recovery property that the partnership purchased this year for use in its trade or business. The partnership may not deduct the section 179 expense, but should report the ex - pense separately on Schedules K and K-1. The partners report their shares in the year in which the property is placed in service. Show the total sec - tion 179 expense on Schedule K, line 13, and al - locate it to each partner on Schedule K-1, line 13. The partnership must specify the item(s) of section 179 property which it elects to treat as an expense and the portion of the cost of each item which is being treated as an expense. Do this on federal Form 4562, Depreciation and Amortization, and on a schedule attached to Schedule K-1. Generally, any election made under section 179 may not be revoked except with the consent of the Di - rector. Depreciation or amortization may not be taken on any amount for which a deduction is allowed under section 179. See section 179 and federal Form 4562 for more information. Please note that Hawaii has not adopted federal provisions relating to the increase of the section 179 deduction and "bonus" depreciation.

# Line 15

Enter any other deductions not included on line 12 through 14, such as: a. Amounts, other than investment interest, paid by the partnership that would be itemized deductions on any of the partners' income tax returns if they were paid directly by a partner for the same purpose. These amounts in - clude, but are not limited to expenses under section 212 for the production of income other than from the partnership's trade or business. b. Any interest penalty on early withdrawal of savings. The federal Form 1099-INT given to the partnership by a bank or savings and loan association will show the amount of any interest penalty the partnership was charged because it withdrew funds from its time sav - ings deposit before its maturity. c. Soil and water conservation expenditures (section 175). d. Expenditures for the removal of architectural and transportation barriers to the elderly and handicapped and which the partnership has elected to treat as a current expense (section 190). e. Contributions to a capital construction fund. f. Any amounts paid during the tax year for health insurance coverage for a partner (in - cluding that partner's spouse and depen - dents). g. Payments for a partner to an IRA, qualified plan, or simplified employee pension (SEP) or SIMPLE IRA plan. If a qualified plan is a defined benefit plan, a partner's distributive share of payments is determined in the same manner as his or her distributive share of partnership taxable income. For a defined ben - efit plan, attach to the Schedule K-1 for each partner a statement showing the amount of benefit accrued for the tax year. h. Interest expense allocated to debt-financed distributions. See Internal Revenue Service Notice 89-35 for more information. i. Interest paid or accrued on debt properly al - locable to each general partner's share of a working interest in any oil or gas property (if the partner's liability is not limited). General partners that did not materially participate in the oil or gas activity treat this interest as in - vestment interest; for other general partners, it is a trade or business interest.

Credits Lines 16 - 30 See Instructions for Schedule CR for more in - formation on specific credits. Line 30 Total Hawaii Income Tax Withheld on Form Schedule NP Enter on line 30 the total tax amount with - held from nonresident partners that is reported on Schedule NP, line 2. Line 31 Investment Interest Lines 31a - 31b(2) must be completed whether or not a partner is subject to the investment inter - est rules. Line 31a. Investment Interest Expense. - Include on this line interest paid or accrued to purchase or carry property held for investment. Property held for investment includes property that produces portfolio income (interest, dividends, annuities, royalties, etc.). Therefore, interest expense allocable to portfolio income should be reported on line 31a of Schedule K-1 (rather than line 14 of Schedule K-1). Property held for investment includes a part - ner's interest in a trade or business activity that is not a passive activity to the partner and in which the partner does not materially participate. An ex - ample would be a partner's working interest in oil and gas property (i.e., the partner's interest is not limited) if the partner does not materially partici - pate in the oil and gas activity. Investment interest does not include interest expense allocable to a passive activity. The amount on line 31a will be deducted (after applying the investment interest expense limita - tions of section 163(d)) by individual partners on their Form N-11 or N-15. Lines 31b(1) and 31b(2). Investment Income and Expenses.-Enter on line 31b(1) only the in - vestment income included on lines 5 through 7 of Schedule K-1. Enter on line 31b(2) only the investment expense included on line 14 of Schedule K-1. If there are items of investment income or ex - pense included in the amounts that are required to be passed through separately to the partner on Schedule K-1 (items other than the amounts included on lines 5 through 7 and 14 of Sched - ule K-1), give each partner a schedule identifying these amounts. Investment income includes gross income from property held for investment, gain attributable to the disposition of property held for investment, and other amounts that are gross portfolio income. In - vestment income and investment expenses do not include any income or expenses from a passive activity. Property subject to a net lease is not treated as investment property because it is subject to the passive loss rules. Do not reduce investment in - come by losses from passive activities. Investment expenses are deductible expenses (other than interest) directly connected with the production of investment income. Other Schedule K, Line 32 See instructions for federal Form 1065, Schedule K for what else to report on line 32. Schedule K-1, Lines 32 - 37 Report on lines 32 through 37 of Schedule K-1, credit recapture amounts for the Hawaii Low- Income Housing Tax Credit, the Capital Goods Excise Tax Credit, the Tax Credit for Flood Victims, the Important Agricultural Land Qualified Agricul - tural Cost Tax Credit, the Capital Infrastructure Tax Credit, and the Historic Preservation Income Tax Credit. Schedule K-1, Line 38 See instructions for federal Form 1065, Schedule K-1 for what to report on line 38. Analysis (Schedule K only) Lines 33a and 33b For each type of partner shown, enter the por - tion of the amount shown on line 33a of Schedule K that was allocated to that type of partner. The sum of the amounts shown on line 33b must equal the amount shown on line 33a. In classifying partners who are individuals as "active" or "passive," the partnership should apply the following rules: 1. If the partnership's principal activity is a trade or business activity, classify a general partner as "active" if the partner materially participat - ed in all partnership trade or business activi - ties; otherwise, classify a general partner as "passive." 2. If the partnership's principal activity consists of working interest in an oil or gas well, clas - sify a partner holding a working interest in the oil or gas well through an entity that does not limit the partner's liability as "active;" other - wise, classify the partner as "passive." 3. If the partnership's principal activity is a rental real estate activity, classify a general partner as "active" if the partner actively participated in all of the partnership's rental real estate activities; otherwise, classify a general partner as "passive." 4. If the partnership's principal activity is a portfolio activity, classify all partners as "active." 5. Classify all limited partners and all partners in a partnership whose principal activity is a rental activity other than a rental real estate activity as "passive." 6. If the partnership cannot make a reasonable determination as to whether or not a partner's participation in a trade or business activity is material or whether or not a partner's participation in a rental real estate activity is active, classify the partner as "passive." In applying the above rules, a partnership should classify each partner to the best of its knowledge and belief. It is assumed that in most cases the level of a particular partner's participa - tion in an activity will be apparent.

# Schedule NP Allocation of Withholding Payment to

Nonresident Partners The partnership is required to withhold and pay to the State on behalf of their nonresident partners, an amount equal to the highest marginal tax rate on individuals, currently 11%, multiplied by the partner's pro rata share of the income attributable to the State. Schedule NP is used for reporting this withholding by the partnership to the Department. The nonresident partner is notified of the amount withheld on Schedule K-1, line 30. Any payments made will be a payment by the partner on account of the income tax imposed on the partner for the taxable period. The partnership is entitled to re - cover a payment from the partner on whose behalf the payment was made. Form N-4P, Statement of Withholding for a Nonresident Partner of a Partnership Form N-4P is to be completed for each non - resident partner. In box 1, fill in the partnership's full name and mailing address. Show the partner's social security number or other tax identification number in box 2. Enter the amount of Hawaii tax that was withheld for the nonresident partner in box 3. Show the partnership's FEIN in box 4. Enter the partner's name and complete mailing address in box 5. In box 6, enter the partner's share of the partnership's income attributable to Hawaii, the sum of lines 1 through 11 of the partner's Schedule K-1. Retain Copy A for your records. Copy B is for the partner's records. Copy C is to be attached to the partner's Form N-15 or N-40. Schedules O and P Allocation and Apportionment of Income If the partnership had ordinary income or (loss) from trade or business activities both within and without Hawaii, complete Schedules O and P to determine the business income or (loss) appor - tioned to Hawaii. For more details, see the instructions for "Attributable to Hawaii" on page 5, under Schedule K and Schedule K-1 . Attach a copy of Schedules O and P to Form N-20. Composite Returns for Nonresident Partners At present, there are no statutory provisions that: (1) allow partnerships the option to file com - posite returns on behalf of their nonresident part - ners, and (2) grant the election to be taxed at the nonresident partners' own individual tax rates but with no standard deduction or personal exemp - tion. However, the Department of Taxation will administratively allow partnerships to elect to file composite Hawaii nonresident income tax returns on behalf of participating partners, all of whom are nonresidents, and make composite payments for the participating partner's distributive share of Hawaii source income based on their own individual tax rate but with no standard deduction or personal exemption, provided the following conditions are met: • The partner must be an individual. • The partner's income from the partnership is the partner's only income from Hawaii sources. If a partner has other income from Hawaii sources such as multiple partnerships, even though the partnerships are related, a sepa - rate net income tax return must be filed by that partner. • The partnership will obtain a Power-of-Attor - ney from each of its partners to permit the partnership to file an income tax return on the partners' behalf. A copy of each power of attorney is to be attached to the initial compos - ite tax return filed by the partnership. • The partnership, as an agent for the partici - pating partners, shall pay tax, additions to tax, interest, and penalties otherwise required to be paid by the partners. The composite Hawaii Nonresident Individual Income Tax Return, Form N-15, shall be completed as follows: 1. Fill in the oval indicating this is a composite return; 2. The first name on the return shall be "Part - ners" and the last name is the partnership's name;

3. The partnership's FEIN shall be used in place of the taxpayers' social security number. Enter the partnership's FEIN in social security number format (i.e., 123-45-6789); 4. Indicate the partnership's mailing address as the taxpayers' address; 5. Indicate the partnership's principal business activity in Hawaii as the taxpayers' occupation; 6. Filing status will be single. No personal ex - emption is allowed; 7. Complete pages 2 and 3, Col. B, lines 17 and 35; 8. Deductions necessary to determine each partner's distributive share of the partnership in - come are allowed; 9. Credits directly attributable to the partnership are allowed; 10. On line 37, enter zero since worldwide source income of each nonresident partner is not required, itemized deductions calculated us - ing the ratio of Hawaii adjusted gross income to total adjusted gross income may not be claimed. Also, tax credits which are based on total adjusted gross income from all sources may not be claimed; 11. Complete page 3 by: a. determining the taxable income for each nonresident partner and enter the total on lines 41 and 43; b. determining the tax for each nonresi - dent partner and enter the total on line 44; and c. completing lines 45 through 51 as ap - propriate, and line 52 (note: on Schedule CR, skip line 11). 12. Complete page 4, lines 53 through 66 as ap - propriate. A schedule is attached to the return detailing each partner's: 1. Name, address, social security number, and filing status (single); 2. Distributive share of income or (loss); 3. Allowable itemized deductions; 4. Tax due computed on the taxable income of the individual partner; and 5. Distributive share of credits. Nonresident partners who have made Hawaii estimated tax payments during the 2024 tax year and who are allowed to be included on the composite return may have those payments credited to the composite return. The partnership may claim these payments on Form N-15, line 55, by entering the total of the estimated tax payments along with "see attached schedule" in the amount column of line 55 and attaching a schedule of the estimated tax payments by stating each individual's: 1. Name, address, and social security number, and 2. Each type of estimated payment and amount of payment (e.g., N-200V, 1st quarter - $200; N-200V, 2nd quarter - $300; etc.) made by the individual. The election to file a composite Hawaii non - resident return may be revoked by the Department upon failure of the partnership to comply with the terms and conditions of this election. In making such an election, the partnership will not be required to obtain from the participating partners, income derived from non-entity sources and claims for non-entity deductions.

# Schedule PTE Pass-Through Entity Tax

Purpose Schedule PTE is used to calculate the PTE tax of an electing PTE at the PTE level and report their qualified members' net income and PTE tax credit amounts under section 235-51.5, HRS.

# General Instructions

Partnerships who make a yearly irrevocable election to pay taxes at the PTE level for the tax - able year are liable for PTE tax on Form N-20, page 2, line 17a. The electing PTE must attach Schedule PTE listing all qualified members and their distributive shares and guaranteed payments subject to PTE tax for the taxable year. See Tax Information Release No. 2024-01, "Proposed Temporary Administrative Rules Relating to Pass-Through Entity Taxation as Enacted by Act 50, Session Laws of Hawaii 2024."

Specific Instructions

# Schedule PTE

If the partnership is an electing PTE for the taxable year, Schedule PTE must be attached to Form N-20. Schedule PTE is a summary of all the qualified members that an electing PTE uses to calculate the total amount of elective tax on the electing PTE's qualified net income. Schedule PTE requires the electing PTE to identify their qualified members by entering their names, identification numbers, pro rata share or distributive share of qualified net income amounts, and calculate the elective tax credit amounts. If you need more space on Schedule PTE to report more qualified members, attach additional Schedule PTEs as needed and check the "Supplement to Part II Only" box at the top of the form and continue with the remaining qualified members in Part II. The total number of qualified members, their qualified net income, and their elective tax credit amounts (Part II, lines 1 though 3) of all Schedule PTEs should equal the amount reported in Part I, lines 1, 2, and 4. Schedule PTE, Part II, lines 1 through 3, should be the total of the amount of qualified members, income, and tax credit amount per form.

RELATED FEDERAL/HAWAII PARTNERSHIP TAX FORMS Copy of Fed. Federal Use Form May Be Form Number Title or Description of Federal Form Hawaii Form Used 970 Application To Use LIFO Inventory Method None Yes* 1065 U.S. Return of Partnership Income N-20 No Schedule D Capital Gains and Losses Sch. D (N-20) No Schedule K-1 Partner's Share of Income, Deductions, Credits, Etc. Sch. K-1 (N-20) No 1128 Application to Adopt, Change, or Retain a Tax Year None Yes* 3115 Application for Change in Accounting Method None Yes* 4562 Depreciation and Amortization None Yes* 4684 Casualties and Thefts None Yes* 4797 Sales of Business Property Sch. D-1 No 5884 Work Opportunity Credit N-884 No 6198 At-Risk Limitations None Yes* 6781 Gains and Losses from Section 1256 None Yes* Contracts and Straddles 8283 Noncash Charitable Contributions None Yes* 8582 Passive Activity Loss Limitations None Yes* 8586 Low-Income Housing Credit N-586 No 8697 Interest Computation Under the Look-Back Method None Yes* for Completed Long-Term Contracts 8824 Like-Kind Exchanges None Yes* 8825 Rental Real Estate Income and Expenses None Yes* of a Partnership or an S Corporation 8832 Entity Classification Election None Yes* 8949 Sales and other Dispositions of Capital Assets None Yes* * If there is no Hawaii equivalent form, the federal form must be used.