RI-1040C Composite Income Tax Return Instructions — PTET + nonresident composite (2025)

# GENERAL INFORMATION

Form RI-1040C is used to report the Rhode Island source income of qualified electing nonresident members of LLCs, Sub S Corporations, Partnerships, and Trusts.

If a pass-through entity is doing business in Rhode Island, or has income, gain, loss, or deduction derived from or connected with sources within Rhode Island, it can file a composite return on behalf of those qualified electing nonresident members. All of the qualified electing nonresident members must have the same taxable year.

In order to be included in the composite filing, the nonresident member must complete a Form RI 1040C-NE and file it with the entity from which they are receiving the Rhode Island source income. The entity must keep all of these election forms on file and be able to furnish them to the Rhode Island Division of Taxation upon request.

DUE DATE: RI-1040C is due on the fifteenth day of the third month following the close of the taxable year of the pass-through entity. (March 16, 2026 for calendar year taxpayers).

NEW FOR TAX YEAR 2025

Federal P.L. 119-21, H.R.1 Due to Rhode Island's decoupling from several provisions of Federal P.L. 119-21, H.R.1, the Rhode Island Division of Taxation created two new schedules that are required to be completed and included in the state filing if certain deductions are taken on the Federal return.

RI Schedule HR1 - Entity Addback of Federal P.L. 119-21, H.R.1 Provisions This schedule is to be used to add back certain amounts allowed to be deducted on the Federal return due to the passage of Federal P.L. 119-21, H.R.1 Provisions.

The items that must be added back prior to determining Rhode Island Taxable Income are: Business interest expense deduction included on Federal Form 1 1120-S, line 13 [I.R.S. C ode 163(j)] Section 174A Amortization Adjustment for research and experi-2 mental expenditures [I.R.S. C ode 174A] Depreciation of business assets [I.R.S. C ode 179(b)] 3 Qualified sound recording production deduction [I.R.S.C ode 181] 4

The amounts from this schedule will come from the entity's RI Schedule HR1 - Entity that was included in the entity's Form RI- 1120S, Form RI-1065 or Form RI-1041 filing. This schedule must be attached to Form RI-1040C.

See page 4 for additional information on this schedule.

RI Schedule 174A Section 174A Amortization Worksheet This schedule is to be used to by those taxpayers who do not elect to amortize Section 174A research and developmental expenditures on the Federal level. If, on the Federal level, the taxpayer fully expenses domestic section 174A research and developmental expenditures, the taxpayer is required to add back the accelerated amount being deducted.

The amounts from this schedule will come from the entity's Form RI- 1120S, Form RI-1065 or Form RI-1041. This schedule does not need to be attached to Form RI-1040C.

# ELECTRONIC MANDATE

The Rhode Island Division of Taxation has an electronic mandate that requires Larger Business Registrants use electronic means to file returns and remit taxes beginning on January 1, 2023.

A "larger business registrant" is defined as any person who: 1) Operates as a business whose combined annual liability for all taxes administered by the Division of Taxation for the entity is or exceeds $5,000; or 2) Operated as a business whose annual gross income is over $100,000 for the entity.

If you meet either of the above criteria you are required to file returns and remit taxes electronically.

Visit the RI Division of Taxation's website for additional information.

Taxation website:

Taxation's portal website: https://taxportal.ri.gov/

In order to file your return and/or remit your payment through the portal, you will need a portal account and a PIN number. If you do not have both of those required items already, be sure to timely create your portal account and/or request a PIN number so that you are set up and ready to file your return and/or remit your payment by the due date. You do not need a portal account to request a PIN number.

# YOU MAY BE SUBJECT TO A PENALTY FOR FAILURE TO FILE

RETURNS AND/OR REMIT PAYMENTS VIA ELECTRONIC MEANS.

If you are not required to file and pay via electronic means, use the following address to send in your return, attachments and payments:

R.I. Division of Taxation One Capitol Hill Providence, RI 02908-5806

# SPECIFIC INSTRUCTIONS ENTITY INFORMATION

Complete the top of the return by filling in the name, address and federal employer identification number. Also, check off the entity's year end. If not a calendar year end, indicate the beginning and end dates of the entity's fiscal year. Only entities with a fiscal year beginning in 2025 may use this form.

Check the "Amended" box if filing an amended 2025 RI-1040C.

SECTION A: COMPUTATION OF INCOME

# Line 1 - Enter your total Federal Taxable Income from Federal Form

1120S, line 22, Federal Form 1065, line 23 or Federal Form 1041, line

23, and add to that any separately stated income or deductions listed on your Federal K-1.

Modifications Increasing Federal Taxable Income

Line 2a - Enter any income from obligations of any state or its political subdivisions, other than Rhode Island.

# Line 2b - Enter Bonus Depreciation that must be added back to Rhode

Island income.

Due to the passage of a bill disallowing federal bonus depreciation for Rhode Island purposes, any bonus depreciation taken for federal purposes must be added back as a modification to income.

A separate schedule of depreciation must be kept for Rhode Island purposes. The gain or loss on the sale or other disposition of the asset is to be determined, for Rhode Island purposes, using the Rhode Island depreciation schedule.

For further information regarding bonus depreciation or section 179 depreciation refer to the General Instructions of Form RI-1040NR, Rhode Island Nonresident Income Tax return.

# Line 2c - Enter the taxable portion of the Paycheck Protection Program

Loan amount under R.I. Gen. Laws § 44-30-12(b)(8).

Line 2d - Enter the amount of Federal P.L. 119-21 H.R.1 Provisions from 2025 RI Schedule HR1 - Entity required to be added back from the 2025 RI Schedule HR1 - Entity included as part of the entity's Form RI- 1120S, Form RI-1065 or Form RI-1041 filing.

RI Schedule HR1 - Entity must be attached to the RI-1040C filing.

See page 4 for additional information on this schedule.

# Line 2e - Enter any other modifications increasing Federal Taxable

Income and provide an explanation for the modification.

Line 3 - Total Modifications Increasing Federal Taxable Income: Add lines 2a, 2b, 2c and 2d.

Modifications Decreasing Federal Taxable Income

# Line 4a - Enter any income from obligations of the United States

Government to the extent that it is included in income for federal tax purposes but exempt for state purposes.

Line 4b - Enter Bonus Depreciation and Section 179 Depreciation that has not been taken for federal purposes because the depreciation was not taken originally.

Since a bill was passed disallowing federal bonus depreciation for Rhode Island purposes, in the first year any bonus depreciation taken for federal purposes should have been added back as a modification to income. Therefore, in subsequent years, if federal depreciation is less than what previously would have been allowed, the difference can be deducted as a modification to income.

Since a bill was passed disallowing the increase in the section 179 depreciation under the Jobs and Growth Tax Relief Reconciliation Act of 2003, section 179 depreciation will remain limited to $25,000 for Rhode Island purposes. Therefore, in the first year any additional section 179 depreciation taken for federal purposes should have been added back as a modification to income. Accordingly, in subsequent years, if federal depreciation is less than what previously would have been allowed, the difference can be deducted as a modification to income.

A separate schedule of depreciation must be kept for Rhode Island purposes. The gain or loss on the sale or other disposition of the asset is to be determined, for Rhode Island purposes, using the Rhode Island depreciation schedule.

For further information regarding bonus depreciation or section 179 depreciation refer to the General Instructions of Form RI-1040NR, Rhode Island Nonresident Income Tax return.

# Line 4c - Enter the amount of Section 174A Amortization Adjustment for research and development expensing from Form RI-1120S, Schedule

B, line 1f, Form RI-1065, Schedule B, line 1f or Form RI-1041, Schedule M, line 1x.

# Line 4d - Enter any other modifications decreasing Federal Taxable

Income and provide an explanation for the modification.

Line 5 - Total Modifications Decreasing Federal Taxable Income: Add lines 4a, 4b and 4c.

Line 6 - Modified Federal Taxable Income: Add line 1 to line 3 and then subtract line 5. (Line 1 + line 3 - line 5)

Line 7 - Rhode Island apportionment ratio: If the entity operates solely in Rhode Island, enter 1.0000. If it is a multistate entity, enter computed ratio from line 27 of apportionment worksheet located on page 2, Section C. (Calculate ratio to four decimal places.)

Line 8 - Rhode Island Source Income: Multiply your Modified Federal Taxable Income (line 6) by the apportionment ratio (line 7).

SECTION B: COMPUTATION OF TAX

# Line 9 - Calculate the Rhode Island income tax using the Rhode Island

Composite Income Tax rate of 5.99% (0.0599).

Line 10 - Qualified electing nonresident members' percentage of ownership. If all members are nonresidents, enter 1.0000. (Calculate ratio to four decimal places.)

Line 11 - Rhode Island Tax of the qualified electing nonresident members: Multiply Rhode Island Income Tax (line 9) by the qualified electing nonresident members' percentage of ownership (line 10).

Line 12 - Rhode Island estimated payments made on RI-1040C-ES and amount applied from 2024 composite return.

Line 13 - Enter any nonresident real estate withholding paid on behalf of the qualified electing nonresident members.

Line 14 - Enter any Rhode Island nonresident withholding from passthrough entities from RI Schedule K-1, Schedule IV, line 2 that was made on behalf of entity members before electing to be included on the composite return. Be sure to attach the RI Schedule K-1(s) to the composite filing.

Line 15 - Other payments: If an extension was filed, enter the amount paid with the extension and attach the extension form, Form RI-4868C, to your return.

Line 16 - Total Payments: Add lines 12, 13, 14 and 15.

Line 17 - Amount due: If line 11 is larger than line 16, subtract line 16 from line 11. This is the amount of tax you owe.

Line 18 - Underestimating interest due.

Line 19 - Total amount due: Add the tax due from line 17 to the underestimating interest due from line 18. This is the total amount due. Complete payment voucher RI-1040C-V and send in with return and payment made to R.I. Division of Taxation.

Line 20 - Overpayment: If line 11 is smaller than line 16, subtract line 11 from line 16. This is your overpayment amount.

If there is an amount due on line 18 for underestimating interest, subtract line 18 from line 20.

If the amount of underestimating interest from line 18 is more than the amount of overpayment from line 20, subtract line 20 from line 18 and enter the result on line 19.

Line 21 - Enter the amount of the overpayment from line 20 that you would like refunded.

Line 22 - Enter the amount of the overpayment from line 20 that you would like applied to your 2025 RI-1040C estimated tax.

SECTION C: APPORTIONMENT

In the apportionment section, you will be using a three factor formula to determine the Rhode Island apportionment ratio for the qualified electing nonresident members.

In column A, enter the Rhode Island portion of each item. In column B, enter the Total (from everywhere) amount of each item.

Average Net Book Value

Line 23a - Enter the Rhode Island and the Total amounts for Inventory.

# Line 23b - Enter the Rhode Island and the Total amounts for

Depreciable Assets.

Line 23c - Enter the Rhode Island and the Total amounts for Land.

Line 23d - Enter the Rhode Island and the Total amounts for Rent (8 times the annual net rental rate).

Line 23e - Total the Net Book Value items - Add lines 23a through 23d.

Line 23f - Average Rhode Island Net Book Value Ratio - divide line 23e in column A by line 23e in column B. (Calculate ratio to four decimal places.)

Receipts

Line 24a - Enter the Rhode Island amount for sales under R.I. Gen. Laws § 44-11-14(a)(2)(i)(B), the amount for all other Rhode Island sales and the Total amount for Gross Receipts.

Due to the passage of R.I. Gen. Laws § 44-11-14(a)(2)(i)(B), gross sales of tangible personal property where shipments are made from an office, store, warehouse, factory or other place of storage in this state and the taxpayer is not taxed in the state of purchase must now be included in the Receipts section of the Rhode Island apportionment column. This gross receipts amount will be listed separately on the apportionment schedule from the amount of all other Rhode Island sales.

# Line 24b - Enter the Rhode Island and the Total amounts for

Dividends.

Line 24c - Enter the Rhode Island and the Total amounts for Interest.

Line 24d - Enter the Rhode Island and the Total amounts for Rents.

Line 24e - Enter the Rhode Island and the Total amounts for Royalties.

Line 24f - Enter the Rhode Island and the Total amounts for Net Capital Gains.

Line 24g - Enter the Rhode Island and the Total amounts for Ordinary Income.

Line 24h - Enter the Rhode Island and the Total amounts for Other Income.

# Line 24i - Enter the Rhode Island and the Total amounts for Income

Exempt from Federal Taxation.

Line 24j - Total the Receipts items - Add lines 24a through 24i.

Line 24k - Average Rhode Island Receipts Ratio - Divide line 24j in column A by line 24j in column B. (Calculate ratio to four decimal places.)

Salaries

Line 25a - Enter the Rhode Island and the Total amounts for Salaries and Wages paid or incurred.

Line 25b - Average Rhode Island Salaries Ratio - Divide line 25a in column A by line 25a in column B. (Calculate ratio to four decimal places.)

# Rhode Island Apportionment Ratio

Line 26 - Total the three ratios by adding lines 23f, 24k and 25b.

Line 27 - Apportionment Ratio: If all three ratio factors were used, divide line 26 by the number 3. If all three ratio factors were not used, divide line 26 by the number of ratios used. (Calculate ratio to four decimal places.) Enter the number here on line 27 and on page 1, Section A, line 7.

SECTION D: MEMBER INFORMATION

Enter the names, addresses, social security numbers, the amount of Rhode Island source income and the amount of Rhode Island tax for each qualified electing nonresident member.

If more space is needed, attach additional schedules to the return.

RI SCHEDULE H.R.1 - ENTITY

With the passage of P. L. 119-21, H.R.1, 119th Cong. (2025) the following items taken as deductions on your Federal return are to be added back in order to determine your Rhode Island Taxable Income.

Business interest expense deduction [I.R.S. Code 163(j)] • Section 174A Amortization Adjustment for research and experi-• mental expenditures [I.R.S. Code 174A] Depreciation of business assets [I.R.S. Code 179(b)] • Qualified sound recording production deduction [I.R.S.Code 181] •

Using RI Schedule HR1 - Entity, each LLC, subchapter S corporation, partnership, and trust filing Form RI-1120S, RI-1065 or RI-1041 is required to add back any of these deductions that are included on its Federal return.

Using the RI Schedule HR1 - Entity included as part of the entity's Form RI-1120S, Form RI-1065 or Form RI-1041 enter the same amounts on the RI Schedule HR1 - Entity for the RI-1040C filing.

Line 1a - Interest expense deduction [I.R.S. Code 163(j)] Enter the additional business interest expense from line 1a of the RI Schedule HR1 - Entity included with Form RI-1120S, RI-1065 or RI- 1041 being filed by the LLC, subchapter S corporation, partnership, or trust.

Line 1b - Section 174A Amortization Adjustment for research and experimental expensing [I.R.S. Code 174A] Enter the research and experimental expenditure adjustment from line 1b of the RI Schedule HR1 - Entity included with Form RI-1120S, RI- 1065 or RI-1041 being filed by the LLC, subchapter S corporation, partnership, or trust.

Line 1c - Depreciation of business assets [I.R.S. Code 179(b)] Enter the additional depreciation of business assets amount from line 1c of the RI Schedule HR1 - Entity included with Form RI-1120S, RI- 1065 or RI-1041 being filed by the LLC, subchapter S corporation, partnership, or trust.

# Line 1d - Qualified sound recording production deduction

[I.R.S.Code 181] Enter the additional qualified sound recording production equipment deduction amount from line 1d of the RI Schedule HR1 - Entity included with Form RI-1120S, RI-1065 or RI-1041 being filed by the LLC, subchapter S corporation, partnership, or trust.

# Line 1e - Reserved for future use

Leave this line blank.

Line 1f - Total amount of P. L. 119-21, H.R.1 deductions. Add lines 1a through 1e. Enter here and on Form RI-1040C, line 2d.

Note: This amount should match the amount on Form RI-1120S, Schedule C, line 1f, Form RI-1065, Schedule C, line 1f, or Form RI- 1041, RI Schedule M, line 2.

# SIGN AND DATE THE RETURN

An officer representing the pass-through entity must sign and date the return. An unsigned return cannot be processed. Any paid preparer who prepares the return must also sign as "preparer." If a firm or corporation prepares the return, the return should be signed in the name of preparer on behalf of the firm or corporation.

If you wish to allow the R.I. Division of Taxation to contact your paid preparer should questions arise regarding your return, please check the box below your preparer's information.