 Enlarge image |
For taxable year beginning and ending in
2022
Ohio IT 4738
Electing Pass-Through
Entity Income Tax Return
Instructions
Rev. 1/23
Department of
hio Taxation
tax. hio.gov
|
 Enlarge image |
IT 4738
Rev. 1/23
Table of Contents
A I
Amended Returns...................................8 Income & Adjustments .......................9-11
Apportionment Formula ...................11-12 Owner Information ................................13
B N
Bonus Depreciation ...................10-11, 13 New for 2022 Taxable Year ..................2-3
D P
Deductions............................................ 11 Payment Options .................................5-6
Penalties and Interest .............................9
F
Filing Tips ...............................................4 T
Taxpayer Assistance ...............................1
G
General Instructions ............................7-8
Online Resources
The Department of Taxation's website at tax.ohio.gov has many resources available to assist when filing the Ohio Pass-Through
Entity & Fiduciary income tax returns:
FAQs – Review answers to common questions on topics.
Forms – Find all pass-through entity & fiduciary income tax forms (including related schedules and worksheets). Many forms
have fill-in versions that you can complete online, print, and then submit to the Department.
Information Releases – Research detailed explanations and legal analyses of certain tax topics.
Ohio Virtual Tax Academy – View webinars designed and presented by Department staff on Ohio's state taxes.
Tax Alerts – Sign up to receive tax updates and reminders from the Department via email.
Federal Privacy Act Notice
Because we require you to provide us with a Social Security number, the Federal Privacy Act
of 1974 requires us to inform you that providing us your Social Security number is mandatory.
Ohio Revised Code 5703.05, 5703.057 and 5747.08 authorize us to request this information.
We need your Social Security number in order to administer this tax.
|
 Enlarge image |
IT 4738
Rev. 1/23
Taxpayer Assistance
Need Help? – To help answer questions and ensure that tax returns are filed accurately, the Department of Taxation provides
the following resources at tax.ohio.gov:
Additionally, the website has all Pass-Through Entity and Fiduciary income tax forms to download or print. If you cannot find
the answer using the website, contact the Department using any of the following methods:
Email – Click 'Contact Us' at the top right on tax.ohio.gov and select
‘Email Us’ to access a secure email form, or email directly to Pass- For persons who use text telephones
(TTYs) or adaptive telephone equip-
ThroughEntity@tax.state.oh.us.
ment only: Contact the Ohio Relay Ser-
Call – Speak with an examiner at 1-888-405-4039 during the vice at 7-1-1 or 1-800-750-0750 and give
Department's normal business hours. the communication assistant the Ohio
Department of Taxation phone number
Normal business hours are from 8 a.m. to 5 p.m. Monday through that you wish to contact.
Friday excluding holidays.
Write – Contact the Department by mail at:
Ohio Department of Taxation
Pass-Through Entity
P.O. Box 181140
Columbus, OH 43218-1140
Note: To overnight documents to the Department, please use the
street address listed below.
4485 Northland Ridge Blvd.
Columbus, OH 43229-6596
Form Requests: Visit tax.ohio.gov to easily download the forms.
Request tax forms anytime by calling 1-800-282-1782.
These instructions contain law references for specific line items and requirements. To review Ohio Pass-Through Entity &
Fiduciary income tax law, see R.C. 5747 and R.C. 5733 respectively.
Go Paperless and File Electronically!
The IT 4738 can be filed electronically through the federal e-file program overseen by the IRS (irs.gov/filing), or through
a participating third-party tax preparation product. PTEs can verify their software is compatible with the MeF program by
reviewing the list of approved software vendors at PTE and Fiduciary Income Tax - Software Developers.
- 1 -
|
 Enlarge image |
IT 4738
Rev. 1/23
NEW FOR 2022 TAXABLE YEAR
Senate Bill 246 was passed by the General Assembly and signed by Governor DeWine.The bill added section R.C. 5747.38, which
allows a qualifying pass-through entity (PTE) to “elect” to be subject to this new entity-level tax. The Department has developed a new
PTE tax form (IT 4738) for taxable year 2022, instructions, FAQs and related information.
Facts to know when the entity elects to file the IT 4738:
● The election is made by the entity and is binding on all owners of the entity.
● All owners’ qualifying taxable income is required to be included if the entity makes this election.
● The election is irrevocable for the taxable year.
● A disregarded entity may NOT make this election.
● Election is made known to the Department by filing the IT 4738.
● Tax rate is 5% for the taxable year beginning January 1, 2022, and for taxable years beginning January 1, 2023, the rate is equal
to the tax rate imposed on taxable business income under RC 5747.02 (A)(4)(a)(currently 3%).
● No refundable or nonrefundable business credits can be claimed on the IT 4738.
● Due date is April 15th of the calendar year after the year in which entity’s fiscal year ends. For taxable year 2022, the due date will
be April 18, 2023.
● Estimated payments are due on the same dates as the IT 1140 estimated payments (15th day of the month after the end of each
quarter).
● Filing the IT 4738 meets Ohio filing requirements for the entity’s non-resident & trust investors unless they have other Ohio
sourced income.
● Owners who file an Ohio individual income tax return, IT 1040, must add back the tax amounts paid on the IT 4738 to the extent
not included in computing federal or Ohio adjusted gross income using the Ohio Schedule of Adjustments, line 2.
● A refundable credit for the proportionate share of the tax paid on the IT 4738 is available for owners who file an IT 1040 using the
Ohio Schedule of Credits, Pass-through entity credit line.
● For taxable years that begin during calendar year 2022, the Department will not impose the 2210 interest penalty for failure to
make, or paid late, estimated payments.
No estimated payment coupon (UPC) is available for the IT 4738 until after 1/18/2023. If you have made, or need to make,
estimated payments before that date, the Department recommends using the IT 1140 UPC.
Line 12 below on the new IT 4738 is where the entity reports any 2022 estimated payments made on an IT 1140 or IT 4708 UPC
that the entity wants transferred to the IT 4738.
Schedule I – Taxable Income, Tax, Payments and Net Amount Due Calculations...cont.
9. Tax liability (see instructions for tax rate)...........................................................................................9.
10. Interest penalty on underpayment of estimated tax (include Ohio IT/SD 2210) ............................10.
11. Ohio IT 4738 estimated UPC/electronic payments for the taxable year .......................................11.
12. Ohio IT 1140 and IT 4708 estimated UPC/electronic payments claimed on
this return (see instructions) ....................................................................................................................12.
Electronic Payment Option
Electronic Funds Transfer (EFT): EPayments may be remitted by EFT (ACH credit) via the Ohio Treasurer of State (TOS). Any
questions about the EFT payment process should be directed to the Ohio Treasurer of State by calling (877)338-6446.
This is an ACH credit option; the entity initiates the payment through its own bank. No online credit card payment or ACH
debit option exists at this time either through the Ohio Treasurer of State (TOS) or the Ohio Department of Taxation.
Each tax form requires the applicable TOS routing/account numbers and distinct codes/format the financial institution must use to
issue the ACH credit via the TOS ACH credit option: The TOS IT 4738 Electing Pass-Through Entity Income Tax Payments
instructions are unavailable, as of publishing. Use the IT 1140 payment instructions until the Ohio Treasurer of State (TOS) posts IT
4738-specific instructions after 1/18/23: A link to the instructions will be available at tax.ohio.gov on the PTE Payments webpage.
Frequently Asked Questions (FAQ’s) are posted to the Department’s website tax.ohio.gov for electing PTEs. The Department will
continue to add FAQs as new information and guidance is finalized. For further updates, please continue to monitor our web site at
tax.ohio.gov/electingPTE. To receive the latest information on Department updates, register to receive Tax Alerts.
- 2 -
|
 Enlarge image |
IT 4738
Rev. 1/23
New for 2022 Taxable Year Continued
What type of return should the PTE file?
A PTE must file an Ohio return to report and pay tax either at the entity level or on behalf of its nonresident individual, trust, estate and PTE
investors. The PTE can elect to file the IT 4738, IT 4708 or the IT 1140. A PTE that changes form types from year to year must ensure all
taxable year periods of income are reported and all related tax is timely and fully paid.
NOTE: If a PTE elects to file the IT 4738, all owners must be included. Once the IT 4738 is filed for any given taxable year, the PTE is not
permitted to amend this return to change to an IT 1140 or IT 4708.
See RC 5747.38(C)
For more information regarding which form to file, see the following chart, or search the PTE FAQs at tax.ohio.gov. See tax.ohio.gov/
electingPTE.
The IT 4738 Income The IT 4708 The IT 1140
Tax Composite Withholding
Return Return Return
April 15th after the April 15th after the 15th day of fourth
Filing date year in which the year in which the month after close
entity’s taxable year entity’s taxable year
ends ends of fiscal year
Yes Yes No
Can the return include resident investors? *All investors (owners) must
be included
5% (all) 3.990% (all) 5% (individuals) or
*For reporting periods that *For reporting periods that 8.5% (entities)
Tax rate begin on or after 1/1/2022 begin on or after 1/1/2021.
“3% (all)
*For reporting periods that
begin on or after 1/1/2023
Can the return claim refundable and/or nonrefundable business No Yes No
credits (including PTE credits received from other PTEs as shown
on an OH IT K-1, credits received via certificate issued by Ohio
Department of Development, Department of Education, others)?
Nonresident: May file Nonresident: May file Nonresident investors
Ohio IT 1040 Individual Ohio IT 1040 Individual must file Ohio IT 1040
Individual Investor Filings Income Tax Return Income Tax Return Individual Income Tax
Ohio resident: Must file Ohio resident: Must file Return
Ohio IT 1040 Individual Ohio IT 1040 Individual
Income Tax Return Income Tax Return
Must file Ohio PTE return May or must file Ohio Must file Ohio PTE return
(IT 1140, IT 4708 OR IT PTE return (IT 1140, IT (IT 1140, IT 4708 OR IT
4738) 4708 OR IT 4738) 4738)
*An entity with Ohio-
Entity Investor Filings sourced income from
multiple sources might
have a filing requirement.
See instructions or contact
Pass-ThroughEntity@tax.
state.oh.us
May file Ohio IT 1041 and/ May file Ohio IT 1041 Must file IT 1041 and/or
or beneficiary files IT 1040 and/or beneficiary files IT beneficiary files IT 1040 if
if income is distributed 1040 if income is income is distributed
distributed*A trust with
Trust as Investor Filings Ohio-sourced income from
multiple sources might
have a filing requirement.
See instructions or contact
Pass-ThroughEntity@tax.
state.oh.us
NOTE: Refundable and nonrefundable business credits cannot be claimed on the IT 4738
or IT 1140. However, a PTE can claim such business credits on the IT 4708.
- 3 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Filing Tips
Provide a Current Address
The Department uses the most up-to-date address on file to send correspondence, billings, assessments, and refunds. If the
address is not correct, refunds and notices will be mailed to the incorrect address. To update an address, check the box above the
address line on the return or visit the Business Address Update page at tax.ohio.gov to change the address.
Verify the IT 4738 and Universal Payment Coupons (UPCs) are for the Correct Tax Year
The Department releases new forms and UPCs each taxable year. Do NOT cross out the year at the top of the IT 4738 or UPC and
write in a new one, as doing so will delay the processing of the IT 4738 or UPC. A PTE with taxable year year ending December 31,
2022 would file the 2022 IT 4738. The UPC for the IT 4738 will be available for first quarter estimated payments due 4/18/2023.
Maintain a Bank Account
The Department cannot change the name on a refund check, or issue the check directly to an investor, due to the closing or
termination of a business.
Reprint Corrected Software-Generated Paper Returns
If the printed software-generated return from a tax preparation program subsequently requires changes on the return, do not write
in the changes. Instead, use the software to make the necessary changes, save, and reprint the return. The Department’s system
will not pick up handwritten changes on returns generated by tax preparation software.
Complete All Applicable Schedules on the Return
When filing via a software program, complete all relevant schedules and do not override any line items. Information from schedules
on the IT 4738 flows to other lines that are used to calculate the tax liability. If the schedules are not completed, a value of zero
will flow to the corresponding lines, which will override any amounts that may have been entered. The return will be recalculated
accordingly, resulting in a potential billing notice or reduced refund.
Report Apportionment Ratio and Ownership Percentage
Enter percentages and ratios in decimal format (e.g., report 30.09% as .3009). Report 100% as 1.0000. Enter apportionment ratios
in decimal format and carry to six decimal places. In addition, do not enter text (e.g., “null” or “zero”) in numeric fields.
Enter Only UPC or Treasurer of State Payments on Lines 11, 12 and 13
Incorrect reporting of PTE credits on lines 11, 12 and 13 may result in a denied/reduced refund or bill. If the entity receives an
IT K-1 reporting a PTE credit from another entity on its behalf, do not report these as estimated payments. Refundable and
nonrefundable business credits are disallowed on the IT 4738.
Provide Supporting Documents
Attach the appropriate documentation specified on the IT 4738 to validate the amounts reported, such as IT K-1s to verify income/
withholding flowing from another PTE to the PTE filer, and from the PTE filer to an owner.
- 4 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Payment Options
First-Time Filers: Submit PTE Registration Form Before First Estimated Payment
If the PTE is a first-time filer of any of the three form types, submit the Pass-Through Entity and Fiduciary Income Tax Registration Form
before submitting the first estimated payment. The form can be found on the tax.ohio.gov website in the Tax Forms search. Failure
to submit the registration form may result in a delay in processing the estimated payment(s), resulting in a billing notice or
refund delay.
Submit a Separate Check for Each Balance Due Amount
A separate check is required for each tax return payment, estimated payment, billing/assessment payment, etc. The Department cannot
apply a single check to multiple balances. The check or money order should be made payable to “Ohio Treasurer of State” with identify-
ing information on the memo line, including:
● Federal employer identification number (FEIN),
● Tax form using the payment (IT 4738);
● Tax year end for the payment (mm-dd-yy).
Using Payment Coupons Created by Third-Party Software
Before submitting a payment coupon created by third party software, please verify the reporting period end date matches the software-
generated Key ID numbers and the number string at the bottom of the payment coupon, in the format MMYY. If mismatched, the pay-
ment will be misdirected, causing a delay in processing the estimated payment(s), resulting in a billing notice or refund delay.
Please contact the third-party software company’s support line to resolve.
Methods for Making PTE and Fiduciary Income Tax Payments
1. Electronic Funds Transfer (EFT): EPayments may be remitted by EFT (ACH credit) via the Ohio Treasurer of State (TOS)
Any questions about the EFT payment process should be directed to the Ohio Treasurer of State by calling (877)338-6446.
This is an ACH credit option; the entity initiates the payment through its own bank. No online credit card payment or
ACH debit option exists at this time either through the Ohio Treasurer of State (TOS) or the Ohio Department of
Taxation.
Access the applicable tax form-specific link below for the information page with the TOS routing/account numbers and codes/
format the financial institution must use to issue the ACH credit via the TOS payment option:
IT 4738 Electing Pass-Through Entity Income Tax Payments instructions unavailable, as of publishing. Use IT 1140
payment instructions.
IT 4708 Pass-Through Entity Composite Income Tax Payments
IT 1140 Pass-Through Entity and Trust Withholding Tax Payments
IT 1041 Fiduciary Income Tax (Trusts and Estates) Payments
NOTE: The TOS no longer requires PTE and fiduciary filers to submit an EFT authorization form to register before making an
IT 4738, IT 4708, IT 1140 and/or IT 1041 payment via ACH credit (no ACH debit option)..
2. Check or Money Order: Make check or money order payable to “Ohio Treasurer of State.” A payment made by a check or
money order must be submitted with the appropriate Ohio Universal Payment Coupon (UPC) based on the form filed. All UPCs
can be found on the tax.ohio.gov website in the searchable Tax Forms section by entering “UPC” in the Form Title or Number
field. Please mail the payment and UPC to the address on the UPC.
3. Electronic Check: When filing electronically through an approved software program, the PTE or fiduciary has the option to
make a payment by electronic check in the form of an Electronic Funds Withdrawal, or direct debit. The direct debit option is
only available for e-filed returns. For mailed returns created from an approved software program, the options for payment are
1) Electronic Funds Transfer (EFT), or 2) check or money order, as listed above.
For a current list of approved software programs, please see the Software Developers page on the Ohio Department of Taxa-
tion website, and search for the most recent “MeF Approval Status” link.
Please contact the software companies directly for their electronic payments support.
- 5 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Payment Options Continued
Completing the Universal Payment Coupon (UPC)
Each payment made by check or money order must be submitted with the appropriate Ohio Universal Payment Coupon (UPC). Ap-
plication of payments is driven by the UPC used and is based on which form is filed (i.e., IT 1041, IT 4708, IT 4738, or IT 1140). Each
UPC allows the Taxpayer to make either an estimated payment (“ES” payment) or payment submitted with the tax return (“P” payment).
Only one type of payment can be made on each UPC submitted.
All UPCs can be found in the Tax Forms field by entering “UPC” in the Form Title or Number field.
The IT 4738 UPC is used to make either an estimated payment (IT 4738ES) or a payment submitted with the return (IT 4738P). When
completing the UPC:
● Enter the reporting period start date and end date in the format mm-dd-yy;
● Select either the IT 4738ES or IT 4738P;
● Enter the correct entity type code in the box above the payment amount (*see codes on instructions page above UPC);
● Enter the amount of payment as a whole number without a decimal, as the UPC features a preprinted “.00.”
Sample IT 4738 UPC: This form must be included with each check or money order.
Include a Check or Money Order with each IT 4738 UPC
Payable to “Ohio Treasurer of State” with identifying information on the memo line, including:
● Federal employer identification number ( FEIN),
● Tax form using the payment (IT 4738);
● Taxable year end date for the payment (mm-dd-yy).
- 6 -
|
 Enlarge image |
IT 4738
Rev. 1/23
to the trade or business, or if it generated business income
2022 Ohio IT 4738 in the past.
General Instructions Generally, all income from a PTE is presumed to be business
income.
Note: Ensure tax return pages are in numerical order. Include any See R.C. 5747.01(B).
attachments after the return. The return and supporting schedules
are on the Tax Forms page tax.ohio.gov. Can an EPTE Claim a Net Operating Loss (NOL) on the IT 4738?
EPTEs are not permitted to claim an NOL deduction on the IT
What is a Pass-Through Entity (PTE)? 4738. Instead, owners who want to utilize an NOL deduction must
A “pass-through entity” is an S corporation, partnership, or limited file the IT 1040.
liability company (LLC). A PTE is also any other person, except an
individual, trust, or estate, that is not classified as a C corporation How Does a PTE Determine its Reporting Period for the Ohio
for federal tax purposes. See R.C. 5747.01(K) and 5733.04(O). Taxable Year?
An EPTE’s taxable year reporting period for Ohio income tax
What is an Electing Pass-Through Entity (EPTE)? purposes is the same as its taxable year reporting period for federal
An “electing pass-through entity” is a qualifying pass-through entity income tax purposes.
that elects to be subject to the tax levied under R.C. 5747.38 for a
taxable year. See R.C. 5747.38(A)(1). However, when filing the IT 4738 return the PTE must file a single
return that includes all tax periods and aggregates all income and
What is an Owner? expenses for the entity for a 12-month reporting period. Generally ,
An “owner” is a person that is a partner, member, shareholder, or an IT 4738 cannot be filed for less than a 12 month reporting period.
investor in an electing pass-through entity for any portion of the See R.C. 5747.08.
taxable year. See R.C. 5747.38(A)(2).
When is the Return Due?
What is the Electing Pass-Through Entity Tax? An EPTE with a 2022 calendar year reporting period must file its
The IT 4738 is an entity level income tax return a PTE elects to file 2022 IT 4738, including copies of its IT K-1s, by April 18, 2023.
that includes all income of all owners of the EPTE. It is filed in lieu of
the IT 1140 (the PTE withholding return). Similar to the IT 1140, an Filing Extensions
EPTE cannot use the IT 4738 to claim credits as shown on IT K-1s The extension due date for filing the IT 4738 is September 15,
received from other PTEs. The election to file the IT 4738 applies 2023, provided the EPTE qualifies for an IRS extension of time
only for one tax year and once made, is binding and irrevocable. to file. Ohio does not have an extension request form but honors
the IRS extension. Include a copy of the IRS extension or IRS
Note: A trust, estate, disregarded entity or C corporation cannot acknowledgement, and/or the extension confirmation number if
file the IT 4738. See R.C. 5747.38(C), 5747.01(K), and 5733.04(O). electronically filed. However, if the EPTE has a fiscal year end, it
may have a different extension due date. See table below.
Which Owners Should Be Included on Form IT 4738?
An EPTE must include all income of all owners of the PTE; therefore, An extension of time to file does not extend the time for payment
all owners are included. of the tax due. The PTE must make extension payments by April
18, 2023 with the required IT 4738 UPC by searching for UPC in
Note: If a nonresident or trust owner’s only Ohio adjusted gross the Form Title or Number field on the Tax Forms page at tax.ohio.
income or modified Ohio taxable income is from an EPTE, there gov. Interest will accrue on any tax not paid by April 18, 2023, and
is no requirement to file an Ohio income tax return for the taxable penalties may also apply.
year. However, the nonresident or trust owner may choose to file
an income tax return (e.g. form IT 1040 or IT 1041) and claim a Estimated Tax Payments
refundable credit for taxes paid by the EPTE on the IT 4738. See The EPTE must make estimated tax payments with the IT 4738ES
R.C. 5747.08(L) and 5747.39. Universal Payment Coupon (UPC) for the entity’s taxable year if
the EPTE’s estimated qualifying taxable income exceeds $10,000.
How Does Ohio Law Define Business and Nonbusiness Use the IT 1140 UPC to make IT 4738 estimated payments until
Income? the 4738 UPC becomes available.
“Business income” is income, including gain/loss arising from any
of the following: Due Dates for Estimated Tax Payments
● Transactions, activities, and sources in the regular course of If any filing due date set forth below falls on a weekend or on a
a trade of business operation; holiday, then the due date becomes the first business day thereafter.
● Real, tangible, and intangible property if the acquisition, rental, Due Date for Estimated Payments % Cumulative Estimated Payments
management, and disposition of the property constitute integral Made
parts of the regular course of a trade or business operation; On or before the 15th day of the month 22.5% of the current year tax liability
● A partial or complete liquidation of a business, including gain following the last day of the 1st quarter.
or loss from the sale or other disposition of goodwill;
● A sale of an equity or ownership interest in a business if the On or before the 15th day of the month 45% of the current year tax liability
sale is treated for federal income tax purposes as the sale of following the last day of the 2nd quarter.
assets and/or the seller materially participated, as described On or before the 15th day of the month 67.5% of the current year tax liability
in 26 C.F.R. 1.469-5T, in the activities of the business during following the last day of the 3rd quarter.
the taxable year in which the sale occurs or during any of the
five preceding taxable years. On or before the 15th day of the month 90% of the current year tax liability
● Compensation and guaranteed payments paid by a pass- following the last day of the 4th quarter.
through entity, or a professional employer organization on its For more information, see the Payment Tips on page 3.
behalf, to an investor who directly or indirectly owns 20% or Does Ohio Follow the Alternative Preparer Signature
more of the entity. Procedures?
Nonbusiness income is any income other than business income. The Department follows federal Notice 2004-54. However, the paid
How Does an Entity Determine What Income is Business Income? preparer must print (not sign) his/her name if the PTE authorizes
Business income can be determined by using either of two tests: the preparer to discuss the return with the Department. Preparers
● Transactional Test: Looks to the nature, frequency and with a Preparer Tax Identification Number (PTIN) must provide it
regularity of the transaction; on all returns.
● Functional Test: Looks to whether the property was integral See R.C. 5703.262(B).
- 7 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Can the EPTE’s Tax Preparer Contact the Department About result in additional tax due. Payment should be included with the
the IT 4738? amended return using an IT 4738 UPC payment coupon.
The EPTE can check the box above the tax preparer’s name on
page 2 of the return to authorize the preparer to: Changes to the Federal Return
● Contact the Department about the status of the EPTE return, If the IRS makes changes to the federal return, either based on
payments, or refund; an audit or an amended return, and those changes affect the Ohio
● Provide the Department with information missing from the return, the EPTE is required to file an amended IT 4738. DO NOT
EPTE’s return; AND file your amended Ohio return until the IRS has finalized the
● Respond to inquiries or notices from the Department related changes to the federal return. Once the changes are finalized,
to the return. please include a copy of all the following:
● The federal amended 1065 OR 1120S; AND
How Does a EPTE Determine its Ohio Method of Accounting? ● The IRS acceptance letter.
A EPTE’s method of accounting on its Ohio return is the same
method it used for federal income tax purposes. Note: Instead of including a copy of these documents, the
See R.C. 5747.45(B). EPTE may submit a copy of the IRS Tax Account Transcript
reflecting the updated federal return information.
When Should the EPTE Complete the IT K-1? The amended IT 4738 should be filed no later than 90 days after
The IT K-1 allows the EPTE to report its income, adjustments,
credits, and apportionment information to its owners. The information the IRS completes its review of the federal return. Failure to file
is used by the EPTE’s owners when completing the IT 1040, IT the return within this time period may result in an assessment or a
1041, IT 4708, IT 4738 or IT 1140. denial of the refund claim.
The 90 days begins to run when:
The EPTE must complete two copies of the IT K-1 for each owner ● The period for the federal appeal has expired, or
whose income is included on the IT 4738. One copy of the IT K-1 ● The date a federal settlement agreement is signed.
must be included when filing the IT 4738. The other copy should
be provided to the owner of the EPTE. See R.C. 5747.10.
The IT K-1 is available in the searchable Tax Forms section at tax. File Prior to Out of Statute
ohio.gov. For additional information, please see the IT K-1 category Ohio’s pass-through entity and fiduciary income taxes generally have
in the PTE FAQs at tax.ohio.gov. a four-year statute of limitations. The Department has four years to
issue an assessment from the later of when the return was due or
Amended Returns filed. The EPTE has four years from the date of the overpayment to
request a refund. Please see the table below for details
When to Amend Tax Year Due Date Timely Payment or Withholding Out-of-Statute Date
The EPTE can file an amended IT 4738 to report changes to the
originally filed return(s). An amended return can result in either a tax 2022 4/18/23 4/15/27
due or a refund based on the changes. Under certain circumstances,
an amended return may be required. To amend the IT 4738 the
EPTE should file a new return showing the original amounts for any Schedule I – Taxable Income, Tax, Payments
item that remains unchanged and reflecting all proposed changes; and Net Amount Due Calculations
indicate that it is amended by checking the box at the top of page 1. Generally, all income from an EPTE is presumed to be business
Please include a copy of the following with the amended return: income.
● Any canceled checks used as payment on the originally filed Note: Amounts reflected in Schedule I are the combined amounts
return; AND
● Supporting documentation that reflects the reason(s) for filing of income and adjustments of ALL owners.
the amended return. Line 1 – Total Business Income (loss) from Schedule II, line 33
Note: Amended return processing may take at least 180 days from This line must equal line 33 (the sum of lines 23 through 32); a
the date of receipt. difference will delay processing of the return and may result in a
For additional information, see tax.ohio.gov for FAQs. billing or reduced refund.
When Not to Amend Your Return Line 2 – Total Business Deductions from Schedule III, line 39
Some common mistakes may not require an amended return. Some
examples include: This line must equal line 39 (the sum of lines 34 through 38); a
● Math errors; difference will delay processing of the return and may result in a
● Missing pages or schedules; billing or reduced refund.
● Demographic errors;
● Missing income statements (W-2, 1099, K-1) Line 6 – Net Nonbusiness Income Allocated to Ohio
Requesting a Refund Generally, income earned by an EPTE is apportionable business
The EPTE may want to amend the return to request an additional income. If income is shown on this line, the EPTE must provide a
credit, deduction or payment. Such changes may result in a refund. narrative and schedule explaining the types of income included on
The EPTE has four years from the date of the overpayment to this line and why they are nonbusiness income.
request a refund. The EPTE must include supporting documentation
to substantiate the changes reported on the amended return. Some Failure to include this information will delay processing of the return
common required documentation includes: and may result in a billing or reduced refund.
● The federal return, including applicable schedules and See R.C. 5747.20, 5733.40(A) and 5733.05;
attachments; Line 7 – Net Nonbusiness Loss Allocated to Ohio
● Copies of the income statements (W-2, 1099, etc.);
● IT K-1s. Generally, income earned by an EPTE is apportionable business
income. If income is shown on this line, the EPTE must provide a
Reporting Additional Tax Due narrative and schedule explaining the types of income included on
The EPTE should amend the return to report additional income this line and why they are nonbusiness income.
or reduce a previously claimed deduction. Such changes may
- 8 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Failure to include this information will delay processing of the return Line 22 – Total Amount Due
and may result in a billing or reduced refund.
Make payments by:
See R.C. 5747.20, 5733.40(A) and 5733.05; ● Electronic check through an approved software program when
Line 9 - Tax Liability filing electronically;
● Electronic funds transfer (EFT) through the Ohio Treasurer of
For taxable years beginning on or after January 1, 2022, the tax State; OR
rate is 5%. For taxable years beginning January 1, 2023 or after, ● Sending a personal check / money order with the Ohio UPC.
the tax rate is 3%. For questions regarding the EFT payment program, see the
Note: The 2022 IT 4738 is not for reporting periods beginning in Electronic Funds Transfer Via Ohio Treasurer of State (TOS) at
calendar year 2022 and ending in calendar year 2023. Business Tax - Pay Online at tax.ohio.gov.
Line 10 – Interest Penalty on Underpayment of Estimated Tax Schedule II – Income and Adjustments
For taxable years that begin during calendar year 2022, the Note: Amounts reflected on Schedule II are the combined amounts
Department will not impose the 2210 interest penalty on any of income and adjustments of ALL owners. The amounts included
entities that elect to file the IT 4738 for failure to make, or paid late, are those which, pursuant to the Constitution of the United States,
estimated payments. the Constitution of Ohio, or any other Ohio or federal law, are subject
For taxable years beginning on or after 1/1/23, entities that elect to to a tax measured by net income.
file the IT 4738 will be subject to the 2210 interest penalty for failure Generally, all income from an EPTE is presumed to be business
to make timely estimated payments. income. See R.C. 5747.01(B).
Line 11 - Ohio IT 4738 UPC/Electronic Payments
Line 24 – Related Member Adjustments
Enter estimated payments made with an IT 4738 UPC or EFT All electing pass-through entities are required to add back
payments made through the Ohio Treasurer of State for this taxable expenses or losses paid or incurred with respect to transactions
year applied to this return. involving related members. A “related member” is:
Line 12 - Ohio IT 1140 and IT 4708 Estimated (UPC/Electronic) ● Any person described in IRC §1563(e) that owns at least 40%
Payments Claimed on This Return of the EPTE;
● Any individual owner, or the owner’s spouse, child, grandchild,
Enter the portion of estimated payments made with an IT 1140 or or parent if combined they own at least 50% of the EPTE;
IT 4708 UPC or EFT and prior year credit carryforwards for this ● An owner that is a partnership, estate, trust, or corporation, or
taxable year to be applied to this IT 4738. Incorrect reporting will the owner’s partnership, estate, trust, or corporation if com-
result in a delay in processing the return. These amounts cannot bined they own at least 50% of the EPTE; OR
also be claimed on an IT 1140 or IT 4708.
● A corporation, or a party related to the corporation that would
Line 13 - Refunds Previously Issued on the Original IT 4738 require an attribution of stock from the corporation to the party
or from the party to the corporation if the EPTE owns at least
Enter the amount of the refund previously issued on the original 50% of the corporation.
IT 4738.
Ownership includes: direct, indirect, constructive, and beneficial.
Note: This line should be used for amended returns only.
● Direct – Investor owns an EPTE with no other owners in be-
Line 18 – Amount of Line 17 to be Credited to Taxable Year tween.
2023 Tax Liability ● Indirect – Investor owns an EPTE that owns another EPTE.
● Constructive – Person is not an investor but is deemed to
A credit carryforward is only allowed on a timely-filed, original own the EPTE through attribution because of their relation-
return; otherwise, an overpayment will be refunded. ship to one of the EPTE’s owners.
Line 19 – Amount of Line 17 to be Refunded ● Beneficial – Person is a beneficiary of a trust or estate, and
thus is treated as an “owner” of the asset.
Interest on Overpayments. Once the return has been verified, if the
refund exceeds one dollar it will be refunded to the EPTE. The EPTE Note: The attribution rules in IRC §318 apply for purposes of eval-
will receive interest on the refund from the date of overpayment until uating the ownership requirements. See the EPTE FAQs at tax.
the date of the refund if the amount is not refunded within 90 days ohio.gov for additional examples.
of the later of the return’s due date, or the date the return was filed. Common expenses and losses subject to add back when paid to a
During calendar year 2023, interest accrues on overpayments at related member include:
an annual rate of 5%. ● Management fees;
● Interest expenses;
See R.C. 5747.11(B) and (C)(1). ● Rents and royalties;
● Compensation paid to an individual owner’s family members
Line 21 – Interest Due on Late Payment of Tax
or other entities;
Interest is due on any unpaid tax exceeding one dollar from the ● Expense sharing, or “common paymaster” arrangements.
unextended due date until the date the tax is paid. An extension of For more information, see FAQs at tax.ohio.gov and the Informa-
time to file does not extend the payment due date. The interest rate tion Release Meaning of “Indirect” Ownership.
for calendar year 2023 is 5%.
See R.C. 5733.40(A)(3) and (4) and R.C. 5733.40(P), IRC
See R.C. 5747.42, 5703.75 and Ohio Admin Code 5703-7-05. §1563(e), and IRC §318.
- 9 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Line 26 and 27 – Guaranteed Payments and Compensation Example 1: EPTE A has total of $180,000 subject to add-back for
the current tax year. The $100,000 of §179 depreciation is from
Enter compensation or guaranteed payments the EPTE paid, or a EPTE A’s business operations. The $80,000 of §168(k) depreciation
professional employer organization (PEO) paid on behalf of the is from its distributive share of bonus expense from EPTE B.
EPTE, to an owner who directly or indirectly owns at least 20%
of the profits or capital of the EPTE at any point during the tax Source of Add-back Amount §168(k) Add-back Add-back
year. These amounts are reclassified from guaranteed payments/ Depreciation (§179-$25,000) Ratio Amount
compensation to a distributive share of income. EPTE A - $100,000 $0 5/6 $83,333
operations
Note: Agreements that Ohio has with Kentucky, West Virginia, EPTE B-
Pennsylvania, Michigan, and Indiana relating to the taxation of distributive share/ $80,000 5/6 $66,667
bonus expense
compensation do not apply. Compensation paid to a 20% or more Total add-back $100,000 $80,000 $150,000
owner must be included on this line. for tax year:
Example 1: Jim is a Kentucky resident who owns 30% of EPTE A. Example 2: EPTE A owns 100% of EPTE B. EPTE A has
He provides services for EPTE A in Kentucky and is paid a wage for $180,000 subject to add-back for the current tax year. EPTE B
his services. Since Jim owns at least 20% of EPTE A, his wages
are reclassified as a distributive share of income. Thus, the wages increased its Ohio employer withholding for its employees by at
are required to be included on EPTE A’s return as a related member least 10% over the previous tax year. EPTE A must use a differ-
add-back, even though Jim is a Kentucky resident. ent add-back ratio for each source of depreciation, and calculates
its depreciation add-back as follows:
Example 2: Karen is an Iowa resident who owns 19% of EPTE A. Add-Back - Combined add-back
Karen receives wages from EPTE A. However, since Karen does Source of Add-back Amount §168(k) Add-back Add-back
not own at least 20% of EPTE A, her wages are not reclassified as Depreciation (§179-$25,000) Ratio Amount
a distributive share of income or added back onto the return as a EPTE A - $100,000 $0 5/6 $83,333
related member add-back. operations
See R.C. 5733.40(A)(7). EPTE B-
distributive share/ $0 $80,000 2/3 $53,333
bonus expense
Line 28 - Portfolio Income(loss) a. - e.
Total add-back
List the amount of each type of portfolio income (or loss) on each for tax year: $100,000 $80,000 $136,666
line. Example 3: EPTE A still has $180,000 subject to add-back for
NOTE: If the sum of lines 28d and 28e (capital gains/losses) is the current tax year, but its federal taxable income is ($100,000)
an overall loss, the amount on line 28e is limited to $3,000 per (i.e. EPTE A has a federal NOL). EPTE A would calculate its
participating owner. depreciation add-back as follows:
Add-Back - NOL
Line 30 – IRC §168(k) Bonus Depreciation and §179 Expense Source of Add-back Amount §168(k) Add-back Add-back
Add-Back and Schedule VI, Line 39 Depreciation (§179-$25,000) Ratio Amount
EPTE A - $100,000
Check the box for the appropriate add-back ratio. operations $0 6/6 $100,000
EPTE B-
Add 5/6 of IRC §168(k) bonus depreciation allowed under the IRC. distributive share/ $0 $80,000 6/6 $80,000
Also, add 5/6 of any qualifying §179 depreciation expense. bonus expense
Total add-back
However: for tax year: $100,000 $80,000 $180,000
● Replace “5/6” with “2/3” for employers who increase their Ohio
income taxes withholding by an amount equal to or greater than Put the total year add-back amount on line 44 of Schedule VI.
10 percent over the previous year; OR For additional information, please see the FAQs and R.C.
● Replace “5/6” with “6/6” for taxpayers who incur a net operating 5733.40(A)(5) and 5747.01(A)(17)(a)(i-v).
loss (NOL) for federal income tax purposes if the loss was a Line 31 – Other Income or Deduction and Federal Conformity
direct/indirect result of the §168(k) and/or §179 depreciation Additions
expenses.
Enter income or deductions not otherwise reported on Schedule
If the amount of qualifying IRC §179 depreciation expense is II that are part of an investor’s distributive share from the EPTE.
greater than $200,000, the $25,000 deduction is reduced dollar for Include a supporting schedule detailing each amount reported
dollar by any amount over $200,000, per the IRC as it existed as on this line, as well as an explanation of why each amount is
of December 31, 2002. included on this line. Failure to provide this information may delay
Using the following lines from federal form 4562, the add-back the processing of the return.
formula is (line 12 - $25,000) + line 14 + line 25. The sum of these The following generally can be included on this line:
lines is multiplied by the appropriate ratio. ● Section 59(e)(2) – depletion amortized on federal Schedule
Additionally, there is no requirement to make Ohio’s depreciation E; include federal form 4562.
add-back in either of the following circumstances: ● Deductions allocable to royalties appearing on federal
● The depreciation is from an EPTE, and the owner owns less Schedule E.
● §754 election – § 754 election is made to adjust the basis
than 5% of the EPTE. This is true even if the EPTE performed of partnership property in the event of a sale or exchange of
the add-back on its Ohio filing (i.e. the IT 1140 or IT 4708); OR partnership interest, a partner’s death, or certain distributions
● An EPTE that increases its Ohio income taxes withheld over to partners.
the previous year’s by an amountgreater than or equal to the ● §743(b) – 743(b) provides certain adjustments in the case of
sum of §168(k) and/or §179 depreciation amounts. a sale or exchange of a partnership interest in which a §754
election is in place.
The following generally cannot be included on this line:
● Charitable contributions.
● Any state or federal credit amount, including the research
and development tax credit and the work opportunity credit.
- 10 -
|
 Enlarge image |
IT 4738
Rev. 1/23
● Wage expenses not deducted on the federal return related to Examples of interest income that are not deductible:
work opportunity credit from Ohio Schedule of Adjustments. ● Interest paid by the IRS on a federal income tax refund;
● Itemized deductions from federal Schedule A such as: ● Interest income from Fannie Maes or Ginnie Maes.
● Interest paid on loan proceeds to purchase investments
that is only deductible for individuals who itemize on See R.C. 5747.01(A)(3).
federal Schedule A.
● Any expense incurred to generate investment income Federal Conformity Deductions
that is only deductible for individuals who itemize on This line is also for federal conformity deductions.
federal Schedule A.
● Research and experimental expenditures. Note: Do not enter any federal adjustments solely because the
● Amounts paid for medical insurance and long term care. deduction is available to an individual on the federal 1040 or the
Ohio IT 1040.
Federal Conformity
This line is also for federal conformity adjustments. For updates For more information, see Ohio Conformity Updates at tax.ohio.gov.
on Ohio Conformity, see Ohio Conformity Updates at tax.ohio.gov See R.C 5701.11.
and R.C. 5701.11.
Line 37 – Exempt Gains from the Sale of Ohio State or Local
For more information, see FAQs at tax.ohio.gov.
Government Bonds
Line 33 – Total Income(loss)
If included in federal income:
This line must equal the sum of line 23 through line 32. A differ- ● Deduct interest income and gains from the sale or disposition of
ence will delay processing of the return and may result in a billing Ohio public obligations and Ohio purchase obligations and income
or reduced refund. from a certain transfer agreement or an enterprise transferred
under that agreement.
Schedule III – Deductions ● Add any loss from the sale or disposition of Ohio obligations.
Lines 34-38 are allowable deductions for all owners. Do not include See R.C. 5747.01(A)(8).
deductions that have already been used to reduce income items Line 39 – Total
included on Schedule II.
DO NOT include deductions solely because they are must equal the sum of line 34 through line 38. A difference
This line
available to an individual on the federal 1040 or the will delay processing of the return and may result in a billing or reduced
! Ohio IT 1040. refund.
CAUTION
Schedule IV – Apportionment Formula
The three apportionment factors are property and payroll, each
Line 35 – IRC §168(k) Bonus Depreciation and §179 Expense weighted at 20%, and sales, weighted at 60%, for a total of 100%.
Deduction However, if any factor’s “total everywhere” is zero, the weights of the
Use the table on line 45 to calculate the current deductions from remaining factors must be proportionately increased so that the total
the prior year add-back amounts. Deduct: remains 100%.You must show the reweighted factors by crossing
out the listed weights and replacing them with the correct weights.
● 1/5 of prior year 5/6 add-backs; Example: ABC LLC is a single-member LLC with no employee
● 1/2 of prior year 2/3 add-backs; AND/OR payroll. In calculating its Ohio apportionment ratio, ABC LLC must
● 1/6 of prior year 6/6 add-backs; reweight its property factor to 25% and its sales factor to 75%.
of applicable §168(k) and §179 depreciation add-backs on a prior
year’s IT 4708, IT 4738, or IT 1140. If an EPTE owns an interest in other PTEs, when calculating its
apportionment ratio, the EPTE must include its proportionate share
NOTE: Deduct only amounts that were added back by the EPTE on of other PTEs “Within Ohio” portion and the “Total Everywhere”
a prior year’s IT 1140 or IT 4708. This deduction is available even portion of property, payroll and sales. These amounts will be
if the asset is no longer owned by the EPTE. reported by the other PTEs in the “Entity Apportionment Percentage”
The deduction must be taken in equal increments in consecutive section of the Ohio IT K-1 issued to the EPTE-owner.
tax years. If the deduction is missed in a taxable year, any unused Note: An EPTE may request, in writing an alternative form of
portion from any given tax year is not eligible to be carried forward. apportionment instead of the method listed above. Such request is
Instead, the EPTE would have to amend the prior returns to claim only valid if approved by the Department.
the deduction.
See R.C. 5747.231, 5747.38(A)(4)(a), and 5733.05(B)(2).
If there is an NOL, the deduction cannot be claimed for that year
and will be carried forward to the next year without an NOL. Property Factor
For additional information, see the PTE FAQs in the Bonus The Property Factor is the ratio of:
Depreciation category at tax.ohio.gov.
Average value of property in Ohio
See R.C. 5733.40(A)(5) and 5747.01(A)(18).
Average value of property everywhere
Line 36 – Net Federal Interest and Dividends Exempt from State
Taxation & Federal Conformity Adjustments “Property” includes any real and tangible personal property that is
owned, rented, subrented, leased and/or subleased in the course
Enter interest and dividend income from obligations issued by the of a trade or business by the EPTE or other PTEs owned by the
United States government or its possessions/territories that are exempt EPTE. Property does not include any of the following:
from Ohio tax under federal law. ● Construction in progress;
● Property not used in a trade or business;
A comprehensive list of deductible interest and dividends can be found ● Property for which Ohio has issued an air, noise, or industrial
in Information Release IT 1992-01 – Exempt Federal Interest Income. water pollution control certificate;
● Property used exclusively during the taxable year for qualified
research.
- 11 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Note: The original cost of qualifying improvements to property Total Everywhere: Enter the total compensation paid everywhere
in an enterprise zone, for which Ohio has issued a Tax Incentive during the taxable year.
Qualification Certificate, should only be included in Total Everywhere.
Sales Factor
The “average value” of business property is calculated by averaging
the total value of all applicable property owned or rented at the The sales factor is the ratio of:
beginning and end of the taxable year.
Sales in Ohio
See R.C. 5747.21(B) and 5733.05(B)(2).
Sales Everywhere
Line 40a - Property Owned
“Sales” includes gross business receipts earned by the EPTE or
Within Ohio: Enter the average value of all Ohio property owned other PTEs owned by the EPTE, such as:
by the business during the taxable year. ● Receipts from the sale of real property, tangible personal
Total Everywhere: Enter the average value of all property owned property, or services;
by the business during the taxable year. ● Receipts from rents and royalties from real and tangible
personal property; OR
Property owned by the business is valued at its original cost. ● Receipts from the transfer of or the right to use intellectual
property such as trademarks, trade names, patents, and
Line 40b - Property Rented copyrights.
Within Ohio: Enter the average value of all Ohio property rented “Sales” does not include:
by the business during the taxable year. ● Interest and dividends;
Total Everywhere: Enter the average value of all property rented ● Receipts from the transfer of intangible property other than
by the business during the taxable year. trademarks, trade names, patents, copyrights or other similar
intellectual property;
Property rented by the business is valued at eight times the net ● Receipts from the transfer of real or tangible personal property
annual rental rate (annual rental expense less subrental receipts). that is either a capital asset or an Internal Revenue Code
section 1231 asset; AND
Payroll Factor ● Receipts from sales to certain public utilities, insurance
The payroll factor is the ratio of: companies, and financial institutions described in R.C.
5733.05(B)(2)(c).
Total compensation in Ohio Note: Income amounts excluded from the sales factor may still be
Total compensation everywhere considered business income under Ohio law.
“Compensation” means any form of remuneration paid by the EPTE, See R.C. 5747.38 and 5733.05(B)(2)(c).
or other PTEs owned by the EPTE, to an employee for personal
services. Compensation does not include any of the following: Line 42 – Sales
● Amounts paid to employees for services unrelated to a trade Within Ohio: Enter gross receipts from sales within Ohio during
or business; the taxable year. Sales within Ohio include all the following:
● Amounts reclassified as a distributive share of income from a ● Receipts from sales of tangible personal property, less returns
PTE under R.C. 5733.40(A)(7); AND and allowances, to the extent the property was received by the
● Amounts paid to employees who are primarily engaged in purchaser in Ohio;
qualified research. ● Receipts from services to the extent the purchaser ultimately
Note: Compensation paid to certain employees at an urban job used or received the benefit of the services in Ohio;
and enterprise zone facility, for which Ohio has issued a Tax ● Rents and royalties from tangible personal property to the extent
Incentive Qualification Certificate, should be included only in total the property was used in Ohio;
compensation everywhere. ● Receipts from the transfer of certain intellectual property to the
extent the property was used in Ohio;
See R.C. 5709.65, 5747.38, and 5733.05(B)(2)(b). ● Receipts from the right to use certain intellectual property
Line 41 - Payroll to the extent the receipts are based on the right to use the
property in Ohio;
Within Ohio: Enter the total compensation paid in Ohio during the ● Receipts from the sale of real property located in Ohio; AND
taxable year. Compensation is paid in Ohio if: ● Rents and royalties from real property located in Ohio.
● The employee’s job is entirely in Ohio; Note: For tangible personal property, where the property is “received
● The employee’s job is primarily in Ohio with only incidental by the purchaser” is not the same as where the purchaser takes
work outside Ohio; physical or legal possession. Instead, it is considered “received”
● The employee performs services in Ohio and either the where it is ultimately used by the purchaser.
headquarters, or, if no headquarters exists, the place from which See R.C. 5733.05(B)(2)(c)(i) and (ii).
the service is directed or controlled, is in Ohio; OR
● The employee is a resident of and performs some services in Total Everywhere: Enter the gross receipts from sales everywhere
Ohio, and the headquarters or the place from which the service during the taxable year.
is directed or controlled is not in any state in which some part
of the service is performed.
Compensation paid to any employee of a common or contract motor
carrier who performs regularly assigned duties in more than one
state should be assigned to Ohio by the ratio of mileage traveled by
the employee in Ohio to the total mileage traveled by the employee
everywhere during the taxable year.
- 12 -
|
 Enlarge image |
IT 4738
Rev. 1/23
Schedule V – IRC §168K Bonus Depreciation and §179 Column B: Enter the depreciation expense add-back.
Expense Add-back Schedule Column C: Enter the ratio used (5/6, 2/3, or 6/6) to calculate the
depreciation expense add-back.
Prior tax year IRC §168K bonus depreciation and §179 expense Column D: Enter the deduction period based on the following chart:
add-back amount and ratio. Add-back Ratio DeductionPeriod
5/6 5 Years
Line 44 – Total Current Year IRC §168K Bonus Depreciation 2/3 2 Years
and §179 Expense Add-Back 6/6 6 Years
Total current year IRC §168K bonus depreciation and §179 expense Column E: Divide the amount in Column B by Column D. This is the
add-back from line 30. “annual depreciation deduction amount” for the deduction period.
ADD-BACK Report the amount on line 35.
Source of §179 §168(k) Add-back Add-back Note: In a given tax year, the EPTE may need to report a mixture of
Depreciation Add-back Amount Ratio (2/3, Amount add-back ratios on Schedule VI, due to investment in multiple PTEs.
Amount 5/6, 6/6) In this scenario, check the 5/6 box and provide an explanation of
the ratio. The EPTE may wish to attach this explanation to future
years’ returns.
Follow the same procedure for the owners of the EPTE on the IT
K-1 under Depreciation Information and fill out the Supplemental
Total add-back Information portion.
for tax year:
Schedule VII – Owner Information
Line 45 – Prior Years Add-Back Amount and Applicable Add-
Back Ratio Provide information for all owners in the EPTE. List all owners in
order from highest to lowest ownership percentage.
Use this table to calculate the current deductions from prior year
add-back amounts and applicable ratios and report on line 35. Complete owner information must be on both of the following
● Schedule VII and additional sheet(s), if necessary; AND
§168(k) and §179 Depreciation Expense Deduction Worksheet ● A copy of IT K-1s, which the PTE will issue to each owner.
A B C D E
Add-back
Tax Year Source of Depreciation Ratio (2/3, 5/6, Deduction Annual
Depreciation Add-back 6/6) Period Depreciation
Amount Deduction
Amount
2021
2020
2019
2018
2017
- 13 -
|