Pennsylvania Department of Revenue Form Instructions
PA-20S/PA-65 Schedule NRK-1 — Non-Resident Schedule of Shareholder/Partner Pass-Through Income
preamble
8 Distributions of Cash, Marketable Securities and Property - not including guaranteed payments . . . . 9 Guaranteed Payments for Capital or Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 All Other Guaranteed Payments for Services Rendered (PA-Apportioned Amount Only) . . . . . . . . . 11 Guaranteed Payments to the Retired Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Owner's Share of IRC Section 179 (SUPPLEMENTAL INFORMATION ONLY) . . . . . . . . . . . . . . 16 Owner's Share of Straight-Line Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Partner's Share of Nonrecourse Liabilities at year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Partner's Share of Recourse Liabilities at year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Distributions from PA Accumulated Adjustments Account . . . . . . . 13 Distributions of Cash, Marketable Securities and Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 PA-Taxable Business Income (Loss) from Operations . . . . . . . . . . . . . 2 Net Gain (Loss) from the Sale, Exchange or Disposition of Property . . 3 Net Income (Loss) from Rents, Royalties, Patents and Copyrights . . . . 4 Income of/from Estates or Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Gambling and Lottery Winnings (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . 6 PA Nonresident Tax Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Total Other Credits. Submit statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Nontaxable income (loss) or nondeductible expenses required to . . . . . . . calculate owner's economic investment. Submit statement. If a loss, fill in the oval. If a loss, fill in the oval. If a loss, fill in the oval. If a loss, fill in the oval. If liquidating, fill in the oval.
FEIN FEIN SSN
Spouse's SSN If jointly held Last Name Name of Entity Issuing NRK-1 First Line of Address Second Line of Address City or Post Office State ZIP Code State ZIP Code Suffix First Name M I City or Post Office Final Limited Partner or Other LLC Member General Partner or LLC Member - Manager Amended Schedule Shareholder's stock ownership: ________% Partner's percentage of: Profit sharing: ________% Loss sharing: ________% Ownership of capital: ________% Name of Owner Receiving NRK-1 (if other than an individual) Partner Type: Enter whole dollars only If a loss, fill in the oval. NOTE: Amounts from this schedule must be reported on the appropriate PA Tax Return. 52/53 Week Short Year EndBegin PA SCHEDULE NRK-1 Nonresident Schedule of Shareholder/ Partner/Beneficiary Pass Through Income, Loss and Credits PA-20S/PA-65 NRK-1 (DR) MOD 04-25 PA Department of Revenue 2025
SECTION I SECTION II SECTION III SECTION IV SECTION V SECTION VI SECTION
VII l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 l00 If Owner is D Fill in: FEIN Fiscal Year Entity Type: Owner Type: Included on PA-40 NRC Return (FI)
1PA-20S/PA-65 NRK-1 revenue.pa.gov Instructions for PA-20S/PA-65 Schedule NRK-1 Nonresident Schedule of Shareholder/Partner/Beneficiary Pass Through Income, Loss and Credits PA-20S/PA-65 NRK-1 IN (DR) MOD 04-25
PURPOSE OF SCHEDULE
Partnerships and S corporations use the PA Schedule NRK-1 to report income and losses by class of income to each of its nonresident owners. A PA Schedule NRK-1 is prepared for each individual partner, member or shareholder showing the share of income (losses) by class and other items required to be reported. Nonresident Pennsylvania partners, members or shareholders (owners) who are individuals are subject to Pennsylvania personal income tax on their share of the entity's Pennsylvania source income, whether or not the income is actually distributed. The PA-20S/PA-65 Schedule NRK-1 provides each nonresident partner, member or shareholder (owner) and entity owner their share of income, losses and credits from the partnership, PA S corporation, and/or entity formed as a limited liability company classified as a partnership or S corporation for federal income tax purposes.
A PA-20S/PA-65 Schedule NRK-1 must be completed for every nonresident owner that has an ownership interest in a partnership, S corporation, and/or entity formed as a limited liability company classified as a partnership or S corporation for federal income tax purposes. A copy of the PA-20S/PA-65 Schedules NRK-1 for each partner, member or shareholder (owner) must accompany the entity's PA-20S/PA-65 Information Return. Owners must receive a copy or copies to prepare Pennsylvania tax or information returns. The PA S corporation or partnership must also retain a copy of all the PA-20S/PA-65 Schedules NRK-1 as part of the entity's records. In addition, a PA-20S/PA-65 Schedule NRK-1 must be completed for all nonresident owners that are estates, trusts, other PA S corporations, disregarded entities or other partnerships. The Pennsylvania taxable income passes through to the final taxpayer. Therefore, the immediate partners, members and shareholders must know the total Pennsylvania taxable income in the event the final owner is a Pennsylvania resident. In the event that the final owner is a nonresident of Pennsylvania, the owner must know Pennsylvania source taxable income. A partnership, S corporation or limited liability company classified as a partnership or S corporation for federal tax purposes (entity) that fails to file a PA-20S/PA-65, S Corporation/Partnership Information Return may be subject to a $250 non-filer penalty. The $250 penalty also applies to each missing PA Schedule RK-1 or NRK-1. NOTE: Entity owners receive both the PA-20S/PA-65 Schedules NRK-1 and RK-1.
PAPER RETURNS AND ELECTRONIC FILED RETURNS
The PA-20S/PA-65 Schedule NRK-1 submitted with the PA- 20S/PA-65 Information Return does not need to be issued to C corporation taxpayers unless a credit from the PA- 20S/PA-65 Schedule OC has been allocated. If a C corporation taxpayer receives a PA-20S/PA-65 Schedule NRK-1, the amount from Line 7, Total Other Credits, must be reported on the appropriate Pennsylvania tax return.
The requirements are different for PA S corporations and partnerships to issue PA Schedules RK-1 and/or NRK-1 to its owners as described below.
Schedule NRK-1 for that portion of the tax year during which a part-year resident shareholder was a nonresident of
Pennsylvania. Part-year shareholders have business income and losses prorated based upon the number of days in the tax year these individuals are located within and outside the state. Each shareholder's pro rata distributive share of total PA source income, losses and credits reported on the PA-20S/PA-65 Information Return determines the income amounts for the lines that are included on the PA Schedule NRK-1. Income is allocated based on days residing or not residing in Pennsylvania. Pennsylvania considers any day or partial day an owner has a residence or domicile within the commonwealth to be a Pennsylvania residency day. The owner will receive PA Schedules NRK-1 and RK-1 reflecting the proportionate share of income earned while a resident and a nonresident. In order to calculate the PA Schedule NRK-1 income and losses by class for the non-residency period, first determine the proportional number of days a shareholder did not reside in the state. Using the number of days a shareholder was not located in the state as the numerator, divide this figure by the total number of days in the tax year representing the denominator. The resulting ratio should be multiplied by the PA source income and losses by class shown on page one of the PA-20S/PA-65 Information Return. This figure is then multiplied
GENERAL INFORMATION WHO SHOULD RECEIVE
PA SCHEDULE NRK-1 PA SCHEDULE NRK-1 FOR C CORPORATION PARTNERS
PART-YEAR RESIDENT OWNERS
2 PA-20S/PA-65 NRK-1 revenue.pa.gov by the shareholder's stock ownership percentage to determine the PA Schedule NRK-1 income and losses by class.
PARTNERSHIPS ONLY NONRESIDENCY PERIOD
A nonresident partner reports income based upon residency status at year-end and does not prorate the income. The partnership must submit a separate PA-20S/PA-65 Schedule NRK-1 for each individual partner if during the partnership's taxable year the partner was: ● A nonresident of Pennsylvania at the close of the taxable year; ● Deceased and a nonresident of Pennsylvania at the time of the partner's death during the taxable year; and/or ● A nonresident of Pennsylvania at the close of business on the day during the taxable year that the partner sold, exchanged, disposed of, liquidated, or redeemed the entire interest in the partnership. NOTE: Income is considered earned on the final day of the tax year. If the partner is a nonresident on the last day of the year, the partner will receive a PA-20S/PA-65 Schedule NRK-1 showing Pennsylvania source income only.
The department will not accept any Schedules RK-1/NRK- 1 in CD rom format. Please reference Informational Notice PIT 2013-02. Schedules RK-1 and NRK-1 submitted in this format will not be processed and the entity may be subject to the $250 non-filer penalty that applies for each missing Schedule RK-1 and NRK-1.
An amended PA-20S/PA-65 Information Return and an amended PA-20S/PA-65 Schedule NRK-1 for each owner must be filed to correct any error on or reflect any change to the original PA-20S/PA-65 Information Return, whether or not an amended federal Form 1120S or federal Form 1065 was filed for that year. To amend an original PA-20S/PA-65 Schedule NRK-1, use a blank schedule for the tax year to be amended and fill in the "Amended Schedule" oval at the top of the schedule. Do not send a copy of the original schedule. Complete the schedule by entering the corrected information and submit it with the amended PA-20S/PA-65 Information Return. See WHERE TO FILE in the PA-20S/PA-65 Information Return instructions. IMPORTANT: When submitting an amended NRK-1, the amended PA-20S/PA-65 Information Return must accompany it, or it will not be accepted by the department.
FOREIGN ADDRESS STANDARDS
If the PA S corporation, partnership or entity formed as a limited liability company classified as a partnership or PA S corporation for federal income tax purposes is located outside the U.S., it is important to write the foreign address on the PA-20S/PA-65 Schedule NRK-1 according to U.S. Postal Service standards. Failure to use these standards may delay processing or correspondence necessary to complete the processing of the return. To comply with foreign address standards, use the following rules when completing the address portion of the PA-20S/ PA-65 Schedule NRK-1. ● Eliminate apostrophes, commas, periods and hyphens. Write the address in all uppercase letters. Addresses should have no more than four lines and must be written in black ink or typewritten. Pencil is unacceptable. ● Write the name of the entity in the spaces provided. Mail may not be addressed to a person in one country "in care of" a person in another country. The address of items sent to general delivery must indicate the addressee's full legal name. ● Write the address in the spaces provided, including street and building name and number, apartment or suite numbers, city name and city or provincial codes. All lines of the delivery address should appear in all capital letters. The house number and street address or box number must appear when mail is addressed to towns or cities. ● Write only the name of the country in the space provided for the city or post office. ● Do not include any entries in the state field other than "OC" for Out-of-Country. The ZIP Code spaces should remain blank on the PA-20S/PA-65 Schedule NRK-1. Providing the address in this format will better ensure that the department is able to contact the entity if additional information is required. Below are examples of properly completed foreign addresses. Foreign Address Examples Name: DIETRICH ENTERPRISES Address 1: HARTMANNSTRASSE 7 Address 2: 5300 BONN 1 City: GERMANY State: OC ZIP Code: Leave Blank OR Name: DIETRICH ENTERPRISES Address 1: 117 RUSSELL DR Address 2: LONDON W1PGHQ City: ENGLAND State: OC ZIP Code: Leave Blank Canada (Only) Address Example The following address format may be used when the postal address delivery zone number is included in the address: COMPLETING PA SCHEDULE NRK-1
ENTITIES WITH A SIGNIFICANT NUMBER OF OWNERS
HOW TO AMEND PA SCHEDULE NRK-1
3PA-20S/PA-65 NRK-1 revenue.pa.gov Name: NORTH BY NORTHWEST CO Address 1: 1010 CLEAR ST Address 2: OTTAWA ONT K1A 0B1 City: CANADA State: OC ZIP Code: Leave Blank If the entity's address does not fit in the available spaces on the PA-20S/PA-65 Schedule NRK-1 using this format, submit a separate statement that includes the entity's name, entity's federal employer identification number, tax year and complete address. NOTE: For a Canadian address, two spaces must exist between the province abbreviation and the postal code. Please review example above where "ONT" (province abbreviation) and "K1A 0B1" (postal code) are shown with the proper address format, separated by two spaces.
IMPORTANT: All required information must be included for both the RECEIVER and ISSUER of the NRK-1. Failure to provide a complete SSN/FEIN for either party, along with their full name and address, will result in an incomplete NRK-1 and may lead to processing issues with the department. SSN Enter the nine-digit Social Security number (SSN) of the individual receiving the PA-20S/PA-65 Schedule NRK-1. If the owner is a disregarded entity, use the SSN of the beneficial owner. Do not use the TIN of a disregarded entity.
LAST NAME, SUFFIX, FIRST NAME, MIDDLE INITIAL
Enter the last name; suffix such as Jr., Sr., etc.; first name and middle initial of the individual receiving the PA-20S/PA- 65 Schedule NRK-1. SPOUSE'S SSN Enter the nine-digit SSN of the spouse (if jointly held) receiving the PA-20S/PA-65 Schedule NRK-1. FEIN Enter the nine-digit federal employer identification number (FEIN) of the owner (if other than an individual) receiving the PA-20S/PA-65 Schedule NRK-1. NOTE: Do not use the TIN of a disregarded entity as the owner receiving NRK-1. List the TIN of the beneficial owner in the appropriate section for SSN or FEIN. Provide the FEIN of the disregarded entity within the OWNER portion of Section I. NAME OF OWNER RECEIVING NRK-1 (IF OTHER THAN AN INDIVIDUAL) If the owner of the entity is a partnership, PA S corporation, estate, trust or entity formed as a limited liability company classified as a partnership or PA S corporation for federal income tax purposes, enter the name of the entity owner receiving the PA-20S/PA-65 Schedule NRK-1. Eliminate all punctuation such as apostrophes, commas, periods and hyphens. If the PA Schedule NRK-1 is being issued to an individual or disregarded entity whose beneficial owner is an individual (See, NOTE under FEIN above), fill this area in with the individual owner information. Fill the Owner Type as "D" and fill in the box below Owner Type with the FEIN of the Disregarded Entity.
FIRST LINE OF ADDRESS
Enter the street address of the owner receiving the PA-20S/ PA-65 Schedule NRK-1. If the address has an apartment number, suite or RR number, enter it after the street address. Eliminate all punctuation such as apostrophes, commas, periods and hyphens. NOTE: If the street address along with the apartment number, suite or RR number does not fit on the first line of address, then enter the street address on the second line of address and the apartment number, suite or RR number on the first line of address.
SECOND LINE OF ADDRESS
Enter the post office box, if appropriate, of the owner receiving the PA-20S/PA-65 Schedule NRK-1. If there is no post office box, leave the second line of the address blank. Eliminate all punctuation such as apostrophes, commas, periods and hyphens. For a foreign address enter the city or municipal designation. See FOREIGN ADDRESS EXAMPLES. For a Canadian address, enter the city and postal delivery zone number. See CANADA ADDRESS EXAMPLE. IMPORTANT: If the address has only a post office box, enter on the first line of address.
CITY, STATE AND ZIP CODE
Enter the appropriate information in each box. Eliminate all punctuation such as apostrophes, commas, periods and hyphens. NAME OF ENTITY ISSUING NRK-1 Enter the name of the entity issuing the PA-20S/PA-65 Schedule NRK-1. Eliminate all punctuation such as apostrophes, commas, periods and hyphens.
CITY, STATE AND ZIP CODE
Enter the appropriate information of the entity issuing the PA-20S/PA-65 Schedule NRK-1 in each box. Eliminate all punctuation such as apostrophes, commas, periods and hyphens. FEIN Enter the nine-digit FEIN of the entity issuing the PA-20S/ PA-65 Schedule NRK-1.
AMENDED SCHEDULE
Fill in the oval if the PA-20S/PA-65 Schedule NRK-1 is an amended schedule. FINAL Fill in the oval if the PA-20S/PA-65 Schedule NRK-1 is a final schedule.
SECTION I GENERAL INFORMATION
4 PA-20S/PA-65 NRK-1 revenue.pa.gov SHAREHOLDER'S STOCK OWNERSHIP Enter the shareholder's percentage of stock ownership in the PA S corporation.
PARTNERSHIP PERCENTAGE
Enter the partner's percentage of each of the following at the close of the taxable year: ● Profit sharing ● Loss sharing ● Ownership of capital
OWNER From the list below, enter the code that corresponds with the type of owner receiving the PA-20S/PA-65 Schedule NRK-1: ● I = Individual ● S = S Corporation ● C = C Corporation ● E = Estate ● T = Trust ● P = Partnership ● L = LLC ● X = Exempt ● D = Disregard Entity If owner is a disregarded entity, the FEIN field below must be filled out.
PARTNER
Fill in the oval that designates what type of partner received the PA-20S/PA-65 Schedule NRK-1. Fill in one oval only.
ENTITY
From the list below, enter the code that corresponds with the type of owner issuing the PA-20S/PA-65 Schedule NRK-1: ● S = S Corporation ● P = Partnership ● E = Estate ● T = Trust ● L = LLC
FISCAL YEAR
If the PA S corporation, partnership or limited liability company filing as a partnership or PA S corporation for federal income tax purposes does not file on a calendar-year basis, fill in fiscal-year oval. Enter the month, day and year (MMDDYY) when the fiscal year begins and ends. 52/53 WEEK If the PA S Corporation, partnership or limited liability company filing as a partnership or PA S corporation for federal income tax purposes files on a basis of 52/53 week, fill in the oval. Enter the month day and year (MMDDYY) when the 52/53 week year begins and ends. NOTE: Do not fill in the fiscal filer oval.
SHORT YEAR
A short year is an accounting period shorter than one year and not a 52/53 week taxable year. A short-year return is required for the following reasons: ● Changes in the annual accounting period. For example, the entity changes from a fiscal-year filer to a calendaryear filer; or ● An entity is in existence during only part of the tax year. For example, if the year is the initial year or final year for all entities. See the PA-20S/PA-65 Information Return instructions on how to file a short-year return.
OWNER'S DISTRIBUTIVE SHARE OF PENNSYLVANIA SOURCE INCOME (LOSS)
PENNSYLVANIA TAXABLE BUSINESS INCOME (LOSS)
FROM OPERATIONS
Enter the owner's pro rata distributive share from the PA- 20S/PA-65 Information Return, Line 2h. The entity must report the owner's share of income (loss) whether distributed or not. If reporting a loss fill in the oval. Guaranteed payments should not be included on Line 1 of PA-20S/PA-65 Schedule NRK-1.
NET GAIN (LOSS) FROM THE SALE, EXCHANGE
OR DISPOSITION OF PROPERTY
This figure will flow from PA-20S/PA-65 Schedule D, Part I, Line 16. If reporting a loss fill in the oval.
Enter the owner's pro rata distributive share of the separately stated items of other Pennsylvania taxable income (loss) from the PA-20S/PA-65 Information Return. If reporting a loss on Line 3 and/or Line 5, fill in the oval.
LINE INSTRUCTIONS
LINE 1
SECTION II
Valid values are: "00000" to "10000", where 10000 = 100% Decimal point is implied after 3rd character from the left e.g. to indicate 33.33%, the value should be "03333" e.g. to indicate 25%, the values should be "02500" Valid values are: "00000" to "10000", where 10000 = 100% Decimal point is implied after 3rd character from the left e.g. to indicate 33.33%, the value should be "03333" e.g. to indicate 25%, the values should be "02500" LINE 2 LINES 3 THROUGH 5
5PA-20S/PA-65 NRK-1 revenue.pa.gov
OWNER'S SHARE OF PENNSYLVANIA CREDITS Enter the owner's pro rata distributive share of the separately stated credits that the PA S corporation or partnership passes through to the owners from the PA- 20S/PA-65 Information Return.
PENNSYLVANIA NONRESIDENT TAX WITHHELD
Enter the Pennsylvania nonresident tax withheld from nonresident owners of Pennsylvania that was submitted to the Pennsylvania Department of Revenue. Include the excess withholding paid on behalf of nonresidents of Pennsylvania if the owner will receive a refund or credit of the excess.
TOTAL OTHER CREDITS
Enter the owner's pro rata share from PA-20S/PA-65 Information Return, Section V, Line 13a. The entity must provide the owner with a statement listing which credit(s) have been passed through to them. When applicable, Line 7 includes credits for PA S corporations treated as C corporations in other states. The statement must include the entity's name, entity's federal employer identification number, tax year, owner name(s), and owner tax identification number(s). IMPORTANT: See PA-20S/PA-65 Schedule OC instructions for which credits must be applied to corporate tax liability prior to being passed through to the entity's owners. C corporation owners cannot claim credit for taxes paid to other states.
DISTRIBUTIONS FROM PARTNERSHIPS
Noncorporate shareholders and partners should use the amounts from PA-20S/PA-65 Schedule NRK-1, Section IV through Section VII, to determine or calculate their Pennsylvania economic investment in the entity. Partners include Line 10 in net classified income on their Pennsylvania tax returns.
DISTRIBUTION OF CASH, MARKETABLE SECURITIES AND PROPERTY NOT INCLUDING GUARANTEED
PAYMENTS
Enter the partner's share of such distributions of cash, marketable securities and property other than guaranteed payments. Nontaxable distributions reduce the nonresident's economic investment.
GUARANTEED PAYMENTS FOR CAPITAL OR OTHER SERVICES
Enter the partner's share of guaranteed payments for capital or other services. For nonresidents a guaranteed payment for other services or for the use of capital is allocable to their state of residence. Nonresidents are not taxed on a guaranteed payment for the use of capital for Pennsylvania personal income tax purposes. Pennsylvania personal income tax rules classify distributions of guaranteed payments for capital or other services as follows: ● A withdrawal proportionately from the capital of all partners; ● A gain from the disposition of the recipient's partnership interest and a loss from the disposition of the other partners' partnership interests, to the extent derived from the capital of the other partners; and ● A return of capital by the recipients to the extent derived from their own capital. The distributions that the partnership makes that represent repayments of the partner's own capital are not considered income for Pennsylvania personal income tax purposes.
ALL OTHER GUARANTEED PAYMENTS FOR
SERVICES RENDERED (PENNSYLVANIA- APPORTIONED AMOUNT ONLY) Enter the partner's share of such payments taxable in Pennsylvania. Pennsylvania taxes nonresidents of Pennsylvania on guaranteed payments based on Pennsylvania-apportioned calculations for ordinary income. NOTE: The partner must know the class of income from which the partnership made the guaranteed payments. The partner must then properly classify the payments on the PA-40 Individual Income Tax Return. Guaranteed payments are apportioned the same as business income. For example if the guaranteed payment is $100 and the Pennsylvania apportionment is 50 percent, then only $50 is included in the business income. IMPORTANT: If the total guaranteed payments include more than one of the income classes described below, the partnership must provide a statement to the partners showing the amounts for each line. For Pennsylvania personal income tax purposes, guaranteed payments are classified as follows: ● If services are rendered directly in the production of income from a business, profession, or farm, the guaranteed payments are gross income from that income class. ● If services are rendered directly in the production of rental or royalty income, the guaranteed payments are gross income from that income class. LINE 9 LINE 8
SECTION IV
LINE 7 LINE 6 LINE 10
SECTION III
6 PA-20S/PA-65 NRK-1 revenue.pa.gov A guaranteed payment is allocable to Pennsylvania to the extent it is deductible from net profits or rental and royalty income that is allocable to Pennsylvania. Income allocable to Pennsylvania is income derived from Pennsylvania sources. HEALTH SAVINGS ACCOUNTS (HSA) Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. The contributions are treated as a distribution of money and are not included in the partner's income. Contributions by a partnership to a partner's HSA for services rendered, however, are treated as guaranteed payments that are deducted by the partnership and included in the partner's income. In both situations, the partnership can deduct the contribution made to the partner's HSA. Contributions to a nonresident partner's HSA for services must be apportioned. Contributions by an S corporation to a 2 percent shareholder/employee's HSA for services rendered are deducted by the S corporation as wage or salary expense and included in the shareholder/employee's gross compensation. The shareholder/employee can deduct the contribution made to the shareholder/employee's HSA.
GUARANTEED PAYMENTS TO A RETIRED PARTNER
Guaranteed payments to a retired partner must meet the exception as described in IRC §1402(a)(10). Generally, retirement payments received by a retired partner from a partnership (of which he or she is a member or former member) are counted as net earnings from self-employment. Certain periodic payments by a partnership to a retired partner made on account of retirement under a written plan of partnership are excluded from the tax. To be effective, the plan must meet such requirements as are prescribed by Reg §1.1402(a)-17. It must apply to partners generally or to a class or classes of partners, and provide such payments at least until the retired partner's death. The exclusion applies to retirement payments received by a retired partner only if he or she renders no services in any business conducted by the partnership during the taxable year of such partnership, ending within or with his or her taxable year in which amounts were received. At the end of such partnership's taxable year : (1) there must be no obligation from other partners to the retired partner, other than to make retirement payments under the plan ; and (2) the retired partner's share in the capital of the partnership had been paid to him or her in full. Code Sec. 1402(a)(10) Reg §1.1402(a)-17.
DISTRIBUTIONS FROM PA S CORPORATIONS DISTRIBUTIONS FROM THE PENNSYLVANIA
ACCUMULATED ADJUSTMENTS ACCOUNT
Enter the shareholder's share of such distributions. Nontaxable distributions reduce the nonresident's economic investment. If a liquidating distribution, fill in the oval.
DISTRIBUTIONS OF CASH, MARKETABLE SECURITIES AND PROPERTY
Enter the shareholder's share of such distributions. Nontaxable distributions reduce the nonresident's economic investment. The PA S corporation should not include distributions to Pennsylvania nonresident shareholders from its PA C corporation earnings and profits as taxable dividend income.
NONTAXABLE INCOME (LOSS) OWNER'S ECONOMIC INVESTMENT
NONTAXABLE INCOME OR NONDEDUCTIBLE
EXPENSES REQUIRED TO CALCULATE OWNER'S ECONOMIC INVESTMENT. SUBMIT A STATEMENT The difference between federal and Pennsylvania depreciation should not be included on this line. Line 14 is based on permanent nontaxable income or nondeductible expenses in calculating Pennsylvania taxable income. This amount is generally not the same amount reported on the PA-20S/PA-65 Information Return, Section IV, Line 12 because Line 12 should include non-permanent items. The owners need this information to determine their personal Pennsylvania economic investment in the entity, taking into consideration the losses and distributions that may exceed their economic investment. Submit a statement that includes the entity's name, federal employer identification number and tax year and provide a breakdown of all nontaxable income earned and all non-deductible expenses not taken. This amount should only include permanent differences needed to calculate the owner's economic investment in the entity. If reporting a loss fill in the oval. The entity provides the owners with this information so the owners can calculate their economic investment. Examples of nontaxable income are tax-exempt interest, gifts, inheritance, loan proceeds, insurance proceeds and federal tax refunds. Examples of nondeductible expenses are partner's retirement contributions, partner's life and health insurance premiums.
SECTION V
LINE 12 LINE 11 LINE 13
SECTION VI
LINE 14
7PA-20S/PA-65 NRK-1 revenue.pa.gov These items may be listed on federal Form 1120S Schedule K as "Items Affecting Shareholder Basis" and on federal Form 1065 Schedule K as "Other Information".
SUPPLEMENTAL INFORMATION
The owners will need certain information to determine their personal Pennsylvania economic investment in the entity.
OWNER'S SHARE OF IRC §179 ALLOWED (PENNSYLVANIA-APPORTIONED AMOUNT ONLY) Enter the owner's share of IRC §179 depreciation expense. Each entity and individual taxpayer is limited to the IRC §179 federal depreciation expense for years beginning on or after January 1, 2023. Do not deduct this amount from any income class. This is for information only and is used to verify the owner has not exceeded the IRC §179 depreciation expense on a individual entity or aggregate basis. This amount has already been deducted from the applicable income class. Do NOT deduct again.
OWNER'S SHARE OF STRAIGHT-LINE DEPRECIATION (PENNSYLVANIA-APPORTIONED AMOUNT ONLY) Enter the owner's share of the entity's total expense. In years in which the entity incurs a loss and the owner is not able to use the entire loss, the owner is required to reduce their economic investment in the entity by their share of straightline depreciation. Therefore, assets for which accelerated depreciation has been calculated must be recalculated using straight-line depreciation in order to calculate Pennsylvania economic investment. The life of the asset must be the same life that was used to calculate depreciation expense deducted in determining Business Income (Loss) from Operations and/or Rental Income (Loss).
PARTNER'S SHARE OF NONRECOURSE LIABILITIES
AT YEAR-END
Enter the partner's share of nonrecourse liabilities at year-end. A nonrecourse liability is a secured liability, identified by the partnership, for which the partners are not personally liable. Nonrecourse liabilities apportion such debts to each partner's outside basis and validate deductions based on such liabilities.
PARTNER'S SHARE OF RECOURSE LIABILITIES
AT YEAR-END
Enter the partner's share of recourse liabilities at yearend. A recourse liability is one for which a partner is personally liable. LINE 16 LINE 17 LINE 18 LINE 15
SECTION VII
Source: official text