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For taxable year beginning in
2022
Ohio IT 1140
Pass-Through Entity
and Trust Withholding
Tax Return InstructionsRev. 11/22
Department of
hio Taxation
tax. hio.gov
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IT 1140
Rev. 12/22
Table of Contents
A G
Amended Returns...................................8 General Instructions ............................6-8
Appendix A (IPTE) ................................14
Appendix B : Filing for an IPTE ............14 H
Appendix C : PTE / Trust with K1 .........15 Highlights for 2022..................................2
Apportionment Formula ...................11-12
Apportionment Formula Worksheet ......16 I
B Interest and Penalties ..........................7-9
Investment PTE ......................................8
Bonus Depreciation Add-Back ...........9-10 Investor Schedule .................................13
Bonus Depreciation Deduction .............10
Bonus Depreciation Schedule .............13 P
D Payment Options .................................4-5
Due Dates...............................................7 T
F Tax Credits...........................................6-7
Tax Rates................................................7
Federal Conformity Adj ......................9-10 Taxpayer Assistance ...............................1
Filing Tips ...............................................3
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.
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IT 1140
Rev. 12/22
Taxpayer Assistance
Need Help? – To help answer questions and ensure that the 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 & Fiduciary income tax forms to download or print. If answers cannot
be found on 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 8:00 a.m. to 5:00 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 & Trust
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 our forms. You
can also 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 1140 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.
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IT 1140
Rev. 12/22
Highlights for 2022
IT K-1 Should the PTE File the IT 1140?
Each entity with Ohio income should prepare a separate IT K-1 for A PTE must file an Ohio return to report and pay tax on behalf
each investor or qualifying beneficiary to enclose with the investor’s of its nonresident individual, trust, and PTE investors. The PTE
or beneficiary’s return. can elect to file the IT 1140, IT 4708 or the IT 4738. A PTE that
changes forms from year to year must ensure all periods of
For more information, see the IT K-1 form and instructions on tax. income are reported and all related tax is timely and fully paid.
ohio.gov in the searchable Tax Forms section.
NOTE: Once the IT 1140 is filed for any given tax period, the
PTE is not permitted to amend this return to change to an IT
Credit Carryforward 4708 or IT 4738.
Beginning with filing periods that start on or after January 1, 2020
the credit carryforward of overpayments has been reinstated, For more information regarding which form to file, see the
however for tax years 2017-2019 the Department did not permit following chart, or search the PTE FAQ General Information
credit carryforwards. A credit carryforward is only allowed on a category at tax.ohio.gov.
timely-filed, original return; otherwise, any overpayment will be The IT 4738 The IT 4708 The IT 1140
refunded. Income Tax Composite Withholding
Return Return Return
Electronic Filing
The IT 1140 can be filed electronically through the federal e-file
program overseen by the IRS (irs.gov/filing), or through a April 15th after April 15th after 15th day of
participating third-party tax preparation product. For a current Filing date year in which the year in which fourth month
list of approved software programs, please see the Software entity’s taxable entity’s taxable after close
Developers page on the Ohio Department of Taxation website, year ends year ends of fiscal year
and search for the most recent MeF Approval Status link.
Can the Yes
A tax return preparer that prepares more than 11 original tax return include *All investors Yes No
returns during any calendar year shall use electronic filing resident (owners) must be
included
technology. This provision does not apply to a tax return preparer investors?
in any calendar year if, during the previous calendar year, the tax 5% (all) 3.990% (all) 5%
return preparer prepared not more than 10 original tax returns. Tax rate *For reporting periods *For reporting periods (individuals) or
that begin on or after that begin on or after 8.5% (entities)
1/1/2022 1/1/2021.
See R.C. 5747.082 3% (all)
*For reporting
periods that begin
on or after 1/1/2023.
Can the
return claim No Yes No
credits?
Can the return
claim payments
from other No Yes No
PTEs?
Investor May file Ohio May file Ohio Must file Ohio
filings return return return
NOTE: Credits cannot be claimed on the IT 1140 and IT 4738.
However, a PTE can claim credit for such amounts on the IT 4708.
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IT 1140
Rev. 12/22
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 on tax.ohio.gov to change the address.
Verify the IT 1140 and UPCs are for the Correct Tax Year
The Department releases new forms and UPCs each tax year. Do not cross out the year at the top of the IT 1140 or UPC and write in
a new one, as doing so will delay the processing of the IT 1140 or UPC. A PTE or trust that has a tax year starting during calendar year
2022 must file the 2022 IT 1140.
Maintain a Bank Account
The PTE or trust must maintain its bank account to ensure it can receive refunds after its closing date. 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 or trust.
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 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 return 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.
Report Estimated Payments on Correct Lines
Incorrect reporting of the payments may result in a denied/reduced refund or bill. If the entity receives an IT K-1 reporting a PTE tax pay-
ment or credit from another entity on its behalf, the credit is not permitted on the IT 1140 and should not be placed on a payment line. See
Investor Information below for details on passing credits proportionately to investors.
Report estimated payments as follows:
● Line 3: Enter estimated payments made with an IT 1140 UPC or EFT payments made through the Ohio Treasurer of State for this tax
year that the PTE or trust wants applied to this 1140;
● Line 3a: Enter the portion of estimated payments made with an IT 4708 UPC or an IT 4738 UPC for this tax year that the PTE or trust
wants applied to this IT 1140;
● Line 3b: Enter either or both of the following:
● Estimated payments made with an IT 1140 UPC for this tax year that the entity or trust wants applied to an IT 4708 filed for the
same tax year; AND/OR
● [Amended Return ONLY] Estimated payment amount from line 3b plus the refund amount from line 5 received from the original
return filed for this tax year.
Provide Supporting Documentation:
Attach the appropriate documentation specified on the IT 1140 to validate the amounts reported, such as IT K-1s to verify income/
withholding credits flowing from another PTE indirectly to the filer, and from the filer to an investor, and any other documents providing
clarification.
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IT 1140
Rev. 12/22
Payment Options
First-Time Filers: Submit PTE Registration Form Before First Estimated Payment
If the PTE or trust is a first-time filer, 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 registra-
tion 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
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 1140);
● 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): Payments 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 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
IT 4738 Electing Pass-Through Entity Income Tax Payments instructions unavailable, as of publishing. Use IT 1140
payment instructions.
NOTE: The TOS no longer requires PTE and fiduciary filers to submit an EFT authorization form to register before making an
IT 4708, IT 4738, IT 1140 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 or hand deliver to our self-service walk-in center.
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.
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IT 1140
Rev. 12/22
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 Forms Search field by entering “UPC” in the Form Title or Number field.
The IT 1140 UPC is used by PTE’s and trusts to make either an estimated payment (IT 1140ES) or a payment submitted with the return
(IT 1140P). When completing the UPC:
● Indicate the reporting period by providing the filing period start date and end date in the format mm-dd-yy;
● Specify the appropriate payment type (IT 1140ES or IT 1140P);
● Enter the 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 1140 UPC: This form must be included with each check or money order.
Include a Check or Money Order with each IT 1140 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 1140);
● Tax year end for the payment (mm-dd-yy).
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IT 1140
Rev. 12/22
Who Should file the IT 1140?
2022 Ohio IT 1140 A qualifying PTE is required to file an IT 1140 when it is subject to
General Instructions withholding or entity tax on distributive shares of income issued to
qualifying investors. A qualifying entity is subject to withhold an
Note: Ensure tax return pages are in numerical order. Include any entity tax when:
attachments after the return. The return and supporting schedules ● The entity is doing business in Ohio or otherwise has nexus
are on the Tax Forms page tax.ohio.gov. with Ohio; AND
● The adjusted qualifying amount exceeds $1,000.
What is a Pass-Through Entity (PTE)?
A “pass-through entity” is an S corporation, partnership, or limited A qualifying trust is required to file an IT 1140 when it is subject to a
liability company (LLC). A PTE is also any other person, except an withholding tax on distributions of certain types of income made to
individual, trust, or estate, that is not classified as a C corporation qualifying beneficiaries. A qualifying trust is subject to withholding
for federal tax purposes. tax when:
● The income distributed is gains or net income attributable to
See R.C. 5747.01(K) and 5733.04(O). real and/or tangible personal property located in Ohio.
● The income is distributed to the trust’s beneficiaries who are
What Is a Qualifying Pass-Through Entity? nonresidents for any portion of the taxable year; AND
A qualifying PTE is any PTE except: ● The adjusted amount of the income distributed exceeds $1,000.
● Entities described in IRC 501(c) such as pension plans and
charities; Who is not required to file an Ohio IT 1140?
● Publicly traded partnerships; AND There is no requirement for a PTE to file the IT 1140 if any of the
● A REIT, RIC, or REMIC. following is applicable for the entire taxable year:
● The PTE’s equity investors are limited to full-year Ohio resident
What is a Qualifying Trust? individuals, estates, trusts, and C corporations;
A qualifying trust is any trust that meets the following three ● The PTE is filing the Ohio IT 4708 composite return on behalf
requirements during the trust’s taxable year: of all its nonresident equity investors who are not full-year Ohio
resident taxpayers;
● The trust is subject to filing the federal 1041 or the federal ● The PTE is filing the Ohio IT 4738 Electing Pass-Through
1040NR (foreign trusts); Entity Income Tax Return, which includes all of its owners; OR
● The trust has at least one beneficiary who is a nonresident ● The PTE is either a disregarded entity or a qualifying
during any part of the taxable year; AND Subchapter S subsidiary, and the PTE’s owner is excluded or
● The trust makes a distribution of income to a nonresident is exempt from filing with the Department.
beneficiary directly or indirectly from either real estate located
in Ohio or to tangible personal property located in Ohio. There is no requirement for a trust to file the IT 1140 if any of the
following is applicable for the entire taxable year:
What is a Qualifying Investor? ● The entity is a trust whose beneficiaries are limited to full-year
A qualifying investor is a nonresident individual, an S Corporation, Ohio resident taxpayers;
partnership, trust, estate or LLC treated as a partnership or S ● The entity is a trust that does not directly or indirectly own
real estate or tangible personal property located in Ohio and
Corporation for federal income tax purposes. owns NO direct or indirect equity investments in a PTE that
A qualifying investor is NOT: has nexus with Ohio.
● Full-year Ohio resident individuals, estates and trusts Note: Trusts may also be required to file the IT 1041 Fiduciary
● Nonresident individuals and estates included on the IT 4708 Income Tax return. See the PTE FAQs Fiduciary Return IT 1041
for the taxable year; category at tax.ohio.gov.
● C corporations;
● A PTE whose only investors are C corporations and full-year How Does Ohio Law Define Business and Nonbusiness Income?
Ohio resident individuals, estates, trusts ; “Business income” is income, including gain/loss arising from any
● A PTE that is a disregarded entity or qualifying sub-chapter S of the following:
subsidiary and the PTE owner (parent) is excluded or exempt ● Transactions, activities, and sources in the regular course of
from filing with the Department; a trade or business operation;
● Dealers in intangibles as defined in R.C. 5725.01(B); ● Real, tangible, and intangible property if the acquisition, rental,
management, and disposition of the property constitute integral
● REITS, RICs and REMICs; parts of the regular course of a trade or business operation;
● Publicly traded partnerships; ● A partial or complete liquidation of a business, including gain
● Pension plans or charities; or loss from the sale or other disposition of goodwill;
● Ohio public utilities who pay Ohio gross receipts excise tax; ● A sale of an equity or ownership interest in a business if the
● Colleges or universities; sale is treated for federal income tax purposes as the sale of
● Insurance companies who file with the Ohio superintendent assets and/or the seller materially participated, as described
of insurance; in 26 C.F.R. 1.469-5T, in the activities of the business during
● Fraternal organizations; the taxable year in which the sale occurs or during any of the
● Beneficiaries of a pension plan trust, profit-sharing trust; a stock five preceding taxable years.
● Compensation and guaranteed payments paid by a pass-
bonus plan trust or similar retirement trust; through entity, or a professional employer organization on its
● Beneficiaries or new recipients of payments from a trust/fund behalf, to an investor who directly or indirectly owns 20% or
that is a nuclear decommissioning reserve fund, a designated more of the entity.
settlement fund or any other similar trust/fund established to ● Nonbusiness income is any income other than business income.
resolve similar injury claims; See R.C. 5747.01(B), 5747.01(C), and 5733.40(A)(7).
● Beneficiaries of a complex trust, but only if the trust irrevocably
agrees in writing that: How Does an Entity Determine What Income is Business Income?
● For the taxable year during or for which the trust distributes Business income can be determined by using either of two tests:
any of its income to any of its beneficiaries who are ● Transactional Test: Looks to the nature, frequency and
regularity of the transaction;
individuals residing outside of Ohio, the trust will be ● Functional Test: Looks to if the property was integral to the
withholding tax as required under R.C. 5747.41 through trade or business, or if it generated business income in the past.
5747.453. Generally, all income from a PTE is presumed to be business
income.
For a complete list of nonqualifying investors, see R.C. 5733.40(I)
See R.C. 5747.01(B).
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IT 1140
Rev. 12/22
Are Any Tax Credits available on the IT 1140 Return?
No. A PTE or trust is not entitled to claim any credit on the IT 1140. See R.C. 5747.42 and Ohio Admin Code 5703-07-05. The fiscal
year ends referenced in the above table may or may not reflect a
A PTE or trust cannot claim a credit as an estimated payment for 12-month filing period.
its taxable year. An IT 1140 filer must pass all credits equal to the Estimated Tax Payments
investor/beneficiary’s proportionate share of the lesser of either the The PTE or trust must make estimated tax payments with the IT
tax due or the tax paid. 1140ES Universal Payment Coupon (UPC) for the entity’s taxable
See R.C. 5747.98 and 5747.059 year if the PTE or trust’s estimated sum of the adjusted qualifying
amounts exceeds $10,000. The interest penalty applies to estimated
Can Tax Credits withheld on the IT 1140 be used on an Ohio payments not timely made. For more information, see page 9.
Income Tax Return?
The IT 1041, IT 4708, and IT 1040 are all Ohio income tax returns. Due Dates for Estimated Tax Payments
Qualifying investors, including PTEs and trusts, can claim an If any due date set forth below falls on a weekend or on a holiday,
income tax credit based on their proportionate share of the IT 1140 then the due date becomes the first business day thereafter.
withholding or entity tax that was paid on an IT 1140 when filing % Cumulative Estimated Payments
their own Ohio income tax return. Made
On or before the 15th day of the month
See R.C. 5747.059. following the last day of the 1st quarter. 22.5% of the current year tax liability
What are the Tax Rates for the IT 1140 return? On or before the 15th day of the month 45% of the current year tax liability
The tax is calculated based on the entity’s adjusted qualifying following the last day of the 2nd quarter.
amount multiplied by the following applicable tax rate:
● 5% for the portion of a PTE’s adjusted qualifying amount for On or before the 15th day of the month 67.5% of the current year tax liability
nonresident individual investors; following the last day of the 3rd quarter.
● 5% for the portion of a trust’s adjusted qualifying amount for On or before the 15th day of the month 90% of the current year tax liability
nonresident beneficiaries; following the last day of the 4th quarter.
● 8.5% for the portion of a PTE’s adjusted qualifying amount
for all qualifying investors other than nonresident individuals. Can Investors and Beneficiaries Be Held Personally Liable for
When is the IT 1140 Return Due? the Tax Liability of the PTE or Trust?
The IT 1140 and payment of the tax are due on the 15th day of the Certain beneficiaries, investors, employees, trustees, officers,
fourth month following the end of the qualifying PTE’s or qualifying members, or managers of the qualifying entity can be held personally
trust’s taxable year. If any filing due date set forth below falls on liable for the entity’s failure to file the IT 1140 and pay the appropriate
a weekend or on a holiday, then the due date becomes the first tax due.
business day thereafter.
See R.C. 5747.453.
Filing Extensions
A PTE or trust with a calendar year end of 12/31/22 can extend the Does Ohio Follow the Alternative Preparer Signature
due date for filing the IT 1140 to September 15, 2023, provided it Procedures?
qualifies for an IRS extension of time to file. Ohio does not have an The Department follows federal Notice 2004-54. However, the paid
extension request form but honors the IRS extension. Include a copy preparer must print (not sign) his/her name if the PTE authorizes
of the IRS extension or IRS acknowledgement, and/or the extension the preparer to discuss the return with the Department. Preparers
confirmation number if electronically filed. See table below. with a Preparer Tax Identification Number (PTIN) must provide it
An extension of time to file does not extend the time for on all returns.
payment of the tax due. See R.C. 5703.262(B) and 5747.08(F).
The PTE or trust must make extension payments per the “Due Dates
for Estimated Tax Payments” table below with the required IT 1140 Can the PTE or Trust’s Tax Preparer Contact the Department
UPC, available at tax.ohio.gov by searching for “UPC” in the Form About the IT 1140?
Title or Number field. Interest will accrue on any tax not paid by the The PTE or trust can check the box above the tax preparer’s name
due date, and penalties may also apply. on page 2 of the return to authorize the preparer to:
TY 2022 Due Dates and Extended Due Dates ● Contact the Department about the status of the entity’s return,
Fiscal Year IRS Due Ohio Due IRS Ext. Due Ohio Ext. Due payments, or refund;
Ends Date Date Date Date ● Provide the Department with information missing from the
12/31/22 3/15/23 4/18/23 9/15/23 9/15/23 entity’s return; AND
● Respond to inquiries or notices from the Department related
1/31/23 4/18/23 5/15/23 10/16/23 10/16/23 to the return.
2/28/23 5/15/23 6/15/23 11/15/23 11/15/23 See R.C. 5747.08(J).
3/31/23 6/15/23 7/17/23 12/15/23 12/15/23 How does a PTE or Trust determine its Ohio Method of
Accounting?
4/30/23 7/17/23 8/15/23 1/16/24 1/16/24 A PTE’s or trust’s method of accounting on its Ohio IT 1140 return
is the same method it used for federal income tax purposes.
5/31/23 8/15/23 9/15/23 2/15/24 2/15/24
See R.C. 5747.45(B).
6/30/23 9/15/23 10/16/23 3/15/24 3/15/24 When Should the PTE or Trust Complete the IT K-1?
7/31/23 10/16/23 11/15/23 4/15/24 4/15/24 The IT K-1 allows the PTE or trust to report its income, adjustments,
credits, and apportionment information to its investors or
8/31/23 11/15/23 12/15/23 5/15/24 5/15/24 beneficiaries. The information is used by the PTE’s investors or
trust’s beneficiaries when completing the IT 1040, IT 1041, IT 4708,
9/30/23 12/15/23 1/16/24 6/17/24 6/17/24 IT 4738 or IT 1140.
10/31/23 1/16/24 2/15/24 7/15/24 7/15/24 The entity must complete two copies of the IT K-1 for each investor
11/30/23 2/15/24 3/15/24 8/15/24 8/15/24 or beneficiary whose income is included on the IT 1140. One copy
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Rev. 12/22
of the IT K-1 must be included when filing the IT 1140. The other For additional information, see tax.ohio.gov for FAQs.
copy should be provided to the investor or beneficiary.
When Not to Amend the Return
The IT K-1 is available in the searchable Tax Forms section at tax. Some common mistakes may not require an amended return. Some
ohio.gov. For additional information, please see the IT K-1 category examples include:
in the PTE FAQs at tax.ohio.gov. ● Math errors;
● Missing pages or schedules;
● Demographic errors;
Investment Pass-Through Entities ● Missing any supporting documentation.
In these situations, the department will either make the corrections to
Investment PTE Definition. An investment PTE is a PTE with at the return or contact the entity to request the needed documentation.
least 90% of its assets represented by intangible assets and at least
90% of its gross income from one or more of the following sources: Requesting a Refund
• Transaction fees earned in connection with the acquisition, The entity may want to amend the return to request an additional
ownership or disposition of intangible property deduction or payment. Such changes may result in a refund. The
• Loan fees entity has four years from the date of the payment to request a
• Financing fees refund. The entity must include supporting documentation to
• Consent fees substantiate the changes reported on the amended return. Some
• Waiver fees common required documentation includes:
• Application fees ● The Federal return, including applicable schedules and
• Net management fees (management fees received, reduced attachments;
by management fees incurred or paid) as long as the net ● IT K-1.
does not exceed 5% of the pass-through entity’s profit Reporting Additional Tax Due
• Dividend income The entity should amend the return to report additional income or
• Interest income reduce a previously claimed deduction. Such changes may result in
• Net capital gains from the sale or exchange of intangible additional tax due. Payment should be included with the amended
property return using an IT 1140 UPC payment coupon.
• Distributive shares of income and gain from other PTEs
Changes to The Federal Return
The percentages are based upon quarterly averages calculated If the IRS makes changes to the federal return, either based on
during the pass-through entity’s taxable year. For purposes of an audit or an amended return, and those changes affect the Ohio
determining if a PTE is an investment PTE, intangible assets include return(s), the entity is required to file an amended IT 1140. Do not file
investments in other PTEs. See R.C. 5733.401. the amended Ohio return(s) until the IRS has finalized the changes
to the federal return. Once the changes are finalized, please include
Investors in an investment PTE are “deemed investors” in any a copy of all the following:
other PTE in which the investment PTE is a direct investor. The ● The federal amended 1065, 1120S OR 1041; AND
operating PTE may withhold on the deemed investors at the ● The IRS acceptance letter.
applicable tax rate (5% or 8.5%) if a timely notice by the investment
PTE is provided to the operating PTE and includes the name, Note: Instead of including a copy of these documents, the entity
address and SSN for each deemed investor. may be able to submit a copy of the IRS Tax Account Transcript
reflecting the updated federal return information.
If timely notice is provided, the investment PTE is ignored for the
purposes of PTE withholding, and the operating PTE can withhold The amended IT 1140 shall be filed not later than one year after
on behalf of the deemed investors. Otherwise, the operating PTE the adjustment has been agreed to or finally determined for federal
must withhold the 8.5% entity tax on the distributive share of income income tax purposes or any federal income tax deficiency or refund,
and gain of the investment PTE. See R.C. 5747.401. or the abatement or credit resulting therefrom, has been assessed
or paid, whichever occurs first.
Using the Filing on Behalf of Deemed Investors. There are
special benefits for an investment PTE; they may use the deemed See R.C. 5733.031(C)
investor rule to eliminate filing a return. While the operating PTE is File Prior to Out of Statute
required to file and withhold on behalf of an investment PTE, the
investment PTE is NOT required to file in order to distribute the Ohio’s pass-through entity and fiduciary income taxes generally
income and credits. The question of how to flow the income and have a four-year statute of limitations. The Department has four
credit information to investors is addressed in APPENDIX A at the years to issue an assessment from the later of when the return was
end of the instructions. due or filed. The PTE or fiduciary has four years from the date of the
payment to request a refund. Please see the table below for details.
Amended Returns Tax Year Due Date Timely Payment or Withholding Out-of-Statute Date
When to Amend. The entity can file an amended IT 1140 to report
changes to the originally filed return(s). An amended return can 2018 4/15/19 4/18/23
result in either a tax due or a refund based on the changes. Under 2019 7/15/20 7/15/24
certain circumstances, an amended return may be required. To 2020 5/17/21 5/15/25
amend the IT 1140, the entity should file a new return showing the
original amounts for any item that remains unchanged and reflecting 2021 4/18/22 4/15/26
all proposed changes; indicate that it is amended by checking the 2022 4/18/23 4/15/27
box at the top of page 1.
Please include a copy of the following with the amended return:
● Any canceled checks used as payment on the originally filed Schedule I – Reconciliation Tax and Payments
return; AND
● Supporting documentation that reflects the reason(s) for filing Line 1 – Tax Liability for Each Column
the amended return. The amounts on this line are from Schedule II, line 20, Columns A and
B for PTE’s, or line 30 for Trusts. A difference will delay processing
Note: Amended return processing may take at least 180 days from of the return and may result in a billing or a reduced refund.
the date of receipt.
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Line 2 – Interest Penalty Line 8 - Total Amount Due - Payment Options
A PTE or trust that does not make timely, sufficient estimated Make payments by:
payments may be subject to the 2210 interest penalty. A PTE or ● Electronic check through an approved software program when
trust filing the IT 1140 should use pages 1 and 3 of the Ohio IT/ filing electronically;
SD 2210 to determine if an interest penalty is due, and if so the ● Sending a personal check/money order with the Ohio UPC;
interest penalty amount. This form is available on the searchable ● Electronic funds transfer (EFT) through the Ohio Treasurer
Tax Forms page at tax.ohio.gov. of State.
Note: A PTE may be subject to the interest penalty even if it is due For questions regarding the EFT payment program, see the
a refund when filing its return. Business Tax - Pay Online page at tax.ohio.gov, or use the link
below Electronic Funds Transfer Via Ohio Treasurer of State
See R.C. 5747.43(C), (D), and (E). (TOS) at Business Tax.
Line 3 - Estimated UPC Payments / 2021 Overpayments Schedule II
Credited to 2022 Qualifying Pass-Through Entities – Tax Due
Enter estimated payments made with an IT 1140 UPC or EFT Line 9 - Qualifying Investors’ Distributive Shares of Income,
payments made through the Ohio Treasurer of State for this tax year Gain, Expense and Loss
to be applied to this IT 1140. Enter 2021 over-payments credited to
2022. If both are made, combine the totals in column A. Enter only qualifying investors’ distributive share of all income, gain,
expenses and losses.
Line 3a - IT 4708 / IT 4738 Estimated Payments & Prior Year IT
4708 Overpayment Claimed on IT 1140 The following generally can be included on this line:
• Section 59(e)(2) – depletion amortized on federal Schedule E;
Enter the portion of estimated payments made with an IT 4708 UPC include federal form 4562.
or IT 4738 for this tax year to be applied to this IT 1140. This will • Deductions allocable to royalties appearing on federal Schedule E.
result in a delay in processing the return. Amounts listed on this • §754 election – §754 election is made to adjust the basis of
line cannot be claimed on an IT 4708. partnership when property is distributed or when a partnership
interest is transferred.
Do not include any payments made by another PTE on this line. • §743(b) – 743(b) provides in case of the sale or exchange
of partnership interest in which §754 is in place, the basis of
Line 3b - IT 1140 Estimated Payments Claimed on IT 4708 partnership property is adjusted.
● For an original IT 1140 return, enter the portion of any IT 1140 The following generally cannot be included on this line:
estimated payments made for the tax year on a IT 1140 UPC • Charitable contributions.
(reported on line 3) that the taxpayer wants the Department to • Any state or federal credit amount, including the research and
apply to a IT 4708 being filed for the same tax year; OR development tax credit and the work opportunity credit.
● If an amended IT 1140 is being filed and the original IT 1140 • Wage expenses not deducted on the federal return related to
work opportunity credit from Ohio Schedule of Adjustments.
reported an overpayment, enter the portion of the IT 1140 • Itemized deductions from federal Schedule A such as:
estimated payments transferred to the IT 4708 as originally • Interest paid on loan proceeds to purchase investments.
reported on line 3b of the return PLUS any refund received on • Any expense incurred to generate investment income.
the originally filed return. • Research and experimental expenditures.
• Amounts paid for medical insurance and long term care.
Line 5a - Amount of Line 5 to be Credited to Year 2023
Note: For more information, see FAQs at tax.ohio.gov.
Beginning with filing periods that start on or after January 1, 2020
the credit carryforward of overpayments has been reinstated, Line 10 – IRC §168(k) Bonus Depreciation & §179 Expense /
however for tax years 2017-2019 the Department did not permit Ohio Authorized Federal Conformity Add-back
credit carryforwards. A credit carryforward is only allowed on a timely
filed, original return; otherwise, any overpayment will be refunded. Check the box for the appropriate add-back ratio. Add 5/6 of Internal
Revenue Code (IRC) §168(k) bonus depreciation allowed under
Line 5b –Amount of Line 5 to be Refunded the IRC Code. Also, add 5/6 of any qualifying §179 depreciation
expense.
Interest on Overpayments. Once the return has been verified, if
the refund exceeds one dollar it will be refunded. Refund interest is However:
paid from the latest of the following dates until the date of the refund:
● Replace “5/6” with “2/3” for employers who increase their Ohio
● The payment date; income taxes withholding by an amount equal to or greater than
● The 90th day after the due date of the return; OR 10 percent over the previous year.
● The 90th day after the return was filed. ● Replace “5/6” with “6/6” for taxpayers who incur a net operating
loss (NOL) for federal income tax purposes if the loss was a
During calendar year 2023, interest accrues on overpayments at direct/indirect result of the §168(k) and/or §179 depreciation
an annual rate of 5%. expenses.
See R.C. 5747.11(B) and (C)(2). If the amount of qualifying §179 depreciation expense is greater
than $200,000, the $25,000 deduction is reduced dollar for dollar
Line 7 - Interest Due on Late Payment of Tax by any amount over $200,000, per the IRC as it existed as of
December 31, 2002.
Interest is due on any unpaid tax exceeding one dollar from the
unextended due date until the date the tax is paid. Generally, the Using the following lines from federal form 4562, the add-back
PTE or trust does not owe interest if it is due a refund. An extension formula is (line 12 - $25,000) + line 14 + line 25. The sum of these
of time to file does not extend the payment due date. The interest lines is multiplied by the appropriate ratio.
rate for calendar year 2023 is 5%. Additionally, there is no requirement to make Ohio’s depreciation
add-back in either of the following circumstances:
See R.C. 5747.08(G).
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● The depreciation is from a PTE, and the investor owns less than Note: Deduct only amounts that were added back by the PTE on
5% of the PTE. This is true even if the PTE performed the add- a prior year’s IT 1140 or IT 4708. This deduction is available even
back on its Ohio filing (i.e., the IT 1140, IT 4708 or 4738); OR if the asset is no longer owned by the PTE.
● A PTE who increases their Ohio income taxes withheld over
the previous year’s by an amount greater than or equal to the The deduction must be taken in equal increments in consecutive tax
sum of §168(k) and/or §179 depreciation amounts. years. If the deduction is missed in a taxable year, any unused portion
from any given tax year is not eligible to be carried forward. Instead, the
Example 1: PTE A has total of $180,000 subject to add-back for PTE would have to amend the prior years’ return to claim the deduction.
the current tax year; $100,000 of qualifying §179 depreciation
expense from PTE A’s business operations, and $80,000 of §168(k) If there is an NOL, the deduction cannot be claimed for that year
depreciation from its distributive share from PTE B. and will be carried forward to the next year without an NOL.
Source of Add-back Amount §168(k) Add-Back Ratio Add-Back For additional information, see the PTE FAQs in the Bonus
Depreciation (§179-$25,000) Amount Depreciation category at tax.ohio.gov.
PTE A -
operations $100,000 5/6 $83,333 See R.C. 5733.40(A)(5) and 5747.01(A)(18).
PTE B - $80,000 5/6 $66,667 Federal Conformity Adjustments. This line is also for federal
distributive share
conformity adjustments. For more information see Ohio Conformity
Total add-back $100,000 $80,000 $150,000 Updates at tax.ohio.gov
for tax year:
Example 2: PTE A owns 100% of PTE B. PTE A has $180,000 See R.C 5701.11.
subject to add-back for the current tax year, as outlined above. PTE Amounts Not Subject to a Tax on or Measured by Net Income.
B increased its Ohio employer withholding for its employees by at Distributive shares of income from qualifying PTEs and distributions
least 10% over the previous tax year. PTE A must use a different from qualifying trusts shall be reduced by any amount that is not subject
add-back ratio for each source of depreciation, and calculates its to a tax on or measured by net income. See R.C. 5733.40 (A)(2).
depreciation add-back as follows:
Add-Back - Combined add-back This income includes but is not limited to the following:
● Federal interest income that under federal law is exempt from
Source of Add-back Amount §168(k) Add-Back Ratio Add-Back state tax measured on or by net income;
Depreciation (§179-$25,000) Amount
● All income that the qualifying PTE earns if the qualifying PTE
PTE A - $100,000 5/6 $83,333 claims an exemption under U.S. Public Law 86-272;
operations ● An ITPE’s items of income previously listed;
PTE B - $80,000 2/3 $53,333 ● Interest income from Ohio public obligations and Ohio pur-
distributive share
chase obligations and gains from the sale or other disposition
Total add-back $100,000 $80,000 $136,666 of Ohio public obligations.
for tax year:
Note: An ITPE can find additional filing resources on our FAQ page
Example 3: PTE A has $180,000 subject to add-back for the current under the heading Investment Pass-Through Entities (IPTE).
tax year, but its federal taxable income is ($100,000) (i.e. PTE A
has a federal NOL). PTE A would calculate its depreciation add- See R.C. 5733.401, 5709.76 and IT 1992-01 – Exempt Federal
back as follows: Interest Income, at tax.ohio.gov.
Add-Back - NOL
Source of Add-back Amount §168(k) Add-Back Ratio Add-Back Line 13 - Related Members Add-Back
Depreciation (§179-$25,000) Amount
PTE A - $100,000 6/6 $100,00 All pass-through entities are required to add back expenses or
operations losses paid or incurred with respect to transactions involving
PTE B - $80,000 6/6 $80,000 related members. A “related member” is:
distributive share ● Any person described in IRC §1563(e) that owns at least
Total add-back $100,000 $80,000 $180,000 40% of the PTE;
for tax year: ● Any individual investor, or the investor’s spouse, child, grand -
child, or parent if combined they own at least 50% of the PTE;
Enter the total year add-back amount on line 31 of Schedule V. ● An investor that is a partnership, estate, trust, or corporation,
or the investor’s partnership, estate, trust, or corporation if
For additional information, please see the FAQs and R.C. 5733.40(A) combined they own at least 50% of the PTE; OR
(5) and 5747.01(A)(17). ● A corporation, or a party related to the corporation that would
require an attribution of stock from the corporation to the party
Federal Conformity or from the party to the corporation if the PTE owns at least
This line is for federal conformity adjustments. For updates on Ohio 50% of the corporation.
Conformity, see Ohio Conformity Updates located on our website
at tax.ohio.gov and R.C. 5701.11. Ownership includes: direct, indirect, constructive, and beneficial.
● Direct – Investor owns a PTE with no other owners in between.
Line 11 - IRC §168(k) Bonus Depreciation & §179 Expense ● Indirect – Investor owns a PTE that owns another PTE.
Deductions / Ohio Authorized Federal Conformity Deductions ● Constructive – Person is not an investor but is deemed to own
/ Amounts Not Subject to a Tax for Investors the PTE through attribution because of their relationship to
one of the PTE’s investors.
Ohio Depreciation Deductions ● Beneficial - Person is a beneficiary of a trust or estate, and
Use the table on line 32 to calculate the current deductions from thus is treated as an “owner” of the asset.
prior year add-back amounts. Deduct:
Note:The attribution rules in IRC §318 apply for purposes of
● 1/5 of prior year 5/6 add-backs, evaluating the ownership requirements.
● 1/2 of prior year 2/3 add-backs, AND/OR
● 1/6 of prior year 6/6 add-backs Common expenses and losses subject to add back when paid to
a related member include:
of applicable §168(k) and §179 depreciation expense add-backs
on a prior year’s IT 1140 or IT 4708.
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● Management fees; “Property” includes any real and tangible personal property that is
● Interest expenses; owned, rented, subrented, leased and/or subleased in the course of
● Rents and royalties; a trade or business. Property does not include any of the following:
● Compensation paid to an individual investor’s family members
or other entities; ● Construction in progress;
● Expense sharing, or “common paymaster” arrangements. ● Property not used in a trade or business;
For more information, see FAQs at tax.ohio.gov and tax alert ● Property for which Ohio has issued an air, noise, or industrial
“Personal Income & Pass-Through Entity Tax: Meaning of ‘Indi- water pollution control certificate; AND
● Property used exclusively during the tax year for qualified
rect Ownership”. research.
Line 14 and 15 – Guaranteed Payments and Compensation Note: The original cost of qualifying improvements to property
Add-Back in an enterprise zone, for which Ohio has issued a Tax Incentive
Compensation and guaranteed payments paid by a PTE, or by a Qualification Certificate, should only be included in Total Everywhere
PEO (professional employer organization) on the PTE’s behalf, to Property.
any qualifying investor with at least 20% direct or indirect ownership The “average value” of business property is calculated by averaging
is reclassified as business income the total value of all applicable property owned or rented at the
Note: Agreements that Ohio has with Kentucky, West Virginia, beginning and end of the tax year. See R.C. 5747.21(B) and
Pennsylvania, Michigan, and Indiana relating to the taxation of 5733.05(B)(2)(a) and 5709.65.
compensation do not apply. Compensation paid to a 20% or more Line 21a - Property Owned
investor must be included on this line.
Example 1: Jim is a Kentucky resident who owns 30% of PTE A. Within Ohio: Enter the average value of all Ohio property owned
He provides services for PTE A in Kentucky and is paid a wage for by the business during the tax year.
his services. Since Jim owns at least 20% of PTE A, his wages are Total Everywhere: Enter the average value of all property owned
reclassified as a distributive share of income. Thus, the wages are by the business during the tax year.
reclassified as a distributive share of income and are required to be
included on PTE A’s return, even though Jim is a Kentucky resident. Property owned by the business is valued at its original cost.
Example 2: Karen is an Indiana resident who owns 19% of PTE Line 21b - Property Rented
A. Karen receives wages from PTE A. However, since Karen does
not own at least 20% of PTE A, her wages are not reclassified as Within Ohio: Enter the average value of all Ohio property rented
a distributive share of income or added back onto the return as a by the business during the tax year.
related member add-back.
Total Everywhere: Enter the average value of all property rented
See R.C. 5733.40(A)(7). by the business during the tax year.
Line 16 – Sum of lines 12 through 15 Property rented by the business is valued at eight times the net
This line must equal the sum of lines 12 through 15. A difference annual rental rate (annual rental expense less subrental receipts).
will delay processing of the return and may result in a billing or
reduced refund. Payroll Factor
Line 20 – Tax Due The payroll factor is the ratio of:
This line must be the product of line 18 (adjusted qualifying amount)
Total compensation in Ohio
times line 19 (tax rate). A difference will delay processing of the
return and may result in a billing or reduced refund. Total compensation everywhere
Schedule III – Qualifying Pass-Through Entities – “Compensation” means any form of remuneration paid to an
Tax Apportionment Worksheet employee for personal services. Compensation does not include
any of the following:
Instructions and a worksheet for a financial institution pass-through
entity are available at the end of this booklet. ● Amounts paid to employees for services unrelated to a trade
or business;
The PTE must include in its apportionment ratio its proportionate ● Amounts reclassified as a distributive share of income from
share of each lower-tiered Pass-Through Entity’s property, payroll a PTE under R.C. 5733.40(A)(7); AND
and sales. See R.C. 5747.231. ● Amounts paid to employees who are primarily engaged in
qualified research.
The three factors are property and payroll, each weighted at 20%,
and sales, weighted at 60%, for a total of 100%. However, if any Note: Compensation paid to certain employees at an urban job
and enterprise zone facility, for which Ohio has issued a Tax
factor’s “total everywhere” is zero, the weights of the remaining Incentive Qualification Certificate, should be included only in total
factors must be proportionately increased so that the total remains compensation everywhere. See R.C. 5747.21(B) and 5733.05(B)
100%. (2)(b) and 5709.65.
Example: ABC LLC is a single-member LLC with no employee Line 22 - Payroll
payroll. In calculating its Ohio apportionment ratio, ABC LLC must
weight its property factor at 25% and its sales factor at 75%. Within Ohio: Enter the total compensation paid in Ohio during the
tax year. Compensation is paid in Ohio if:
Property Factor ● The employee’s job is entirely in Ohio;
The property factor is the ratio of: ● The employee’s job is primarily in Ohio with only incidental
work outside Ohio;
Average value of property in Ohio ● The employee performs services in Ohio and either the head-
quarters, or, if no headquarters exists, the place from which
Average value of property everywhere the service is directed or controlled, is in Ohio; OR
● The employee is a resident of and performs some services in
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Ohio, and the headquarters or the place from which the service Schedule IV – Trusts – Tax Due
is directed or controlled is not in any state in which some part
of the service is performed. A qualifying trust is required to file an IT 1140 to report and withhold
tax on distributions of certain types of income to its qualifying
Compensation paid to any employee of a common or contract motor beneficiaries. A qualifying trust is subject to Ohio’s withholding
carrier who performs regularly assigned duties in more than one tax when:
state should be assigned to Ohio by the ratio of mileage traveled by ● It distributes gains or net income attributable to real and/or
the employee in Ohio to the total mileage traveled by the employee tangible personal property located in Ohio;
everywhere during the taxable year. ● The income is distributed to the trust’s beneficiaries who are
nonresidents of Ohio; AND
Total Everywhere: Enter the total compensation paid everywhere ● The adjusted qualifying amount of the income distributed
during the tax year. exceeds $1,000.
Sales Factor Line 25 – Sum of All Distributions of Income or Gain Attributable
to Tangible Personal Property Located in Ohio or Real Property
The sales factor is the ratio of: Located in Ohio
Sales in Ohio Enter gains or net income attributable to real and/or tangible
Sales Everywhere personal property located in Ohio if:
● The income is distributed to the trust’s qualifying beneficiaries;
“Sales” includes gross business receipts such as: AND
● The trust’s total adjusted qualifying amount exceeds $1,000.
● Receipts from the sale of real property, tangible personal
property, or services; The proportionate share of credits, received by the trust from an
● Receipts from rents and royalties from real and tangible IT K-1 or 1099R on a distribution of income, must forward to the
personal property; OR beneficiaries of the trust. Report distributed credits on the IT K-1, line
● Receipts from the transfer of or the right to use intellectual
property such as trademarks, trade names, patents, and 4, as indirect credits. Include on line 4 the FEIN of the source entity.
copyrights. IRC §168(k) Bonus Depreciation and §179 Expense Add-Back
“Sales” does not include any of the following: and Federal Conformity Adjustments
● Interest and dividends; Enter the investor’s/beneficiary’s proportionate or distributive share
● Receipts from the transfer of intangible property other than of the current year IRC §168K bonus depreciation and §179 expense
trademarks, trade names, patents, copyrights or other similar add-back. See Schedule V worksheet.
intellectual property;
● Receipts from the transfer of real or tangible personal property See R.C. 5733.40(A)(5), 5747.01(A)(17) and 5701.11.
that is either a capital asset or an Internal Revenue Code
section 1231 asset; AND Line 26a - Depreciation Add-back Fractions
● Receipts from sales to certain public utilities, insurance com-
panies, and financial institutions described in R.C. 5733.05(B) Check box one of the following add back ratios:
(2)(c). ● 6/6 if the PTE or fiduciary had a federal net operating loss
Note: Income amounts excluded from the sales factor may still be (NOL) resulting from the deduction of §168K bonus depre-
considered business income under Ohio law. R.C. 5747.21 and ciation and §179 expense; OR
5733.05. ● 2/3 if the PTE, in the year of the depreciation expense, in-
creased its Ohio employer withholding by at least 10% over
Line 23 - Sales the previous year; OR
● 5/6 if the above scenarios do not apply.
Within Ohio: Enter gross receipts from sales within Ohio during
the tax year. Sales within Ohio include all the following: Federal Conformity
● Receipts from sales of tangible personal property, less returns
and allowances, to the extent the property was received by the Add Federal Conformity Adjustments.
purchaser in Ohio;
● Receipts from services to the extent the purchaser ultimately Note: Do not enter any federal adjustments solely because it is
used or received the benefit of the services in Ohio; available to an individual on the federal 1040 or the Ohio IT 1040.
● Rents and royalties from tangible personal property to the extent
the property was used in Ohio; For updates on Ohio Conformity, see Ohio Conformity Updates
● Receipts from the transfer of certain intellectual property to the at tax.ohio.gov.
extent the property was used in Ohio;
● Receipts from the right to use certain intellectual property Line 27 – IRC §168(k) bonus depreciation and §179 expense
to the extent the receipts are based on the right to use the deductions from Schedule V and Ohio authorized federal con-
property in Ohio; formity deductions
● Receipts from the sale of real property located in Ohio; AND
● Rents and royalties from real property located in Ohio.
Use the table on line 32 to calculate the current deductions from
Note: For tangible personal property, where the property is “received the prior year add-back amounts. Complete worksheet in sched-
by the purchaser” is not the same as where the purchaser takes ule V and deduct:
physical or legal possession. Instead, it is considered “received”
where it is ultimately used by the purchaser. ● 1/5 of prior year 5/6 add-backs;
See R.C. 5733.05(B)(2)(c)(i) and (ii). ● 1/2 of prior year 2/3 add-backs; AND/OR
● 1/6 of prior year 6/6 add-backs;
Total Everywhere: Enter the gross receipts from sales everywhere of applicable IRC § 168(k) bonus depreciation and §179 expense
during the tax year. add-backs on a prior year’s IT 4708 or IT 1140.
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NOTE: Deduct only amounts that were added back by the trust Line 32 - Prior Years Add-Back Amount and Applicable
on a prior year’s IT 1140. This deduction is available even if the Add- Back Ratio
asset is no longer owned by the trust.
The deduction must be taken in equal increments in consecutive Use this table to calculate the current deductions from prior year
tax years. If the deduction is missed in a taxable year, any unused add-back amounts and applicable ratios and report on line 11.
portion from any given tax year is not eligible to be carried forward. §168(k) Bonus Depreciation and §179 Expense Deduction Worksheet
Instead, the trust would have to amend the prior returns to claim A B C D E
the deduction. Source of Depreciation Add-back Deduction Annual
Tax Year Ratio (2/3, 5/6,
If there is an NOL, the deduction cannot be claimed for that year Depreciation Add-back 6/6) Period Depreciation
Amount Deduction
and will be carried forward to the next year without an NOL. Amount
2021
For additional information, see the PTE FAQs in the Bonus Depre-
ciation category at tax.ohio.gov. 2020
2019
See R.C. 5733.40(A)(5) and 5747.01(A)(18).
2018
Federal Conformity Deductions 2017
This line is for federal conformity deductions. 2016
Note: Do not enter any federal adjustments solely because the
deduction is available to an individual on the federal 1040 or the Column B: Enter your depreciation expense add-back.
Column C: Enter the ratio used (5/6, 2/3, or 6/6) to calculate your
Ohio IT 1040. depreciation expense add-back.
For updates on Ohio Conformity, see Ohio Conformity Updates Column D: Enter the deduction period based on the following chart:
at tax.ohio.gov. Add-back Ratio Deduction
Period
See R.C 5701.11. 5/6 5 Years
2/3 2 Years
IRC §168(k) Bonus Depreciation 6/6 6 Years
and §179 Expense Add-Back Schedule
Column E: Divide the amount in Column B by Column D. This is your
Prior tax year add-back amount and add-back ratio. “annual depreciation deduction amount” for the deduction period.
Report the amount on line 11.
Line 31 - Total Current Year §168(k) Bonus Depreciation and
§179 Expense Add-Back Note: In a given tax year, the PTE may need to report a mixture of
add-back ratios on Schedule VI, due to investment in multiple PTEs.
Use this line to report current year add-back from line 10. In this scenario, check the 5/6 box and provide an explanation of the
ratio. You may wish to attach this explanation to future years’ returns.
Use schedule below to calculate multiple add-backs.
Follow the same procedure for the investors of the PTE on the IT
ADD-BACK CALCULATION TABLE K-1 under Depreciation Information and fill out the Supplemental
Information portion.
Source of §179 §168(k) Add-back Add-back
Depreciation Add-back Amount Ratio (2/3, Amount Schedule VI – Investor Information
Amount 5/6, 6/6)
Provide information for all investors in the PTE. First list investors
whose income is included on the return, in order from highest to
lowest ownership percentage. Then list the remaining investors
from highest to lowest ownership percentage. Indicate investors
included on the return by checking the appropriate box.
Total add-back
for tax year: Complete investor information must be provided on both of the
following:
• Schedule VI (attach additional sheets if necessary); AND
• IT K-1s, which the PTE will include with its return and issue to
each investor.
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Appendix A - Investment Pass-Through Entities (IPTEs) - Deemed Investor
The following example shows how a PTE can benefit from the “deemed investor” rule. The ‘deemed investor” rule will allow a pass-
through entity the option to “look through” one of their select IPTE investors that has individual investors and pay at 5% tax withholding
rate instead of 8.5% tax withholding rate for that select PTE investor.
PTE A has operating income. PTE B is an IPTE that owns 100% of PTE A. PTE B is owned by Jane (40%), Dave (40%) and PTE C (20%).
Normally, PTE A would withhold for PTE B on its income at a rate of 8.5%. However, since PTE B is an IPTE, PTE A can withhold for
PTE B on behalf of Dave and Jane at the individual rate of 5%, and withhold for PTE C at the entity rate of 8.5%.
How the deemed investor rule works:
PTE B:
● Must timely notify PTE A of this election and provide the name, address,
and SSN for both Dave and Jane to support the deemed investor provision.;
PTE A:
● Will withhold at the 5% (individual) rate for the proportionate share of
income for Jane and Dave passing through PTE B; AND
● Will withhold at the 8.5% (entity) rate for the proportionate share of income
for PTE C passing through PTE B.
When PTE A has both individuals and PTEs and files using the Deemed Investor rule,
PTE A should provide a statement when it files the IT 1140 return, which explains the
Deemed Investor income and credits to PTE B.
The Department recommends that PTE B file an Ohio PTE return reporting the indirect
income included on the IT K-1s it issues to its investors.
Appendix B - Filing an Ohio IT 1140 for an IPTE
The Department reviews and verifies PTE credits claimed by a taxpayer on a tax return. Credits are verified back to the initial source,
the operating PTE. When the IPTE has several layers of investors, the inability to verify where the credit originated could result in:
● Billing for non-payment
● Reduced refunds
● Requesting information for a full review by a Tax Examiner
Every entity must document all credits and income being claimed and passed through to another entity or individual. Documentation
can include any of the following:
● IT K-1s issued to the PTE listing all investment sources along with the initial source of income and credits (the operating entity);
● An organization chart, including FEINs of all PTEs in the organization; include the initial source of income and credits (the operating
entity); AND
● A narrative outlining the flow of income and credits.
Although not required, an IPTE may elect to file an IT 1140 to provide more clear and precise information to the Department for verifying
the flow of income and credits.
To file the IT 1140 as an IPTE:
1. Include on line 9 of the IT 1140, the combined total of all qualifying investor’s distributive shares of income, gain, expenses, and losses
2. Include on line 10 IRC §168(k) bonus depreciation and §179 expense add-back for the current reporting period
3. Include on line 11:
a. IRC §168(k) bonus depreciation and §179 expense incurred for the current reporting period
b. Applicable federal conformity adjustments for the IPTE.
c. The non-qualifying amount from the underlying IPTEs or operating companies.
4. Subtract line 11 from line 9 and report on line 12. This will determine the amount of taxable income to be apportioned. If the sole
source of income to the IPTE is distributive shares of income from other PTEs, then the net result is no adjusted qualifying amount,
resulting in zero income to be taxed.
5. The IPTE should include the proportionate share of all indirect income and credits on the IT K-1s issued to its investors.
NOTE: IT K-1s issued to the PTE cannot be used as a credit or payment on the IT 1140 and should list all investment sources along
with the initial source of income and credits (the operating entity). The entire amount of the indirect credit must be distributed to the
qualifying investors by their proportionate share showing on the IT K-1 line 4.
Include the federal return, and all IT K-1s it received from other PTEs in which it holds an ownership interest, showing the income
and credits flowing to it.
Clear representation of the chain of ownership reduces the occurrence of Department notices and inquiries.
See R.C. 5733.401.
For more IPTE information see the FAQ section at tax.ohio.gov.
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Appendix C – PTE with IT K-1 Income
The PTE credit received from the underlying PTE must not be applied as a credit or payment on the IT 1140 return. The entire amount
of credit must be distributed to the qualifying investors based on ownership percentage / distributive share in the PTE. This share of the
credit is reported on the investors’ IT K-1, line 4.
NOTE: If all investors are not included on the IT 1140, use only the portion of income and credits of the investors who are included on
the return.
To calculate Ohio taxable income for a PTE that received an IT K-1:
1. Include on line 9 of the IT 1140, the combined total of all qualifying investor’s distributive shares of income, gain, expense, and loss
2. Include on line 10 IRC §168(k) bonus depreciation and §179 expense add-back for the current reporting period
3. Include on line 11:
a. IRC §168(k) bonus depreciation and §179 expense deduction incurred for the current reporting period
b. Applicable federal conformity adjustments for the IPTE.
4. Add lines 9 and 10 and subtract line 11. Report on line 12.
5. Include on lines 13-15 – Related member, guaranteed payments or compensation add-backs.
6. Add lines 12-15 - This will determine the amount of taxable income to be apportioned.
7. Combine all apportionment ratios from all PTEs, to arrive at the aggregate amount of apportionment.
8. Calculate tax due:
a. Line 16 multiplied by the aggregate apportionment ratio.
2. This tax will be owed by the PTE that received the IT K-1 from the underlying entity.
3. Report the calculated tax on the IT K1s as a direct credit on line 3.
4. Calculate the total indirect credits from the underlying PTEs and report on the IT K-1s as indirect on line 4.
For more IPTE information see the FAQ section at tax.ohio.gov.
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Apportionment Formula for Financial Institution Pass-Through Entities
For a pass-through entity that is a financial institution, the apportionment formula should be calculated in accordance with Ohio Revised
Code (R.C.) 5733.056. Use worksheet to calculate the apportionment formula for a pass-through entity that is a financial institution.
Note: All ratios are to be carried to six decimal places.
Apportionment Ratio (1) (2) (3)
Ohio Everywhere Ratio
Sales Factor – R.C. 5733.056(F)
1. Receipts from the lease, sublease or rental of real property ....................
2. Receipts from the lease or rental of tangible personal property ...............
3. Interest from loans secured by real property ............................................
4. Interest from loans not secured by real property ......................................
5. Net gains from the sale of loans secured by real property .......................
6. Net gains from the sale of loans not secured by real property .................
7. Interest and fees charged to credit card holders ......................................
8. Net gains from the sale of credit card receivables ...................................
9. Credit card issuer’s reimbursement fees ..................................................
10. Receipts from merchant discount .............................................................
11. Loan-servicing fees from loans secured by real property.........................
12. Loan-servicing fees from loans not secured by real property...................
13. Loan-servicing fees for servicing the loans of others ...............................
14. Receipts from services not otherwise apportioned...................................
15. Interest, dividends, net gains and other income from both
investment assets and activities and trading assets and activities...........
Check method: Avg. value method Gross income method
16. Certain other receipts ...............................................................................
17. Total. Enter ratio here and on Summary, line 1, below ............................. ÷ =
Property Factor – R.C. 5733.056(D) Ohio Everywhere
18. Average cost of real property and tangible personal property owned .....
19. Gross rents payable on real and tangible personal property x 8 ..............
20. Loans and credit card receivables ...........................................................
21. Total. Enter ratio here and on Summary, line 2, below ............................ ÷ =
Payroll Factor – R.C. 5733.056(E)
Ohio Everywhere
22. Compensation paid to employees. Enter ratio here and on
Summary, line 3, below ............................................................................
(1) (2) (3)
Factor ÷ Weight = Weighted Factor
Apportionment Ratio Summary
1. Sales (line 17) ......................................................................................... x .70 =
2. Property (line 21) ..................................................................................... x .15 =
3. Payroll (line 22) ....................................................................................... x .15 =
4. Total weighted apportionment ratio ............................................................................................................................
If the denominator of any factor is zero, the weight given to the other factors must be proportionately increased so that the total weight
given to the combined factors used is 100%.
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