PDF document

- 1 -

                                                      STATE OF HAWAII—DEPARTMENT OF TAXATION
                   
  2023(REV. 2023)              INSTRUCTIONS FOR FORM N-35
 
                                        HAWAII INCOME TAX RETURN FOR AN S CORPORATION
                      (Section references are to the Internal Revenue Code (IRC) unless otherwise specified.)
            (NOTE: References to “married” and “unmarried” are also references to “in a civil union” and “not in a civil union,” respectively.)

ATTENTION:                                            • A valid S corporation election for federal pur-   Who Must File Form N-35
                                                        poses is automatically effective for Hawaii in-   A  corporation  must  file  Form  N-35  if  it  has 
  Hawaii has not adopted the increased ex-              come purposes without a separate election.        elected, by filing federal Form 2553, to be treated 
pensing deduction under section 179 (Hawaii             An S corporation having income attributable       as an S corporation for federal purposes, the IRS 
limit is $25,000) or the “bonus” depreciation         • 
                                                        to sources both within the State of Hawaii and    has accepted the election, and the election re-
provisions.                                             outside the State must attribute that income      mains in effect. S corporations which are finan-
  Hawaii has not adopted the domestic ac-               according to source for shareholder reporting.    cial corporations subject to  tax  under chapter 
tivities production  deduction  under section           S corporations having nonresident sharehold-      241, Hawaii Revised Statutes (HRS), may not file 
199.                                                  • 
                                                        ers are required to obtain from each nonresi-     Form N-35, but must file Form F-1, Franchise Tax 
                                                        dent  shareholder,  and  file  with  the  Depart- Return. An S corporation cannot be included as 
Where To Get Tax Forms                                  ment of Taxation (Department), an agreement       part of a unitary group with C corporations. The S 
  Hawaii tax forms, instructions, and schedules         (Schedule NS) that the shareholder will file a    corporation must file a separate Form N-35.
may be obtained at any taxation district office or      Hawaii  return and make timely payment of 
from the Department of Taxation’s website at tax.       all taxes imposed with respect to the share-      Termination of Election
hawaii.gov, or you may contact a customer ser-          holder’s share of the S corporation’s Hawaii      An S corporation’s status as such shall re-
vice representative  at: 808-587-4242  or 1-800-        income. Also, the shareholder will be subject     main in effect for Hawaii income tax purposes as 
222-3229 (Toll-Free).                                   to personal jurisdiction in the State for pur-    long as the corporation’s federal election remains 
                                                        poses of the collection of unpaid income tax,     effective.  If  the  corporation’s  federal  election  is 
Changes You Should Note                                 penalties, and interest. If the corporation fails terminated, the corporation’s S status for Hawaii 
Act 50, Session  Laws  of  Hawaii  (SLH)  2023          to timely file these agreements on behalf of its  purposes is also terminated.
  –  The Pass-Through Entity (PTE) Tax Credit           nonresident shareholders, the corporation is 
  allows partnerships and S corporations to an-         required to pay to the State, on behalf of each   Six-Month Automatic Extension of 
  nually elect to pay Hawaii income taxes at the        shareholder for whom an agreement has not         Time to File Corporate Return
  entity level. Eligible members of an electing         been timely filed, an amount equal to the high-   Section 18-235-98,  Hawaii  Administrative 
  PTE may claim a nonrefundable income tax              est marginal tax rate on individuals (presently   Rules, allows an automatic six-month extension 
  credit for  their pro rata share of  PTE  taxes       11%) multiplied by the shareholder’s pro rata     of time to file a return without filing an application 
  paid by the entity. Effective January 1, 2024         share of the income attributable to the State.    for extension. This does not include an extension 
  for  taxable years beginning  after  December         Any payments made will be considered to be        of time to pay. Use Form N-201V, Business In-
  31, 2022.                                             a payment by the shareholder on account of        come Tax Payment Voucher, to make a payment 
Act 56, SLH 2023  –   This act amends  Hawaii           the income tax imposed on the shareholder         (if applicable). File Form N-201V by the regular 
  income  tax law under chapter 235, Hawaii             for the taxable period. These agreements are      due  date of the S corporation  return. Form N-
  Revised Statutes  (HRS), to  conform  to  cer-        to be filed with the S corporation’s annual tax   201V can be filed and payment made electroni-
  tain provisions of the IRC, as amended as of          return.                                           cally through the State’s Internet portal at hitax.
  December 31, 2022.                                    S corporations  having nonresident  share-        hawaii.gov.
                                                      • 
Act 217, SLH 2022  –  This act amends  the              holders may file composite returns and make       Federal Form 7004, Application for Automatic 
  motion  picture,  digital  media,  and  film          composite payments on behalf of some or all       Extension  of Time To File Certain  Business  In-
  production  income tax credit for  taxable            of their nonresident shareholders.                come Tax, Information, and Other Returns, may 
  years beginning  after December  31, 2022             S corporations may make a yearly irrevocable      not be used in lieu of Form N-201V. Such auto-
  by  (1)  changing  the  repeal  date  from  Janu-   •                                                   matic extension does not extend the time for pay-
                                                        election to pay taxes at the PTE level and the 
  ary 1, 2026 to January 1, 2033; (2) increas-          election shall be binding on all shareholders     ment of the tax. The corporation’s automatic ex-
  ing the credit amount from 20% of qualified           who  are  qualified  members  of  an  electing    tension does not affect the due date for the filing 
  production  costs to 22%  in a county with a          PTE and whose distributive shares are sub-        of the shareholders’ returns.  The shareholders 
  population of over 700,000, and from 25% of           ject to PTE taxation for the taxable year.        must apply for their own extensions, if needed. If 
  qualified production costs to 27% in a county                                                           a composite return is to be filed on behalf of non-
  with a population of 700,000 or less; (3) in-       Purpose of Form                                     resident shareholders, an extension must be ob-
  creasing the credit ceiling from $15,000,000          Form N-35 is used to report the income, de-       tained for this return if the return cannot be filed 
  per  qualified  production  to  $17,000,000  per    ductions, gains, losses, etc., of an S corporation  by the due date of the composite return.
  qualified production; (4) reducing the amount       doing business in Hawaii. Do not file Form N-35     Period to be Covered by 2023 Return
  of qualified productions costs from $200,000        until the corporation has been notified by the In-
  to  $100,000;  (5)  removing  the  requirement      ternal Revenue Service (IRS) that the corpora-      File the 2023 return for calendar year 2023 
  for productions to submit a verification review     tion’s election to be treated as an S corporation   and fiscal years beginning in 2023 and ending in 
  by a qualified certified public accountant; (6)     has been accepted. If the corporation’s election    2024. If the return is for a fiscal year, fill in the tax 
  requiring  the report by the Department of          is not in effect for the tax year, use Form N-30,   year spaces on the form.
  Business Economic Development  and Tour-            do not use Form N-35. Unless requested by the       Note: Form N-35 for 2023 may also be used 
  ism (DBEDT) to include  the dollar  amount          Department, it is not necessary to submit a copy    if: (1) the corporation has a tax year of less than 
  claimed, name of the company, and name of           of the corporation’s accepted federal Form 2553,    12 months that begins and ends in 2023 and (2) 
  the  qualified  production  of  the  taxpayer;  (7) Election by a Small Business Corporation.           the 2024 Form N-35 is not available by the time 
  changing the time frame for DBEDT to issue                                                              the corporation is required to file its return. How-
  a letter to the taxpayer claiming the tax credit;   Filing Requirements                                 ever, the corporation must show its 2024 tax year 
  and (8) requiring taxpayers to submit a fee to        If your corporation is an electing PTE, Form      on the 2023 Form N-35 and incorporate any tax 
  DBEDT.                                              N-35 along with all schedules, statements, and      law  changes that are effective for tax years be-
                                                      other  documents  MUST  be  filed  electronically   ginning after December 31, 2023.
General Instructions                                  for taxable years beginning after December 31, 
  Caution: The attachment of a copy of a fed-         2022, unless  you obtain  a waiver. Use Form        Final Return
eral S Corporation return, Form 1120S, is not ac-     L-110, Electronic Filing or Payment  Exemption      If the corporation ceases to exist, check box 
ceptable as a substitute for fully completing the     Application, to apply for a waiver. Failure to file (2) “Final Return” near the top of the form. Also 
Hawaii S Corporation return, Form N-35.               electronically and/or submit an electronic funds    check box B(1) on each Schedule K-1 to indicate 
                                                      transfer may result in cancellation of the election that it is a final Schedule K-1.
                                                      for PTE taxation.

                                                                                                                                          FORM N-35

- 2 -

Enlarge image

Amended Return                                         IRS Adjustment                                         refund or credit is allowed, taxes paid on or be-
To correct an error in a Form N-35 already             If the corporation is filing an amended return         fore the due date of the return (e.g. taxes with-
filed,  file  an  amended  Form  N-35,  using  the     due to an IRS adjustment, check box (5) “IRS Ad-       held from  an employee’s  pay,  or  estimated tax 
form for the year being  amended, and check            justment” near the top of the form and check the       payments) are considered paid on the due date 
the “AMENDED Return” box at the top of the             “AMENDED Return” box at the top of the form.           of the return, without considering an extension of 
form. Schedule  AMD, Explanation  of Changes           Also complete and attach Schedule AMD, Expla-          time to file the return.
on  Amended  Return, must be attached  to the          nation of  Changes  on Amended Return, to  the         Hawaii has adopted the IRC provision to al-
amended Form N-35. Also, attach all schedules,         amended  Form N-35 and all schedules, forms,           low  documents  and  payments  delivered  by a 
forms,  and  attachments  required  to  file  a  com-  and attachments required to file a complete re-        designated private delivery service to qualify for 
plete  return. If the amended  return results in a     turn.  An amended Schedule  K-1 (Form N-35)            the “timely mailing treated as timely filing/paying 
change to income, or a change in the distribution      must also be filed with the amended Form N-35          rule.”  The Department will conform to the IRS 
of any income or other information  provided  to       and given to each shareholder. Check box B(2),         listing of designated private delivery service and 
shareholders, an amended Schedule K-1 (Form            to indicate that it is an amended Schedule K-1.        type of delivery  services qualifying  under this 
N-35) must also be filed with the amended Form                                                                provision.  Timely  filing  of  mail  which  does  not 
N-35 and given to each shareholder. Check box          Electing PTE                                           bear  the  U.S.  Post  Office  cancellation  mark  or 
B(2), to indicate that it is an amended Schedule       If  the corporation  elects to be taxed at the         the date recorded or marked by the designated 
K-1.                                                   PTE level for the taxable year, check box (6)          delivery service will be determined by reference 
An electing PTE cannot file an amended re-             “Electing PTE” near the top of the form. Schedule      to other competent evidence. The private deliv-
turn to revoke their PTE election. All PTE elec-       PTE(s) must be attached to Form N-35.                  ery service can tell you how to get written proof 
tions are irrevocable. An electing PTE who would                                                              of the mailing date.
like  to request a refund for an overpayment  of       Upper-Tier PTE
the PTE tax paid must file their request for refund    If the corporation is an upper-tier PTE (i.e., a       Accounting Methods
on or before the due date prescribed, including        PTE that is a member of another PTE) that re-          Figure ordinary income using the method of 
an extended due date if an extension has been          ceived a PTE tax credit as a member of a lower-        accounting regularly  used in keeping the  cor-
granted.                                               tier PTE (i.e., a PTE that has at least one mem-       poration’s  books and records. In  all cases, the 
                                                       ber that is a PTE) that is either an electing PTE      method  adopted  must  clearly  reflect  income. 
Change in Federal Taxable Income                       or an upper-tier PTE, check box (7) “Upper-Tier        (See section 446.)
In general, a change to your federal return,           PTE”  near the  top  of  the  form.  Schedule PTE-     Unless the law specifically states otherwise, a 
whether it is made by you, or by the IRS, must be      U(s) must be attached to Form N-35.                    corporation may change the method of account-
reported to the State of Hawaii.                                                                              ing used to report income in earlier years (for in-
1) Section 235-101(b), HRS, requires a report (an      Protective Claim                                       come as a whole or for any material item) by first 
amended return) to the Director of Taxation if         A  protective  refund  claim  is  a  claim  filed  to  filing an approved copy of federal Form 3115,       
the amount of IRC taxable income is changed,           protect a taxpayer’s right to a potential refund       Application  for Change  in  Accounting Method, 
corrected, adjusted or recomputed as stated            based on a contingent event for a taxable pe-          with the Department. If the change qualifies for 
in (3).                                                riod for which the statute of limitations is about     an automatic change request on federal Form 
                                                       to expire.  A protective  claim  is usually  based     3115, attach a copy of the Form 3115 filed with 
2) This report must be made:                           on contingencies  such as pending  litigation  or      the IRS to the first Hawaii return affected by the 
a)  Within 90 days after a change, correction,         an ongoing federal income tax audit or an audit        change.
     adjustment or recomputation is finally de-        in another state. For more information see Tax 
     termined.                                         Facts 2021-2.                                          Rounding Off to Whole Dollars
b)  Within 90 days after a federal  amended                                                                   The Department  is requiring  taxpayers to 
     return is filed.                                  Designation of Tax Matters Person                      round off cents to the nearest whole dollar for all 
                                                       (TMP)                                                  dollar entries on the tax return and schedules. 
c)  At  the  time  of  filing  the  next  income  tax  An S corporation may designate  a share-               To do so, drop amounts under 50 cents and in-
     return, if earlier than set forth in a) or b).    holder as the TMP for the tax year for which the       crease amounts from 50 to 99 cents to the next 
3) A report within the time set out in (2) is required return is filed by completing the Designation of       dollar.  For  example: $1.39 becomes $1 and 
if:                                                    Tax Matters Person section at the bottom of page       $2.69 becomes $3. If you have to add two or 
a)  The amount of taxable income as returned           4 of the return.                                       more amounts to figure the amount to enter on 
     to the United States is changed, correct-                                                                a line, schedule, or worksheet, you may choose 
     ed, or adjusted by an officer of the United       When to File and Where to File                         to use one of two methods. Once a method of 
     States or other competent authority.              Returns must be filed on or before the 20th            rounding is established, you must use the same 
                                                       day of the fourth month following  the close of        method throughout the return. The first method 
b)  A change in taxable income results from a          the taxable year. If this date falls on a Saturday,    is to include the cents when adding and round 
     renegotiation of a contract with the United       Sunday, or holiday, the due date for the return is     off only the total. The other method is to round 
     States or a subcontract thereunder.               extended to the next business day.                     off  each  entry.  For  example:  You  received  two 
c)  A recomputation of  the income tax im-             If you are enclosing a check or money order            1099-INT forms, one showing interest of $50.55 
     posed by  the  United States  under  the          with your tax return, mail your return with pay-       and one showing interest of $185.73. For round-
     Internal Revenue Code results from any            ment to:                                               ing method 1, show your total interest as $236 
     cause.                                                                                                   ($50.55 + $185.73 = $236.28 rounded to $236). 
                                                       Hawaii Department of Taxation 
d)  An amended income tax return is made to            P.O. Box 1530                                          For rounding method 2, show your total inter-
     the United States.                                Honolulu, HI 96806-1530                                est as $237 ($50.55 rounded to $51 + $185.73 
                                                                                                              rounded to $186 = $51 + $186 = $237).
4) The report referred to above shall be in the        If you are    not enclosing a payment with 
form of an amended Hawaii income tax return.           your tax return, mail your return to:                  Change in Accounting Period
5) The statutory period for the assessment of any      Hawaii Department of Taxation                          To change an accounting  period, see IRC 
deficiency or the determination of any refund          P.O. Box 3559                                          Regulations  section  1.442-1  and federal Form 
attributable  to the report shall not expire           Honolulu, Hawaii 96811-3559                            1128, Application to Adopt, Change, or Retain a 
before the expiration of one year from the date                                                               Tax Year.
the Department is notified by the taxpayer or          Note: Under Hawaii Income Tax Law, certain 
the IRS, whichever is earlier, of such a report        tax credits must be claimed  within 12 months          Paying the Tax
in writing. Before the expiration  of this one-        from the close of the tax year.
                                                                                                              The corporation must pay the tax due (line 
year period, the Department and the taxpayer           If you are filing your return after the prescribed     27, page 2) in full on or before the 20th day of 
may agree in writing to the extension of this          due date, the refund shown may be limited or dis-      the fourth month after the end  of the tax year. 
period.  The period so agreed  upon  may be            allowed due to the statute of limitations. In gen-     Amounts due on any Form N-4(s) (line 22c, page 
further  extended by  subsequent agreements            eral, a claim for refund or credit for overpaid in-    2) and Schedule  PTE(s) (line  22f, page  2) at-
in writing made before the expiration  of the          come taxes must be filed within three years after      tached to the S corporation’s return are also due 
period previously agreed upon.                         the return is filed for the taxable year, within three at this time. As a reminder, extensions allowed for 
                                                       years of the due date for filing the return, or within filing a return do NOT extend the time for paying 
                                                       two years from when the tax is paid, whichever         the tax due on the return. If the corporation can-
                                                       is later. For purposes of determining whether a        not pay the full amount that is owed, you can ask 
Page 2

- 3 -

Enlarge image

to enter into a payment agreement once you re- carried forward as long as the entity continues parer by checking the “Yes” box above the paid
ceive a billing notice for the balance due. Please to elect to be taxed as a PTE every taxable year preparer’s signature. Checking “Yes” will allow
be aware that penalty and interest continue to ac- until exhausted. the Department to contact the paid preparer to
crue on the unpaid tax amount even though you The corporation’s net operating loss is al- answer any questions that may arise during the
have not yet received a billing notice. Payments lowed as a deduction from the shareholder’s processing of the corporation’s return. This des-
will be accepted and applied to the corporation’s gross income (section 1366), unless the corpo- ignation does not allow your third party designee
tax liability; however, to ensure that the corpora- ration is an electing PTE. If the corporation is to call the Department for information about the
tion’s payments are applied correctly, your check an electing PTE, the net operating loss is not processing of the return or for other issues re-
or money order must have: (1) the corporation’s allowed as a deduction from the shareholder’s lating to the return. This does not replace Form
name as shown on the return clearly printed on gross income. N-848, Power of Attorney.
the check, (2) the corporation’s federal employer
identification number (FEIN), and (3) the tax year Attachments Transfers to Corporation Controlled
and form number being filed (e.g., 2023 N-35). If Attach schedules in alphabetical order and by Transferor
a payment is being made with this return, attach other forms in numerical order. If a person acquires stock or securities of
your check or money order where indicated on If the corporation is filing any Forms N-4, a corporation in exchange for property, and no
the front of Form N-35. Form N-201V is no lon- Statement of Withholding For a Nonresident gain or loss is recognized under section 351,
ger required when making a payment with your Shareholder of an S Corporation, attach these the transferor and transferee must attach the
return. forms to the front of Form N-35 in the left margin information required by IRC Regulations section
Estimated Tax as indicated on Form N-35. 1.351-3.
If an S corporation expects to have a tax li- If the corporation owes any tax, attach the Information Returns That May be
ability of $500 or more on its tax return or is an check or money order to the front of Form N-35 Required
electing PTE for the taxable year, submit Form N- where indicated on top of any Form N-4s being Form N-196, Annual Summary and Transmit-
201V with payment to the Department. Estimated submitted. tal of Hawaii Information Returns.
payments are paid in four installments. These in- Attach any Schedule NS(s) at the back of the Federal Form 966, Corporate Dissolution or
stallments are due on or before the 20th day of return. Liquidation.
the fourth, sixth, and ninth months of the tax year If the corporation is an electing PTE, at- Federal Forms 1099-DIV, INT, K, MISC, OID,
and on or before the 20th day of the first month tach the election Form N-362E with all required PATR and R. You may have to file these informa-
following the taxable year. See the instructions signature(s) and Schedule PTE at the back of the tion returns to report certain dividends, interest
for line 23b and Form N-201V for more informa- return. payments, payment card and third party network
tion. Form N-201V can be filed and payment If the corporation is an upper-tier PTE, attach transactions, medical and health care payments,
made electronically through the State’s Internet Schedule PTE-U at the very back of the return miscellaneous income, original issue discount,
portal at hitax.hawaii.gov. behind all other Schedules. patronage dividends, and total distributions from
Electronic Funds Transfer (EFT) If you need more space on the forms or profit-sharing plans, retirement plans, and indi-
Section 231-9.9, HRS, authorizes the De- schedules, attach separate sheets and show the vidual retirement arrangements.
partment to require those taxpayers whose tax same information in the same order as on the Use federal Form 1099-DIV to report actual
liability exceeds $100,000 during the past year printed forms as instructed, but show your totals dividends paid by the corporation. Only distri-
to pay the tax by EFT instead of by check. The on the printed forms. Please use sheets that are butions from accumulated earnings and profits
Department reviews the filing records of taxpay- the same size as the forms and schedules. At- are classified as dividends. Do not issue federal
ers and will mail notices to taxpayers who met tach these separate sheets after all the sched- Form 1099-DIV for dividends received by the
this criterion. Any taxpayer who does not meet ules and forms. Be sure to put the corporation’s corporation that are allocated to shareholders on
this criterion may still voluntarily pay by EFT. If name and FEIN on each sheet. line 5 of Schedule K-1 (Form N-35).
an EFT payment is dishonored, a $25 service fee Signature Specific Instructions
will be assessed. For more information on paying
taxes by EFT, see tax.hawaii.gov/eservices/ The return must be signed and dated by the Line by Line
and Tax Information Release Nos. 95-6 and 99-1. president, vice president, treasurer, assistant
treasurer, chief accounting officer, or any other Federal Employer I.D. No. & Hawaii Tax I.D.
Failure for PTEs to submit by EFT shall result corporate officer (such as tax officer) authorized No.— Enter the Federal Employer I.D. No. & Ha-
in cancellation of the election for PTE taxation. to sign. waii Tax I.D. No. in the space provided.
Penalty and Interest A receiver, trustee, or assignee must sign and S Corporation’s Address — If the corpora-
Late Filing of Return – The penalty for failure date any return he or she is required to file on tion’s address is outside the United States or its
to file a return on time is assessed on the tax due behalf of a corporation. possessions or territories, enter the information
on the line for “City or town, State and Postal/
at a rate of 5% per month, or part of a month, up If a corporate officer fills in Form N-35, the ZIP Code” in the following order: city, province or
to a maximum of 25%. Paid Preparer’s space under “Signature of Offi- state, postal code, and the name of the country.
Failure to Pay Tax After Filing Timely Return cer” should remain blank. If someone prepares Do not abbreviate the country name.
– The penalty for failure to pay the tax after filing Form N-35 and does not charge the corporation,
a timely return is 20% of the tax unpaid within 60 that person should not sign the return. Certain If your mailing address has changed, you
days of the prescribed due date. others who prepare Form N-35 should not sign. must notify the Department of the change by
For example, a regular, full-time employee of the completing Form ITPS-COA, Change of Address
Failure to Timely Pay by EFT – The penalty corporation such as a clerk, secretary, etc., does Form, or log in to your Hawaii Tax Online account
for failure to timely pay by EFT is 2% of the total not have to sign. at hitax.hawaii.gov. Failure to do so may pre-
tax unless you obtain a waiver. Use Form L-110, vent your address from being updated, any re-
Electronic Filing or Payment Exemption Applica- In general, anyone paid to prepare Form N-35 fund due to you from being delivered (the U.S.
tion, to apply for a waiver. must sign the return and fill in the other blanks in Postal Service is not permitted to forward your
the Paid Preparer’s Information area of the re- State refund check), and delay important notices
Interest at the rate of 2/3 of 1% per month turn. The preparer may furnish his or her alter- or correspondence to you regarding your return.
or part of a month shall be assessed on unpaid native identifying number for income tax return
taxes and penalties beginning with the first cal- preparers (PTIN) instead of his or her social se- Enter the number of Schedules NS
endar day after the date prescribed for payment, curity number. attached to this return
whether or not that first calendar day falls on a
Saturday, Sunday, or legal holiday. The preparer required to sign the return Enter, in this space provided, the number of
MUST: Schedules NS, Hawaii S Corporation Agreement
Net Operating Loss and Other • Complete the required preparer information. of Nonresident Shareholder, which are attached
Deductions Sign in the space provided for the preparer’s to the return. See the instructions for Schedule
An S corporation may not take the deduc- • NS later in these instructions for more informa-
signature.
tion.
tion for net operating losses provided by section Give a copy of Form N-35 to the taxpayer in
172 and the special deductions in sections 241 •
addition to the copy to be filed with the De- Passive Activity Limitations
through 250 (except section 248), unless the cor- partment. See the instructions for federal Form 1120S
poration is an electing PTE. If the corporation is
an electing PTE, the net operating losses may be The corporation may authorize the Depart- for information regarding limitations for passive
ment to discuss its tax return with its paid pre- activities.
Page 3

- 4 -

Enlarge image

Income holding company of a qualified high technol- Line 9 - Repairs and Maintenance
Caution: Report only trade or business ac- ogy business by an employee, officer or direc- Enter the cost of incidental repairs, such as
tivity income or loss on lines 1a through 5. Do tor of the qualified high technology business, or labor and supplies, and maintenance that do not
not report rental activity income or portfolio investor who qualified for the high technology add to the value of the property or appreciably
income or loss on these lines. Rental activity business investment tax credit is excluded from prolong its life. New buildings, machinery, or per-
income and expenses and portfolio income and income. If the corporation is a qualified high tech- manent improvements that increase the value of
expenses are reported separately on Schedule nology business and has included royalties and the property are not deductible. They are charge-
K. other income derived from patents, copyrights, able to capital accounts and may be depreciated
and trade secrets the corporation owns in the in- or amortized.
Refer to the instructions for federal Form come reported on line 1, these amounts should Do not include section 179 expense items.
1120S for further guidance. be included in the deductions shown on line 19. Report this amount on Schedule K, line 12, and
Note: Do not include any income that is tax- If the amount reported on line 19 includes these each shareholder’s share on Schedule K-1, line
exempt on lines 1 through 5 or any nondeductible royalties and other income from patents, copy- 12.
expenses on lines 7 through 19. These income rights, and trade secrets, these amounts should
and expense items are used, however, in figuring be identified by attaching a separate schedule or Line 10 - Bad Debts
the accumulated adjustments account and the listing. Enter the total debts that became worthless
other adjustments. in whole or in part during the year, but only to the
A corporation that receives any exempt in- Line 2 - Cost of Goods Sold
come other than interest, or holds any property or See the instructions for Schedule A. extent such debts relate to a trade or business
activity.
engages in an activity that produces exempt in- Line 5 - Other Income Line 11 - Rents
come, must attach to its return an itemized state- Enter any other trade or business income Generally, if the gross income from an activity
ment showing the amount of each type of exempt not listed above and explain its nature on an consists of amounts paid principally for the use
income and the expenses allocated to each type. attached schedule. Examples of other income of real or personal tangible property held by the
Line 1a - Gross Receipts are recoveries of bad debts deducted in earlier corporation, the activity is a rental activity. There
Enter gross receipts or sales from all busi- years under the specific charge-off method, and are several exceptions to this general rule. Re-
ness operations except those you report on lines refunds of taxes deducted in earlier years. Do not fer to the Instructions to federal Form 1120S for
4 and 5. For reporting advance payments, see include those items requiring separate computa- guidance.
Treasury Regulations section 1.451-5. To report tions by shareholders that must be reported on
income from long term contracts, see section Schedule K. (See the instructions for Schedules Line 12 - Taxes and Licenses
460. K and K-1). Do not offset current year’s taxes Enter taxes and licenses paid or incurred in
Generally, the installment method cannot be with tax refunds. the trade or business activities of the corporation,
used for dealer dispositions of property. See sec- If “other income” consists of only one item, if not reflected in cost of goods sold. Taxes in-
tion 453(I) for details and exceptions. Enter on identify it by showing the account caption in pa- curred in the production or collection of income,
line 1a the gross profit on collections from install- rentheses on line 5. A separate schedule need or for the management conservation, or mainte-
ment sales for any of the following: not be attached to the return in this case. nance of property held for the production of in-
a. Dealer dispositions of property before March Do not net any expense item (such as inter- come may be considered to be deductible only
1, 1986, est) with a similar income item. Report all trade or under section 212. These are not deductible on
b. Dispositions of property used or produced in business expenses on lines 7 through 19. line 12; they are reported separately on Sched-
ules K and K-1, line 14.
the trade or business of farming, and Deductions Do not deduct taxes assessed against local
c. Certain dispositions of timeshares and resi- benefits that increase the value of the property
dential lots reported under the installment Limitations on Deductions
method. Caution: Report only trade or business activ- assessed (such as for paving, etc.), federal in-
Attach a schedule showing for the current ity related expenses on lines 7 through 19. Do come taxes, estate, inheritance, legacy, succes-
year and 3 preceding years: not report rental activity expenses or expens- sion, and gift taxes, or taxes reported elsewhere,
es related to portfolio income on these lines. such as in Schedule A.
(a) Gross sales, Expenses related to rental activities and portfolio Line 13 - Interest
(b) Cost of goods sold, income are reported directly on Schedule K. Include on line 13 only interest incurred in the
(c) Gross profit, Refer to federal instructions for Form 1120S for trade or business activity(ies) of the corporation
(d) Percentage of gross profit to gross sales, further guidance on limitations on deductions. that is not claimed elsewhere on the return.
(e) Amount collected, and Line 7 - Compensation of Officers Do not include interest expense on debt used
(f) Gross profit on amount collected. Enter on line 7 the total compensation of all to purchase rental property or debt used in rental
Amounts received by a qualified high technol- officers except compensation reported else- activities for which income or loss is reported on
ogy business as royalties and other income de- where on the return, such as amounts included lines 2 and 3 of Schedule K.
rived from patents, copyrights, and trade secrets in cost of goods sold, elective contributions to Do not include interest expense which is
owned by the qualified high technology busi- section 401(k) cash or deferred arrangement, clearly and directly allocable to gross income that
ness and developed and arising out of a quali- or amounts contributed under a salary reduction is portfolio or investment income which is report-
fied high technology business are excluded from SEP agreement. ed separately on line 15a of Schedule K.
Hawaii income. Expenses related to this income Do not include interest on debt proceeds allo-
are deductible. “Qualified high technology busi- Line 8 - Salaries and Wages cated to distributions made to shareholders dur-
ness” means a business conducting more than Enter on line 8 the amount of total salaries ing the tax year. Instead, report such interest on
50% of its activities in qualified research. “Quali- and wages (other than salaries and wages de- line 14 of Schedules K and K-1. To determine the
fied research” means (1) the same as in section ducted elsewhere on the return) paid or incurred amount to allocate to distributions to sharehold-
41(d) of the Internal Revenue Code, (2) the de- for the tax year. If the corporation is claiming the ers, see federal Notice 89-35, 1989-1, C.B. 675.
velopment and design of computer software for credit for the employment of vocational rehabilita- Do not include interest expenses on debt re-
ultimate commercial sale, lease, license or to be tion referrals, total wages paid must be reduced quired to be allocated to the production of desig-
otherwise marketed, for economic consideration. by the amount of the credit taken. nated property. Interest that is allocable to certain
With respect to the software’s development and If a shareholder or a member of the family of property produced by an S corporation for its own
design, the business shall have substantial con- one or more shareholders of the corporation ren- use or for sale must be capitalized. In addition,
trol and retain substantial rights to the resulting ders services or furnished capital to the corpo- the corporation must also capitalize any interest
intellectual property; (3) biotechnology, (4) per- ration for which reasonable compensation is not on debt that is allocable to an asset used to pro-
forming arts products, (5) sensor and optic tech- paid, the Department may make adjustments in duce the above property. A shareholder may have
nologies, (6) ocean sciences, (7) astronomy, or the items taken into account by such individuals to capitalize interest that the shareholder incurs
(8) nonfossil fuel energy-related technology. All and such shareholders as is necessary to reflect during the tax year with respect to the production
income earned and proceeds derived from stock the value of such services or capital. See section expenditures of the S corporation. Similarly, inter-
options or stock, including stock issued through 1366(e). est incurred by an S corporation may have to be
the exercise of stock options or warrants, from capitalized by a shareholder with respect to the
a qualified high technology business or from a shareholder’s own production expenditures. The
Page 4

- 5 -

Enlarge image

information required by the shareholder to prop- line 14. Do not take the section 199 deduction for 1. The corporation used the LIFO inventory
erly capitalize interest for this purpose must be U.S. production activities. method for its last tax year as a C corpora-
provided by the corporation in an attachment for Include in line 19 the deduction taken for tion, or
line 29, of Schedule K-1. See section 263A(f) and amortization. See instructions for federal Form 2. A C corporation transferred LIFO inventory to
Treasury Regulations sections 1.263A-8 through 4562 for more information. the corporation in a nonrecognition transac-
1.263A-15 for more information. In most cases, you may not take a deduction tion in which those assets were transferred
Federal temporary regulations section 1.163- for any part of any item allocable to a class of ex- basis property.
8T gives rules for allocating interest expense empt income. (See section 265 for exceptions). The additional tax due to LIFO recapture is
among activities so that the passive activity Items directly attributable to wholly exempt in- figured for the corporation’s last tax year as a
limitation, investment interest limitation, and the come must be allocated to that income. Items di- C corporation or for the tax year of the transfer,
personal interest limitation can be properly fig- rectly attributable to any class of taxable income whichever applies. See the Instructions for Form
ured. Generally, interest expense is allocated in must be allocated to that taxable income. N-30 to figure the tax. The tax is paid in four equal
the same manner as debt is allocated. Debt is If an item is indirectly attributable both to tax- installments. The C corporation must pay the first
allocated by tracing disbursements of the debt able income and to exempt income, allocate a installment by the due date (not including exten-
proceeds to specific expenditures. These regula- reasonable proportion of the item to each, based sion) of Form N-30 of the corporation’s last tax
tions give rules for tracing debt proceeds to ex- on all the facts in each case. year as a C corporation or for the tax year of the
penditures. transfer, whichever applies. The S corporation
Attach a statement showing (1) the amount of
See federal temporary regulations section each class of exempt income and (2) the amount must pay each of the remaining installments by
1.163-8T for special rules on allocation of inter- of expense items allocated to each such class. the due date (not including extensions) of Form
est expense, transitional rules, and other details. Show the amount allocated by apportionment N-35 for the three succeeding tax years. Enter on
Generally, prepaid interest can only be de- separately. line 22d the amount of the LIFO tax installment.
ducted over the period to which the prepayment The deductions for business meals and en- Line 22e - Interest due under the look-back
applies. See section 461(g) for details. tertainment expenses are limited to 50%. Meal method for completed long-term contracts
Line 14 - Depreciation expenses are deductible only if the expenses If the corporation used the look-back method
Enter depreciation expense from federal are directly related or associated with the active under section 460(b)(2) for certain long-term
Form 4562 claimed on assets used in a trade or conduct of a trade or business. In addition, the contracts, complete federal Form 8697, Inter-
business activity that is not claimed elsewhere on amount that may be deducted for entertainment est Computation Under the Look-Back Method
the return. tickets, skyboxes, or other private luxury boxes for Completed Long-Term Contracts. If you will
is limited. See federal Publication 463 for details.
As noted on page 1 of these instructions, owe interest on an unpaid amount, calculate
Hawaii has not adopted federal “bonus” depre- Line 21 - Ordinary Income (loss) the amount due using the rate of 2/3 of 1% per
month, or part of a month, beginning the first cal-
ciation provisions. If a depreciation deduction is This is nonseparately computed income or endar day after the date prescribed for payment
claimed for Hawaii tax purposes, the corporation loss as defined in section 1366(a)(2). This in- whether or not that first calendar day falls on a
must: (a) complete a federal Form 4562 for Ha- come or loss is entered on Schedule K, line 1. Saturday, Sunday, or legal holiday. Include the
waii tax purposes using the federal depreciation Line 21 income is not used in figuring line 22a amount of interest due on line 22e. Attach Form
guidelines in effect before the adoption of the “bo- or 22b tax. See instructions for line 22a for figur- 8697 with a check made payable to “Hawaii State
nus” depreciation provisions and (b) attach the ing taxable income for purposes of line 22a or Tax Collector” to Form N-35. Write the corpora-
completed federal Form 4562 to the Hawaii tax 22b tax. tion’s FEIN, daytime phone number, and “Form
return. The corporation must also keep records
of the differences in the asset’s depreciable basis Line 22a - Excess Net Passive Income 8697 interest” on the check. If you are due a re-
fund, do not attach Form 8697 to your Form N-35.
for federal and Hawaii tax purposes. Tax Instead, file federal Form 8697 separately with
Do not include any expense deduction for re- If the corporation has always been a sub- the Department. Complete the signature section
covery property (section 179) on this line. This chapter S corporation, the line 22a tax does not of federal Form 8697 following the instructions
amount is not deductible by the corporation. In- apply. for the signature section of Form N-35. File fed-
stead, it is passed through to the shareholders on S corporations that have accumulated earn- eral Form 8697 by the date you are required to
Schedules K and K-1, line 12. ings and profits at the end of the taxable year, file your Form N-35 (including extensions).
Line 15 - Depletion passive investment income totaling over 25%
If the corporation claims a deduction for tim- of gross receipts, and have taxable income are Line 22f - Pass-Through Entity Tax
ber depletion, complete and attach federal Form subject to a tax imposed at the rate of 6.4%. This If the corporation is not an electing PTE for
T, Forest Activities Schedule. tax is applied against the smaller of the S cor- the taxable year, line 22f does not apply to the
poration’s excess net passive income or taxable corporation
Do not report depletion deductions for oil and income. See the worksheet for Excess Net Pas- Electing PTEs are liable for the income tax
gas properties on this line. Each shareholder sive Income Tax in federal instructions for Form on the sum of all qualified members’ distributive
figures depletion on these properties under sec- 1120S for the computation of these amounts. shares multiplied by the highest rate of tax ap-
tion 613A(c)(13). See the instructions for federal Use Hawaii Form N-30 for the taxable income plicable to the individual under section 235-51,
Form 1120S, Schedule K-1, box 17, code R, for computation. Attach a schedule to your Hawaii HRS, with no separate tax rate for capital gains.
information on oil and gas depletion that must be S corporation return, following the format of the The PTE tax rate is 11% for the 2023 taxable
supplied to the shareholders by the corporation. worksheet to show your tax computation. year. Attach Schedule PTE(s), showing all the
Line 18 - Employee Benefit Programs For tax years beginning after May 25, 2007 , qualified members’ shares of qualified net in-
Enter the amount of contributions to em- gains from sales or exchanges of stock or se- come and calculated PTE tax amount reported
ployee benefit programs (such as insurance and curities will not be treated as an item of passive on line 22f.
health and welfare programs) that are not an inci- investment income when figuring the excess net Line 23b
dental part of a pension, profit-sharing, etc., plan passive income tax on Form N-35, line 22a.
If the S corporation is a Hawaii corporation
included in line 17. Line 22b with an expected corporate tax liability of $500
See instructions for federal Form 1120S for Refer to instructions for Schedule D (Form or more, the corporation must file a declaration
more information. N-35). of estimated income tax and pay the estimated
tax liability in four installments. See Form N-201V
Line 19 - Other Deductions Line 22c for more information. If the S corporation is not a
Enter any other allowable deductions related Enter the number of N-4’s attached to the Hawaii corporation and less than 15% of the cor-
to any trade or business activity for which there corporation’s return. On line 22c, enter the total poration’s business for the taxable year is attrib-
is no line on page 1 of the return. Do not include amount of taxes withheld as shown on the Forms uted to Hawaii, the filing of an estimate and the
those items requiring separate computations N-4 attached. payment of estimated tax may be excused upon
which must be reported on Schedules K and K-1. application to the Department. Form N-201V can
Do not deduct losses incurred in transactions Line 22d - LIFO Recapture Tax be filed and payment made electronically through
which were not connected with the corporation’s The corporation may be liable for the addi- the State’s Internet portal at hitax.hawaii.gov.
trade or business. Report these losses separate- tional tax due to LIFO recapture under Regula- Estimated taxes which are paid by the cor-
ly to the shareholders on Schedules K and K-1, tions section 1.1363-2 if: poration on behalf of its nonresident sharehold-
ers in anticipation of the filing of a composite re-
Page 5

- 6 -

Enlarge image

turn should be made on Form N-201V. See the Line 30 - BALANCE DUE (REFUND) with statement with Form N-35 and check the LIFO
instructions for filing composite returns later in amended return box on line 9c. On line 9d, enter the amount or
these instructions for more information. Form N- If no amount was entered on line 29, enter on percent (estimates may be used) of total closing
201V can be filed and payment made electroni- line 30 the amount, if any, from line 25 or line 27 inventories covered under section 472.
cally through the State’s Internet portal at hitax. of the amended return. If there is an amount on If you have changed or extended your inven-
hawaii.gov. line 29, and that amount is: tory method to LIFO and have had to “writeup”
Any amount that was paid on an S corpora- a. A payment and there is an amount on line 25 your opening inventory to cost in the year of elec-
tion’s Form N-201V for the tax year should be of the amended return, add these amounts tion, report the effect of this writeup as income
indicated in the N-201V space on line 23b and and enter the total on line 30 with a minus (line 5, page 1) proportionately over a 3-year
included in the line total. sign, “-”, before the amount. period that begins in the tax year you made this
election. (section 472(d).)
If the corporation is not a Hawaii corporation b. A payment and there is an amount on line
and it sold any Hawaii real property and Hawaii 27, subtract the amount on line 29 from the If you are engaged in manufacturing or pro-
State income taxes were withheld from the sales amount on line 27 and enter the difference on duction, you must use the full absorption method
proceeds, the amount of tax so withheld, or the line 30. If the difference is a negative amount, of inventory costing. If you are not using it, you
amount of tax remaining with the Department if show the negative amount on line 30 with a must change to this method. Under it, both direct
the corporation filed a Form N-288C, Application minus sign, “-”. and certain indirect production costs are included
for Tentative Refund of Withholding on Disposi- for inventory valuation purposes. Use federal
tions by Nonresident Persons of Hawaii Real c. An overpayment and there is an amount on Form 3115 to change to full absorption.
Property Interests, should be entered in the N- line 25, consider the amount on line 25 a
288A space on line 23b if the corporation is sub- negative amount and subtract the amount on See federal Publication 538 for more informa-
ject to Hawaii tax on the sale of property. If the line 29 from the amount on line 25, and enter tion on inventory valuation methods.
sale of Hawaii property is not taxed at the corpo- the difference on line 30. If the difference is a
rate level, the amount of tax held by the Depart- negative amount, show the negative amount Schedule K and Schedule K-1
ment is to be passed through to the shareholders on line 30 with a minus sign, “-”. If there is an Shareholder’s Share of Income,
on line 16n of Schedules K and K-1. overpayment on the amended return, do NOT
enter this amount on line 26b. Credits, Deductions, etc.
Line 24 - Underpayment of Estimated d. An overpayment and there is an amount on Purpose
Tax Penalty line 27, subtract the amount on line 29 from
A corporation that fails to make estimated tax the amount on line 27, and enter the result Schedule K is a summary schedule of all the
payments when due may be subject to an under- on line 30. This is the amount the corporation shareholders’ share of the corporation’s income,
payment penalty for the period of underpayment. owes on its amended return. deductions, credits, etc. and shows the amounts
of these items that are attributable to Hawaii
Use Form N-220, Underpayment of Estimated If the corporation has an amount due on its sources. Schedule K-1 shows each sharehold-
Tax by Corporations, to see if the corporation amended return, make check or money order er’s distributive share. A copy of each sharehold-
owes a penalty and to figure the amount of the payable to “Hawaii State Tax Collector” and at- er’s K-1 must be attached to the Form N-35 filed
penalty. tach the check or money order to the front of with the Department. A copy is kept as a part of
Line 27 - Tax Due Form N-35. the corporation’s records and each shareholder
Enter on line 27 the sum of lines 22g and 24 receives his or her own separate copy with at-
minus 23d. If this amount is zero or less, enter 0. Schedule A tached instructions.
If this amount is more than zero, pay this amount Cost of Goods Sold General Instructions
by certified or cashier’s check made payable to
“Hawaii State Tax Collector” and attach the check Inventory valuation methods The corporation is liable for taxes on Form
N-35, page 2, lines 22a, 22b, 22d, 22e, and 22f.
to the front of Form N-35. Your inventories can be valued at: (a) cost, Resident shareholders are liable for income tax
If the corporation cannot pay the full amount (b) cost or market value (whichever is lower), or on their share of the corporation’s total income
that is owed, you can ask to enter a payment (c) any other method approved by the Director (reduced by any taxes paid by the corporation
agreement after you receive a billing notice for of Taxation, if that method conforms to the provi- on that income) and must include their share of
the balance due. Please be aware that penalty sions of the applicable regulations cited below. the income on their tax return whether or not it
and interest continue to accrue on the unpaid tax Taxpayers using erroneous valuation meth- is distributed to them. Nonresident shareholders
amount even though you have not yet received ods must change to a method permitted for Ha- are liable for Hawaii income tax on their share
a billing notice. Payments will be accepted and waii income tax purposes. of the corporation’s income attributable to Hawaii
applied to the corporation’s tax liability; however, On line 9a, check the method(s) used for (reduced by any taxes paid by the corporation
to ensure that the corporation’s payments are ap- valuing inventories. Under “lower of cost or mar- on that income). Part-year resident shareholders
plied correctly, your check or money order must ket,” market generally applies to normal market are liable for Hawaii income tax on their share
have: (1) the corporation’s name as shown on conditions when there is a current bid price pre- of the corporation’s total income while a resident
the return clearly printed on the check, (2) the vailing at the date the inventory is valued. When plus Hawaii income tax on their share of the cor-
corporation’s FEIN, and (3) the tax year and form no regular open market exists or when quota- poration’s income attributable to Hawaii while a
number being filed (e.g., 2023 N-35). tions are nominal because of inactive market nonresident (reduced by any taxes paid by the
NOTE: Any payment made with Form N-4, conditions, use fair market prices from the most corporation on those income amounts).
Statement of Withholding for a Nonresident reliable sales or purchase transactions that oc- The total distributive share items (columns
Shareholder of an S corporation, must be includ- curred near the date the inventory is valued. For b and c) of all Schedule K-1s should equal the
ed in the total taxes paid with Form N-35. For additional requirements, see Treasury Regula- amount reported on Schedule K.
more information on Form N-4, see page 8. tions section 1.471-4.
Line 28 - Amount of Payment Inventory may be valued below cost when Attributable to Hawaii
Enter the amount of payment. Attach your the merchandise is unsalable at normal prices or Each S corporation must state specifically
check or money order where indicated on the unusable in the normal way because the goods the income attributable to the State and income
front of Form N-35. Make your check or money are “subnormal” (that is, because of damage, im- not attributable to the State with respect to each
order payable to “Hawaii State Tax Collector.” perfections, show wear, etc.) within the meaning shareholder.
of Treasury Regulations section 1.471-2(c). Such Ordinary income or (loss) from trade or busi-
For Amended Returns goods may be valued at a current bona fide sell- ness activities shall be attributed to the State by
Line 29 - Amount paid (overpaid) on ing price less direct cost of disposition (but not the use of the apportionment of business income
less than scrap value) when the taxpayer can allocation provisions of the Uniform Division of
original return establish such a price. See Treasury Regulations Income for Tax Purposes Act (UDITPA), section
Enter on line 29 the amount paid on the cor- section 1.471-2(c) for additional requirements. 235-29, HRS. Business income, including rent,
poration’s original return (from line 27 on the If this is the first year the “Last-in First-out” capital gains, and portfolio income that appears
original return) or the amount overpaid (from line (LIFO) inventory method was either adopted on Schedule K, shall be apportioned to this State
25 on the original return). Place a minus sign, or extended to inventory goods not previously by multiplying the income by a fraction, the nu-
“-”, before the amount of any overpayment. valued under the LIFO method, as provided in merator of which is the property factor plus the
section 472, attach a copy of federal Form 970, payroll factor plus the sales factor, and the de-
Application to Use LIFO Inventory Method, or a nominator of which is three. If the denominator of
Page 6

- 7 -

Enlarge image

the property factor, payroll factor, or sales factor   of the corporation. See Item A in the specific in-                           Enter the amount attributable to Hawaii and 
is zero, the denominator of the fraction in section    structions below.                                                            the amount attributable elsewhere for each ap-
235-29, HRS, is reduced by the number of fac-            A transferee shareholder  (rather than the                                 plicable item listed.
tors with a zero denominator, and the numera-          transferor) is considered to be the owner of stock                           Note:  Actual dividends distributions paid out 
tor of that fraction shall not include  any factor     on the day it is transferred.                                                of retained earnings (accumulated earnings and 
with a zero denominator. The property factor is          Special rule—If a shareholder terminates his                               profits) of the S corporation are not reported on 
a fraction, the numerator of which is the average      or her interest in a corporation  during the tax                             Schedule  K-1.  However,  these  dividends  are 
value of the corporation’s real and tangible per-      year, the corporation, with the concurrence  of                              reported to shareholders on federal Form 1099-
sonal property owned or rented and used in this        all  affected  shareholders,  may  elect  to  allocate                       DIV. These distributions do not increase or de-
State during the tax period, and the denomina-         income and expenses, etc.,  as if  the corpora-                              crease a shareholder’s basis in stock.
tor of which is the average value of all the cor-      tion’s tax year consisted of two tax years, the first                        Also note: All income earned and proceeds 
poration’s real and tangible  personal  property       which ends on the date of the shareholder’s ter-                             derived from stock options or stock,  including 
owned or rented and used during the tax period.        mination. To make the election, the corporation                              stock issued  through  the exercise  of stock op-
Property owned by the corporation is valued at         must file a statement of election with the return                            tions or warrants, from a qualified high technolo-
its original cost. The average value of property       for the tax year of election and attach a statement                          gy business or from a holding company of a qual-
shall be determined by averaging the values at         of consent signed by all affected shareholders. If                           ified high technology business by an employee, 
the beginning and ending of the tax period. The        the election is made, write “IRC section 1377(a)                             officer or director of the qualified high technology 
use  of monthly  values  may be required  if nec-      (2) Election Made” at the top of each Schedule                               business, or investor who qualifies for the high 
essary  to  properly  reflect  the  average  value  of K-1. See section 1377(a)(2) and Treasury Regu-                               technology business investment tax credit is ex-
the corporation’s property. Property rented by         lations section 1.1377-1 for details and a defini-                           cluded from income.
the corporation is valued at eight times the net       tion of affected shareholders.
annual rental rate. Where property is rented for                                                                                    Line 16
less than a 12-month period, the rent paid for the     Specific Instructions                                                        Any  S  corporation  doing business  in Ha-
actual period of rental shall constitute the annual    (Schedule K-1 only)                                                          waii may qualify for Hawaii’s Fuel Tax Credit for 
rental rate for the tax period. The payroll factor       Prepare  and  give to each  shareholder  a                                 Commercial  Fishers, the Capital  Goods Excise 
is a fraction, the numerator of which is the total     Schedule K-1 on or before the day on which the                               Tax Credit, the Enterprise Zone Tax Credit, the 
amount paid in this State during the tax period        corporation’s  return  is  filed.  On  each  Schedule                        Hawaii Tax Credit for Low-Income Housing, the 
by the corporation for  compensation, and the          K-1, enter the names, addresses, and identify-                               Credit for Employment of Vocational Rehabilita-
denominator of which is the total compensation         ing numbers of the shareholder and corporation,                              tion Referrals, the Motion Picture, Digital  Me-
paid everywhere during the tax period. The sales       complete items A and B and enter the sharehold-                              dia and Film Production Income Tax Credit, the 
(gross receipts) factor is a fraction, the numera-     er’s distributive share of each item.                                        Credit  for School  Repair  and  Maintenance,  the 
tor of which is the total sales of the corporation in                                                                               Renewable  Energy Technologies  Income Tax 
this State during the tax period, and the denomi-      Item A (Schedule K-1 only)                                                   Credit, the  Important  Agricultural Land Quali-
nator of which is the total sales of the corporation     If  there was  no change in shareholders or                                fied Agricultural Cost Tax Credit, the Tax Credit 
everywhere during the tax period. If this appor-       in the relative interest in stock the shareholders                           for  Research  Activities, the  Historic Preserva-
tionment does not fairly represent the extent of       owned during the tax year, enter the percentage                              tion Income  Tax Credit, the Renewable Fuels 
the corporation’s business activity in this State,     of total stock owned by each shareholder dur-                                Production Tax Credit for Years After 1/1/22, and 
the corporation may request the use of separate        ing the tax year. For example, if shareholders X                             the Pass-Through Entity Tax Credit. The benefits 
accounting, the exclusion of one or more of the        and Y each owned 50% for the entire tax year,                                of these credits may be passed  through  to the 
factors, the inclusion  of one or more additional      enter 50% in item A for each shareholder. Each                               shareholders of the corporation.
factors, or the use of any other method to accu-       shareholder’s distributive share items (lines 1-29                           Report the shareholder’s pro rata share of 
rately reflect the corporation’s business activity in  of Schedule K-1) are figured by multiplying the                              credits on Schedule K-1. Attach the appropriate 
the State. Complete Schedules O and P on page          annual amount on Schedule K  by the percent-                                 credit form to the S corporation’s return.
4 of Form N-35 to show this computation.               age in A.                                                                    For  the Fuel  Tax Credit for  Commercial 
 Non-business items are attributed as follows:           If there was a change  in stock ownership                                  Fishers, enter the credit amount  on  line  16a. 
 Net rents and royalties from real property lo-        during the tax year, each shareholder’s percent-                             Shareholders will use Form N-163 to claim their 
cated in Hawaii are attributed to Hawaii. Federal      age of ownership is weighted for the number of                               credit.
Form 8825 may be attached to Form N-35 as a            days in the tax year that stock was owned. For                               For  the Capital  Goods  Excise Tax  Credit, 
schedule of expenses.                                  example, A and B each held 50% for half the tax                              report the cost of qualifying  property,  not the 
 Net rents and royalties from tangible personal        year and A, B, and C held 40%, 40% and 20%                                   credit amount, on line 16b of Schedules K and 
property are attributed to Hawaii if, and to the ex-   respectively for the remaining half of the tax year.                         K-1.
tent that, the property is utilized in Hawaii.         The percentage of ownership for the year for A, 
 Capital gains and losses from  sale of  real          B, and C is figured as shown in the table below                              For the  Enterprise Zone Tax Credit, the S 
property located in Hawaii are attributed to Ha-       and is then entered in item A.                                               corporation is to prepare a separate  Form N-
                                                                                                                                    756A for each shareholder.
waii.                                                            a.       b.          c. (a x b)                                    For the  Hawaii Tax Credit for Low-Income 
 Capital  gains  and  losses  from sales of tan-                                                                                    Housing, enter the credit amount on line  16d. 
gible personal property are attributable to Hawaii        % of total     % of tax     % of ownership                                Shareholders will use Form N-586 to claim their 
if the property had a situs in Hawaii at the time         stock owned    year held    for the year                                  credit.
of the sale.                                              50%            50%          25%                                           For the  Credit for Employment of Voca-
                                                        A
 Interest and dividends  are attributed to Ha-                   40       50          +20        45%                                tional Rehabilitation Referrals, enter the credit 
waii if  the  corporation’s  commercial  domicile is             50       50                 25                                     amount on line 16e. Shareholders will use Form 
in Hawaii.                                              B        40       50          +20        45%                                N-884 to claim their credit.
 Patent and copyright royalties are attributed          C        20       50                     10%                                For the  Motion Picture, Digital Media, and 
to Hawaii if,  and to the extent that,  the patent       Total ............................................................... 100% Film Production Income Tax Credit, report the 
or copyright  is utilized  by the payer  in Hawaii.                                                                                 shareholder’s  share  of  the  qualified  production 
Amounts  received  by  a  qualified  high  technol-      If there was a change in stock ownership dur-                              costs on line 16f of Schedules K and K-1. Share-
ogy business as royalties and other income de-         ing the tax year, each shareholder’s distributive                            holders will use Form N-340 to claim their credit.
rived from patents, copyrights, and trade secrets      share items (lines 1-29 of Schedule K-1) are fig-                            For the Credit for School Repair and Main-
owned by the qualified high technology business        ured on a daily basis, based on the percentage of                            tenance, report the credit amount on line 16g. 
and developed and arising out of a qualified high      stock held by the shareholder on each day. See                               Shareholders will use Form N-330 to claim their 
technology business are excluded from  Hawaii          section 1377(a)(1) and (2) for details.                                      credit.
income. Expenses related to this income are de-
ductible.                                              Schedules K and K-1                                                          For    the Renewable Energy Technologies 
                                                                                                                                    Income Tax Credit, report the credit amount on 
Shareholder’s Distributive Share Items                 Lines 1 through 15                                                           line  16h. Shareholders will  use Form N-342  to 
 Items  of  income, loss,  deductions, etc.,  are        Refer to the instructions for federal Schedules                            claim their credit.
allocated to a shareholder on a daily basis, ac-       K and K-1 (Form 1120S).
cording to the number of shares of stock held by 
the shareholder on each day during the tax year 
                                                                                                                                                                              Page 7

- 8 -

Enlarge image

For the Important Agricultural Land Quali- 16o. Any payments so made will be considered 1. Fill in the oval indicating this is a composite
fied Agricultural Cost Tax Credit, report the to be a payment by the shareholder on account return.
credit amount on line 16i of Schedules K and K-1. of the income tax imposed on the shareholder 2. The first name on the composite return shall
For the Tax Credit for Research Activities, for the taxable period. The corporation is entitled be “Shareholders,” the last name shall be the
report the credit amount on line 16j of Schedules to recover a payment from the shareholder on corporation’s name. The corporation’s FEIN
K and K-1. Shareholders will use Form N-346 to whose behalf the payment was made. These shall be used in place of the taxpayer’s social
claim their credit. agreements are to be filed with the corporation’s security number. Enter the corporation’s FEIN
For the Historic Preservation Income Tax return for the first period for which the corporation in social security number format (i.e., 123-45-
Credit, report the credit amount on line 16k of is subject to this provision and for any period in 6789). Indicate the corporation’s mailing ad-
Schedules K and K-1. Shareholders will use which the corporation had a nonresident share- dress as the taxpayer’s address.
Form N-325 to claim their credit. holder on whose behalf such an agreement has 3. Do NOT indicate filing status or number of ex-
not been previously filed. A shareholder may re- emptions.
For the Renewable Fuels Production Tax voke, in writing, an agreement previously made.
Credit for Years After 1/1/22, report the cred- The revocation will be effective for the year of 4. On line 17, Column A of Form N-15, enter the
it amount on line 16l of Schedules K and K-1. the corporation’s return to which the statement total distributive share of the corporation’s
Shareholders will use Form N-360 to claim their of revocation is attached and subsequent years, total income and on line 17, Column B, the
credit. thereby subjecting the shareholder to the with- total of Hawaii income for the shareholders
For the Pass-Through Entity Tax Credit, re- holding provisions. The revocation cannot be included in the composite return.
port the credit amount on line 16m of Schedules made retroactive. 5. Enter these same amounts on line 35.
K and K-1. Shareholders will use Form N-362 to 6. On line 37, enter zero for the ratio of Hawaii
claim their credit. Form N-4, Statement of Withholding adjusted gross income to Total adjusted gross
For more information on the various credits, for a Nonresident Shareholder of an S income.
including the deadline to claim the credits, please Corporation 7. On lines 41 and 43, enter the total of the
refer to the applicable credit form. Form N-4 is to be completed for each non- shareholders’ taxable incomes; on line 44,
resident shareholder for whom a Schedule NS enter the total amount of tax on the taxable
Line 16n has not been filed on a timely filed N-35 and for incomes entered on line 43, including the to-
Enter the amount of Hawaii taxes held by the nonresident shareholders who have revoked a tal amount of other taxes from Forms N-152,
Department from the sale of Hawaii real property previously filed Schedule NS. In box 1, fill in the N-312, N-325, N-338, N-344, N-348, N-405,
that is not taxed at the corporate level. S corporation’s full name and mailing address. N-586, and N-814. The amount on line 44
Lines 17 through 22 Show the shareholder’s social security number should be the sum of the tax computed for
or other tax identification number in box 2. En- each of the individual shareholders included
Refer to the instructions for federal Schedule ter the amount of Hawaii tax that was withheld on the return.
K (Form 1120S). for the nonresident shareholder in box 3 (11% of
Amounts paid to shareholders who are resi- the amount shown in box 6). Show the S corpo- 8. Any Hawaii credits available to the included
dents of Hawaii are to be entered in columns b ration’s FEIN in box 4. Enter the shareholder’s shareholders should be claimed on the re-
and c. Amounts paid to shareholders who are not name and complete mailing address in box 5. turn.
residents of Hawaii are to be entered in column In box 6, enter the shareholder’s share of the S 9. Any tax due on the return, line 65, is to be paid
b. corporation’s income attributable to Hawaii, the by the corporation on behalf of the sharehold-
sum of lines 1 through 10 of the shareholder’s ers.
Schedules L, M-1, and M-2 Schedule K-1. Attach Copy A of Form N-4 to the 10. Overpayments (line 59), if any (if not applied
S corporation’s Form N-35. Retain Copy B for the to estimated taxes for the subsequent year
and Schedule M-3 corporation’s records. Copy C is for the share- (line 63)), will be refunded (line 64) to the cor-
(Form N-35) holders’ records. Copy D is to be attached to the poration which will make the refund distribu-
shareholder’s Form N-15. tion to the shareholders.
Attach a copy of page 4 of federal Form
1120S to the corporation’s Hawaii return. The Composite Returns for Nonresident 11. The return is to be signed by the Tax Matters
corporation must also maintain a State Accumu- Shareholders Person.
lated Adjustments Account. S corporations may file composite returns on Attach to the return a schedule listing the
If the corporation is required to file Schedule behalf of some or all of its nonresident sharehold- names, addresses, social security numbers, the
M-3 on its federal return, attach a copy of that ers. In order to be included in a composite re- filing status, the distributive share of Hawaii in-
schedule to the corporation’s Hawaii return. turn, the shareholder must be an individual, the come or (loss), the individual shareholder’s al-
shareholder must have a signed Schedule NS in lowable itemized deductions, each shareholder’s
Schedule NS effect, and the shareholder’s only Hawaii source Hawaii taxable income, the tax due computed on
of income is from the S corporation. the taxable income of the individual sharehold-
ers, credits if applicable, and the tax due or over-
Hawaii S Corporation Agreement of The corporation must obtain a statement from payments for each of the shareholders included
Nonresident Shareholders each nonresident shareholder electing to be in- in the return.
S corporations having nonresident sharehold- cluded in the composite return stating that the
ers are required to obtain from each nonresident shareholder elects to be included in the return, Filing status for each individual shareholder
shareholder, and file with the Department, an that the income of the S corporation attribut- may be indicated on the schedule using the fol-
agreement that the shareholder will file a Hawaii able to Hawaii is the shareholder’s only Hawaii lowing codes: S - single, MJ - married filing a
return and make timely payment of all taxes im- income, and the shareholder is not otherwise joint return, MS - married filing separately, HH -
posed with respect to the shareholder’s share required to file a Hawaii income tax return. The head of household, and QS - qualifying surviving
of the S corporation’s Hawaii income. Also, the corporation must also get a power of attorney spouse with dependent child.
shareholder will be subject to personal jurisdic- from the shareholder for the purpose of filing the The individual shareholder’s taxable income
tion in the State for purposes of the collection return. These statements should be retained by is computed by subtracting allowable itemized
of unpaid income tax, penalties, and interest. the corporation. deductions from the shareholder’s distributive
Schedule NS is used for this purpose. If the Once a shareholder elects to be part of a share of the corporation’s income. Allowable
corporation fails to timely file these agreements composite return, the shareholder cannot elect itemized deductions are those allowed for Hawaii
on behalf of its nonresident shareholders, the out of the return for that year unless other Hawaii income tax purposes which are not determined
corporation is required to pay to the State, on source income is received by the shareholder. If by using the ratio of Hawaii adjusted gross in-
behalf of each shareholder for whom an agree- this occurs, the shareholder must notify the cor- come to total gross income. No standard deduc-
ment has not been timely filed, an amount equal poration and the corporation must amend the tion or personal exemption is allowed.
to the highest marginal tax rate on individuals, composite return to remove the shareholder from Nonresident shareholders who have made
currently 11%, multiplied by the shareholder’s the return. The shareholder must then file his or Hawaii estimated tax payments during the 2023
pro rata share of the income attributable to the her own Hawaii nonresident return, Form N-15. tax year and are allowed to be included on the
State (lines 1 through 10, column b, of the share- The composite return for nonresident share- composite return may have those payments
holder’s Schedule K-1). Form N-4 is used for re- holders is to be filed on Form N-15, Individual credited to the composite return. The S corpora-
porting this withholding by the corporation to the Income Tax Return Nonresident and Part-Year tion may claim these payments on Form N-15,
Department. The nonresident shareholder is noti- Resident. line 55, by entering the total of the estimated tax
fied of the amount withheld on Schedule K-1, line payments along with “see attached schedule” in
Page 8

- 9 -

Enlarge image

the amount column of line 55 and attaching a         Specific Instructions                                  corporation  may elect to treat a wholly-owned 
schedule of the estimated tax payments by stat-      Schedule PTE only                                      corporation as a QSub. 
ing each individual’s name, address, social se-      If the corporation is an electing PTE for the          A QSub is a corporation that: (1) is 100 per-
curity number, and each type of estimated pay-       taxable year, Schedule PTE must be attached to         cent owned by a parent S corporation; (2) is eli-
ment and amount of payment (e.g., N-200V, 1st        Form N-35. Schedule PTE is a summary of all the        gible to make an S corporation election; (3) the 
quarter - $200; N-200V, 2nd quarter - $300, etc.)    qualifying members that an electing PTE uses to        parent S corporation elects to treat as a QSub; 
made by the individual.                              calculate the total amount of elective tax on the      and (4) is not an ineligible corporation as defined 
   Note: Please do not attach Form N-15 to the       electing  PTE’s  qualified  net  income.  Schedule     in section 1361(b)(2). For income tax purposes, 
S corporation income tax return, Form N-35. The      PTE requires  the electing  PTE to identify their      a QSub is treated like a division of the parent S 
S  corporation’s  nonresident  shareholders  filing  qualified members by entering their names, iden-       corporation and is not recognized as a separate 
Form N-15 are considered a taxpayer separate         tification numbers, pro rata share or distributive     entity. The assets, liabilities, income, deductions, 
and  apart  from  the  S  corporation;  thus,  Form  share of qualified net income amounts and to cal-      and credits of a QSub are treated as those of the 
N-15 must be filed separately.                       culate the elective tax credit amounts.                parent S corporation. 
   If it is expected that there will be taxes due    If you need more space on the Schedule PTE             If a QSub election is made for an existing cor-
on the composite return, estimated taxes may be      to  report  more  qualified  members,  attach  addi-   poration, the corporation is deemed to have liqui-
paid for the composite return using Form N-200V.     tional Schedule PTEs as needed and check the           dated into the parent S corporation in a tax-free 
Form  N-200V  can  be  filed  and  payment  made     “Supplement to Part II Only” box at the top of the     liquidation under sections 332 and 337 immedi-
electronically through the State’s Internet portal   form  and  continue  with  the  remaining  qualified   ately before the election is effective. The QSub 
at hitax.hawaii.gov.                                 members in Part II.                                    election on federal Form 8869 is recognized as 
                                                     The  total  number  of  all  qualified  members,       a Hawaii QSub election pursuant to section 235-
Schedule PTE and Schedule                            their qualified net income, and their elective tax     122(a), HRS. The parent S corporation must at-
PTE-U                                                credit amounts (Part II, lines 1 through 3) of all     tach a copy of the federal Form 8869 to the first 
                                                     Schedule PTEs should equal the amount report-          Hawaii S corporation tax return filed following the 
Pass-Through Entity Tax                              ed in Part I, lines 1, 2, and 4.                       federal QSub election.
Purpose                                              Schedule  PTE, Part II,  lines  1 through 3,           Hawaii Income Tax Return Filing 
                                                     should  be  the  total  of  the  amount  of  qualified Requirements for a QSub
   Schedule PTE is used to calculate the PTE         members, income, and  tax credit amount  per           The  parent  S  corporation  must  file  a  single 
tax of an electing PTE at the PTE level and report   form.                                                  Hawaii income tax return (Form N-35) using the 
their qualified members’ net income and PTE tax 
                                                                                                            parent’s FEIN. The parent’s return should include 
credit  amounts  under  section  235-___,  HRS.      Schedule PTE-U only                                    the assets, liabilities,  income, deductions,  and 
Schedule PTE-U is used by upper-tier PTEs to         Note:   An  upper-tier  PTE’s  “qualified  mem-        credits of the QSub.
report their eligible  shareholders’ distributive    bers” are eligible shareholders of the upper-tier 
shares of a PTE tax credit amount received from      PTE who qualify to claim the PTE tax credit.           Hawaii Income Tax Return Filing 
an electing PTE or lower-tier PTE.                   If  the corporation  is an upper-tier  PTE that        Requirements for a QSST and an ESBT
Definitions                                          has received a PTE tax credit from an electing         A QSST must file a fiduciary tax return (Ha-
   “Electing pass-through entity” means a Quali-     PTE or a lower-tier PTE that the corporation is a      waii Form N-40) to report the income taxable to 
fied PTE that elects PTE taxation for the taxable    member of, Schedule PTE-U must be attached             its beneficiary. The sole beneficiary of the QSST 
year.                                                to  Form  N-35. Schedule PTE-U  is a summary           is treated as the S corporation  shareholder  for 
   “Lower-Tier PTE” means a PTE that has at          generated  by upper-tier PTEs of the tax credit        the S corporation qualification requirements, as 
least one member that is a PTE.                      amount(s) received and distributive shares of the      well as for the pass-through of income, losses, 
                                                     tax credit amount allocated to its eligible share-     credits, distributions, and adjustment to the basis 
   “Qualified Member” means a direct member          holders  reported per electing  PTE or lower-tier      of the stock. The beneficiary must file an individu-
of an Electing  PTE whose  distributive  shares      PTE separately. Schedule  PTE-U requires  the          al Hawaii income tax return to report the income, 
are subject to PTE taxation for the taxable year.    upper-tier PTE to identify their eligible sharehold-   losses, and credits distributed by the QSST to the 
Qualified members do not include shareholders        ers by entering their names, identification num-       beneficiary.
who are C corporations of an electing PTE.           bers, and their distributive shares of the PTE tax     An  ESBT  must  file  a  Hawaii  fiduciary  tax 
   “Qualified PTE” means a PTE that is eligible      credit.                                                return to pay the income tax on the income at-
to elect PTE taxation for the taxable year.          If  you need more space on the Schedule                tributable to the S corporation stock held by the 
   “Upper-Tier PTE” means a PTE that is a            PTE-U to report additional eligible shareholders,      ESBT. The taxable income of the ESBT includes 
member of an electing PTE or lower-tier PTE.         attach  additional  Schedule PTE-Us  as  needed        the income,  loss or deduction, and  credits at-
                                                     and check the “Supplement to Part II Only” box at      tributable to the S corporation stock, gain or loss 
General Instructions                                 the top of the form and continue with the remain-      from the sale of S corporation stock and any Ha-
   S corporations who make a yearly irrevocable      ing eligible shareholders in Part II.                  waii income taxes and administrative expenses 
election to pay taxes at the PTE level for the tax-  Total PTE tax credit amount(s) received from           properly allocable to the S corporation stock. The 
able year are liable for PTE tax on Form N-35,       an electing PTE or lower-tier PTE that were al-        income is taxed at the highest Hawaii income tax 
page 2, line 22f. The electing PTE must attach       located to an upper-tier PTE’s eligible sharehold-     rate for estates and trusts. The ESBT’s income 
Schedule PTE listing all qualified members and       ers (Part II, line 2) of all Schedule PTE-Us should    distributable to a beneficiary does not include the 
their distributive shares subject to PTE tax for the equal  each reported electing  PTE or lower-tier       income attributable to the S corporation stock. A 
taxable year.                                        PTE tax credit amount(s) in Part I, line 1.            beneficiary must file a Hawaii income tax return 
   S corporations that are upper-tier PTEs and       Schedule PTE-U, Part II, lines 1 and 2, should         to report the income, losses and credits distrib-
received a PTE tax credit from an electing PTE       be the total of the amount of qualified members        uted by the ESBT to the beneficiary.
or lower-tier PTE for the taxable year must attach   and tax credit amount per form.
Schedule  PTE-U listing  all their eligible  share-
holders and their distributive shares of the PTE     The Application of Hawaii Income Taxes 
tax credit.                                          to Qualified Subchapter S Subsidiary 
   For more information, see  Tax Information        Corporations (QSub), Qualified 
Release No. 2023-03, “Temporary Administrative       Subchapter S Trusts (QSST), and 
Rules Relating to Pass-Through Entity Taxation       Electing Small Business Trusts (ESBT)
as Enacted by Act 50, Session Laws of Hawaii         Hawaii’s  Income  Tax  Law adopts the  provi-
2023.”                                               sions of section 1361 under which a parent S 

                                                                                                                                                Page 9

- 10 -

Enlarge image

              STATE OF HAWAII — DEPARTMENT OF TAXATION 
              RELATED FEDERAL/HAWAII S CORPORATION TAX FORMS
                                                                                    Copy of Fed. 
Federal                                                                Use          Form May Be 
Form Number  Title or Description of Federal Form                      Hawaii Form  Used*
1120-S       U.S. Income Tax Return for an S Corporation               N-35         No
Schedule D   Capital Gains and Losses and Built-In Gains               Schedule D   No
Schedule K-1 Shareholder’s Share of Income, Deductions,                Schedule K-1 No 
             Credits, Etc.
970          Application to Use LIFO Inventory Method                  None         Yes
1128         Application to Adopt, Change, or Retain a Tax Year        None         Yes
2220         Underpayment of Estimated Tax by Corporations             N-220        No
2553         Election By a Small Business Corporation                  None         No
3115         Application for Change in Accounting Method               None         Yes
4562         Depreciation and Amortization                             None         Yes
4684         Casualties and Theft                                      None         Yes
6252         Installment Sale Income                                   None         Yes
8023         Elections Under Section 338 for Corporations Making       None         Yes 
             Qualified Stock Purchases
8697         Interest Computation Under the Look-Back Method for       None         Yes 
             Completed Long-Term Contracts
8824         Like-Kind Exchanges                                       None         Yes
8825         Rental Real Estate Income and Expenses                    None         Yes 
             of a Partnership or an S Corporation

8949         Sales and Other Dispositions of Capital Assets            None         Yes
 *If there is no Hawaii equivalent form, the federal form must be used.

Page 10

PDF file checksum: 837637604

(Plugin #1/10.13/13.0)