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  Partnership Income   

  Understanding Income Tax 

   New Jersey’s bird is the Eastern Goldfinch, as seen here on the left. 
    
Determining Partnership Income ............................................................................................................................................................ 2 

Definitions ........................................................................................................................................................................................................ 2 

Question 1. What do I do with the information on Schedule NJK-1, Form NJ-1065 that my partnership(s) gave 
me? ..................................................................................................................................................................................................................... 6 

Question 2. What do I report if my partnership did not give me a Schedule NJK-1, Form NJ-1065? ....................... 11 

Instructions for Partner’s Reconciliation Worksheet A ................................................................................................................ 14 

Question 3. How do I determine my reportable income from a partnership if I was a part-year resident/part-
year nonresident?....................................................................................................................................................................................... 18 

Question 4. How do I allocate losses reported by more than one of my partnerships if total losses exceed 
partnership income? ................................................................................................................................................................................. 21 

Question 5. How do I determine the basis in my partnership(s) for New Jersey Income Tax purposes? ................ 23 

Question 6. How do I determine the gain (loss) from the sale of my partnership interest? ......................................... 24 

Question 7. What do I report in the year my partnership was completely liquidated? .................................................. 35 

Instructions for Partner’s Reconciliation Worksheet A - Liquidated ....................................................................................... 37 

Connect With Us. ........................................................................................................................................................................................ 38 

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Partnership Income

Understanding Income Tax

Determining Partnership Income

Partnership income is reported as one category of income on the partner’s New Jersey Income Tax return rather
than in multiple categories. For example, interest, dividends, rents, gains, or losses earned by a partnership are
combined with federal ordinary income (loss) to determine New Jersey partnership income (loss). This bulletin
explains how to determine the proper amount to report as your share of partnership income on your New Jersey
Income Tax return when:

1. You receive an appropriate Schedule NJK-1, Form NJ-1065 from your partnership(s);
2. You do not receive a Schedule NJK-1 from your partnership(s); or
3. You were a resident of New Jersey during only part of the year.
It also describes the ownership basis in a partnership for the purpose of calculating a gain (loss) from the sale of
a partnership interest.

(See Income from S Corporations for the procedure on reporting income from S corporations.)

Definitions

Partnership

Any unincorporated organization, syndicate, group, pool, or joint venture, through which a business, financial
operation, or venture is carried. This does not include a corporation, trust, or estate as defined by the New Jersey
Gross Income Tax Act. The Act allows only entities that qualify for and elect to be treated as a partnership for
federal tax purposes, and are in business, to be treated as partnerships. Examples of such entities include limited
liability companies (LLCs) and limited liability partnerships (LLPs).

Partner

The owner of a partnership interest. This includes a taxpayer subject to New Jersey Income Tax who is a member
of a partnership, or other unincorporated entity of the partnership, for purposes of determining the share of
partnership income distributed to the owners (distributive share).

Privilege period

The calendar year or fiscal accounting period for which a tax is payable.

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                                      Partnership Income 

                               Understanding Income Tax 

Basis 

The  ownership  basis  represents  how  much  money  and  other  assets  an  owner  invested  in  the  partnership. 
Additional investments and profits derived from the partnership increase the owner’s basis, while losses or cash 
withdrawals from the partnership reduce the basis. When investors sell their interest in the partnership, their 
profit is calculated by subtracting their basis from the sale proceeds. 

Partnerships’ Filing Requirements 

Every partnership having a New Jersey resident partner, or deriving income (loss) from New Jersey sources, must 
file a New Jersey partnership return, Form NJ-1065. A partnership that has 10 or more partners must file Form 
NJ-1065 and make payments electronically. A partnership, regardless of the number of partners, must also file 
and pay electronically if it:  

 • Is required to remit tax based on any nonresident partner’s allocable share of New Jersey partnership 
   income; and 
 • Uses the services of a paid preparer 

The partnership is required to issue Schedule NJK-1, Form NJ-1065, to each member. The Schedule shows that 
particular partner’s distributive share of the partnership’s income (loss), pension, and net gain (loss) from the sale 
of assets as a result of a complete liquidation. 

Payment Requirements 

Each entity that is classified as a partnership for federal income tax purposes may be required to: 

 • Make a payment of $150 for each owner of an interest in the entity, up to a maximum of $250,000 if the 
   entity has more than two owners and any income, loss, or expense derived from New Jersey sources. We 
   also require a 50% installment payment, unless it is the partnership’s final year of operation;  

 • Make a tax payment on behalf of all nonresident partners. We will credit the tax paid by the partnership 
   to the accounts of the nonresident partners; and                      

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                                     Partnership Income 

                                 Understanding Income Tax 

 • Make a quarterly tax payment on behalf of all nonresident partners that is equal to 25% of the tax due, on 
   or before the 15th day of the fourth, sixth, and ninth month of the privilege period. The entity also must 
   make a payment on or before the 15th day of the first month following the close of the privilege period. 
   We will credit these installment payments to the accounts of the nonresident partners in proportion to 
   each nonresident partner’s share of ownership.  

Adjustments to Income 

You can deduct certain qualified, unreimbursed business expenses from the distributive share of partnership 
income amount(s) reported to you by your partnership(s) on Schedule NJK-1 (or from the amount determined 
on Reconciliation Worksheet A).  

After you make any necessary adjustments to each distributive share of partnership income amount, you must 
enter the adjusted amount(s) on Schedule NJ-BUS-1. Then, the net amount(s) are totaled and entered on your 
personal New Jersey resident return (Form NJ-1040), nonresident return (Form NJ-1040NR), or fiduciary return 
(Form NJ-1041).  

If the adjusted net total is zero or less, make no entry on Form NJ-1040, or enter zero in Columns A and B, Form 
NJ-1040NR or on Form NJ-1041. (See Losses  below.) 

To qualify as deductible, costs or expenses must meet all of the following criteria: 

 • Incurred primarily and directly in the pursuit of business income; and 
 • Incurred as common and accepted practice in that field of business; and 
 • Required for and appropriate to the intended business purpose; and 
 • Reasonable in relation to the intended business purpose. 

You can only deduct ordinary business costs and expenses. You are not allowed to deduct expenses that were 
not incurred in the conduct of the trade or business, nor are you able to take a deduction based on income. The 
determination of whether a business expense is ordinary is based on the facts and circumstances of the expense. 
The burden is on you to demonstrate to our satisfaction that the cost or expense is deductible. 

You can deduct investment interest expense you incurred to acquire a partnership interest from your distributive 
share of partnership income. 

If you are a New Jersey resident, you can deduct the full amount of qualified, unreimbursed business expenses 
from your distributive share of partnership income.  
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                                   Partnership Income 

       Understanding Income Tax 

If you are a New Jersey nonresident, you also can deduct the full amount of qualified, unreimbursed business 
expenses from your distributive share of partnership income from all sources. However, you must prorate the 
amount of your qualified, unreimbursed expenses for each partnership to determine the portion attributable to 
(and deductible from) your distributive share of partnership income derived from New Jersey sources.  

Calculate the deductible portion of qualified expenses by multiplying the full amount of the expense by the 
ratio of New Jersey source partnership income to total partnership income: 

                                    Line 4, Column B, Schedule NJK-1 
                                    Line 4, Column A, Schedule NJK-1 

When you make adjustments to the amount of distributive share of partnership income reported on Schedule 
NJK-1 or Reconciliation Worksheet A, you must enclose a separate schedule detailing the nature and amount of 
each expense deducted for the New Jersey resident, nonresident, or fiduciary return, along with a copy of all 
Schedule NJK-1(s) and/or Reconciliation Worksheet A(s).  

Losses 

You cannot offset a loss in one category of income against income in a different category. You cannot carry 
losses forward or backwards from one year to another on your Income Tax return.  

If the partnership reports a loss to you or if a loss occurs as a result of adjustments for qualified, unreimbursed 
business expenses, you will enter the loss for that partnership on Schedule NJ-BUS-1 and use it to offset income 
from other partnerships. If the net amount from all partnerships listed on Schedule NJ-BUS-1 is a loss, you should 
make no entry on your New Jersey Income Tax return in the category “Distributive Share of Partnership Income.” 

If more than one partnership has a loss, and net losses exceed income, see question 4. 

Basis 

Making annual adjustments to your New Jersey basis in a partnership will allow you to accurately determine your 
gain (loss) when you sell or otherwise dispose of your interest in the entity. For more information on determining 
the basis in your partnership, see question 5. 

Disposition of a Partnership Interest  

If you disposed of your interest in a  partnership during the tax year, see question 6  for details on how to 
determine and report the gain (loss) from the disposition. 

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Partnership Income

Understanding Income Tax

Question 1. What do I do with the information on Schedule NJK-

1, Form NJ-1065 that my partnership(s) gave me?

Residents

New Jersey resident individuals, estates, and trusts are subject to the State’s Income Tax on their distributive
share of partnership income (loss) regardless of the source from which the income was derived. If you are a
resident with income from a partnership, you must:

1. Deduct any allowable, unreimbursed business expenses from the amount that appears in Column A,
Schedule NJK-1, Form NJ-1065 as “Distributive Share of Partnership Income (loss);” (See Adjustments
to Income .)

2. Enter the adjusted amount on Schedule NJ-BUS-1 of Form NJ-1040 or FormNJ-1041 in the “Distributive
Share of Partnership Income” section;

3. Enter the amount from Schedule NJ-BUS-1 on Form NJ-1040 or Form NJ-1041 on the line for “Distributive
Share of Partnership Income.” If this amount is zero or less, make no entry on Form NJ-1040, or enter
zero on Form NJ-1041. (See Losses .)

Example 1 illustrates the procedure for determining the amount to report as distributive share of partnership
income.

Multiple Partnerships

If you have income (loss) from more than one partnership, you must:

2. Enter the adjusted amounts from allpartnerships on Schedule NJ-BUS-1 of Form NJ-1040 or Form NJ-
1041 in the “Distributive Share of Partnership Income” section;

3. Total the adjusted amounts on Schedule NJ-BUS-1, and enter the result on Form NJ-1040 or Form NJ-
1041. If the total is zero or less, make no entry on Form NJ-1040, or enter zero on Form NJ-1041. (See
Losses .)

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                                  Partnership Income 

                              Understanding Income Tax 

The amount reported in Column A, Schedule NJK-1, Form NJ-1065 as  Net Gain (loss) from Disposition of 
Assets as a Result of a Complete Liquidation represents the total amount of taxable gain or loss from that 
entity. Enter this amount on Form NJ-1040, or Form NJ-1041 on the line for “Net gains or income from disposition 
of property.” 

Nonresidents 

Individual, estate, or trust partners that reside outside of New Jersey are subject to this State’s Income Tax on the 
distributive share of partnership income, but only for New Jersey-sourced income. 

If you are a nonresident, you must include your distributive share of partnership income from all sources on your 
New Jersey Income Tax return as follows: 

 1. Deduct any allowable, unreimbursed business expenses from the amount that appears as “Distributive 
    Share of Partnership Income (loss)” in Column A, Schedule NJK-1, Form NJ-1065; (See Adjustments to 
    Income .) 

 2. Enter the adjusted amount on Schedule NJ-BUS-1 of Form NJ-1040NR (nonresident individual partners) 
    or Form NJ-1041 (nonresident estate or trust partners) in the “Distributive Share of Partnership Income” 
    section;  

 3. Enter the amount from Schedule NJ-BUS-1 in Column A, Form NJ-1040NR or on Form NJ-1041 on the 
    line for “Distributive Share of Partnership Income.” If this amount is zero or less, enter zero; (See Losses .) 

 4. Deduct the prorated amount of any allowable, unreimbursed business expenses from the amount that 
    appears in Column B, Schedule NJK-1. This adjusted amount is the portion of total distributive share of 
    partnership income allocated to New Jersey and actually subject to tax; 

 5. Enter the adjusted New Jersey amount in Column B, Form NJ-1040NR (nonresident individual partners), 
    or on Schedule E, Form NJ-1041 (nonresident estate or trust partners). If this amount is zero or less, enter 
    zero. 

Example 1 illustrates the procedure for determining the amount to report as distributive share of partnership 
income. 

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Partnership Income

Understanding Income Tax

You must enter the share of New Jersey tax reported by the partnership in Part III, Schedule NJK-1, Form NJ-1065
on your New Jersey Income Tax return to claim credit for tax paid on your behalf by the partnership. Individual
partners must enter the amount on Form NJ-1040NR, and estate or trust partners must enter the amount on
Form NJ-1041.

Multiple Partnerships

If you have income (loss) from more than one partnership, you must:

1. Deduct any allowable, unreimbursed business expenses from the amount that appears as “Distributive
Share of Partnership Income (loss)” in Column A, Schedule NJK-1, Form NJ-1065 for each partnership;
(See Adjustments to Income .)

2. Enter the adjusted amounts from allpartnerships on Schedule NJ-BUS-1 of Form NJ-1040NR (individual
partners) or Form NJ-1041 (estate or trust partners) in the “Distributive Share of Partnership Income”
section;

3. Total the adjusted amounts on Schedule NJ-BUS-1, and enter the result in Column A, Form NJ-1040NR
or on Form NJ-1041. If the total is zero or less, enter zero; (See Losses .)

4. Deduct the prorated amount of any allowable, unreimbursed business expenses for each partnership from
the distributive share of partnership income (loss) from New Jersey sources (Column B of each Schedule
NJK-1);

5. Total these adjusted amounts, and enter the result in Column B, Form NJ-1040NR or on Schedule E, Form
NJ-1041. If the total is zero or less, enter zero.

You must include the amount of income reported by the partnership as Net Gain (loss) from Disposition of
Assets as a Result of a Complete Liquidation in Column A, Schedule NJK-1, Form NJ-1065 on your New Jersey
Income Tax return to determine your income from all sources. This amount must be entered as, “Net gains or
income from disposition of property,” in Column A, Form NJ-1040NR for nonresident individual partners or Form
NJ-1041 for nonresident estate or trust partners. Enter the amount from Column B, Schedule NJK-1 in Column B,
Form NJ-1040NR for nonresident individual partners or on Schedule E, Form NJ-1041 for nonresident estate or
trust partners. You are taxed on this amount from New Jersey sources.

If you have income (loss) from more than one partnership, you must add the separate amounts of share of New
Jersey tax reported by the partnerships (Part III of each Schedule NJK-1). Individual partners must enter the total
on Form NJ-1040NR, and estate and trust partners must enter the total on Form NJ‑1041 to claim credit for tax
paid on their behalf by the partnerships.

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                                            Partnership Income 

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Example 1 

 Schedule 
 NJK-1 
 (Form NJ-1065)  

 PART II             Income Information 
                                                                 NJ-1040 Filers 
                                                                                  B. New Jersey Source 
        Income Classifications            A. Total Distribution  Enter Amounts on                       NJ-1040NR Filers 
                                                                                     Amounts 
                                                                 Line Shown Below 
 1. Partnership Income (loss)               18,000                                   9,000                      
 2. New Guaranteed Payments                 -0-                                      -0-                        
 3. Partner’s 401(k) Contribution           2,577                                    1,288                      
 4. Distributive Share of Partnership 
    Income (loss)                           15,423               Line 21             7,712                     Line 23 
    (Line 1 plus Line 2 minus Line 3) 
 5. Pension                                                      Line 20a                                       
 6. Net Gain (loss) from Disposition of 
    Assets as a Result of a Complete                             Line 19                                       Line 19 
    Liquidation 

 PART III            Partner’s Information 
                                                                                                       Line 10b, Page 1 CBT-100 
                                                                                                       Line 8b, Page 1 CBT-100S 
                                                                                                       Line 10, Page 1, CBT-100U 
 1. Nonresident Partner’s Share of NJ Tax                                         1. 573               Line 8, NJ-CBT-1065 
                                                                                                       Line 51, NJ-1040NR 
                                                                                                       Line 23, NJ-1080C 
                                                                                                       Line 34a, NJ-1041 
 2. Partner’s HEZ Deduction                                                       2.                    
 3. Partner’s Sheltered Workshop Tax Credit                                       3.                    

A partnership supplied the following Schedule NJK-1 to one of its partners: 

During the tax year, this partner had deductible business expenses as shown below: 

              Auto                                                                   $300 
              Telephone                                                                  75 
              Investment interest expense to acquire the partnership interest            48 
                                       
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                                    Partnership Income 

                                Understanding Income Tax 

Example 1 (continued)  

Resident 

A resident partner reports distributive share of partnership income on the New Jersey Resident Income Tax 
Return, Form NJ-1040, as follows:  

 Distributive share of partnership income                                      
      per Schedule NJK-1, Column A:                                   $15,423 
 Less unreimbursed business expenses:                                    
      Auto                                                            ( 300)   
      Telephone                                                       (   75)   
      Investment interest expense to acquire the partnership interest (   48)   
 Adjusted distributive share of partnership income                             
      (include on Form NJ-1040)                                       $15,000 

The partner must enclose a schedule, similar to the one above, with the return to explain any adjustments made 
to the amount reported on Schedule NJK-1 by the partnership. 

Nonresident 

Nonresident partners must use an allocation factor to determine the deductible portion of each expense from 
New Jersey source income. Calculate the allocation factor by dividing Distributive Share of Partnership Income 
(loss) in Column B (New Jersey Source Amounts) by Distributive Share of Partnership Income (loss) in Column 
A (Total  Distribution). In this example, the  allocation factor is 50%  (7,712 ÷ 15,423). The partner reports 
distributive share of partnership income on the New Jersey Nonresident Income Tax Return, Form NJ-1040NR, 
as follows:  

 Distributive share of partnership income                                      
      per Schedule NJK-1, Column A:                                   $15,423 
 Less unreimbursed business expenses:                                    
      Auto                                                            ( 300)   
      Telephone                                                       (   75)   
      Investment interest expense to acquire the partnership interest (   48)   
 Adjusted distributive share of partnership income                             
      (include on Form NJ-1040)                                       $15,000 

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                                Partnership Income 

                              Understanding Income Tax 

The partner must enclose a schedule, similar to the one above, with the return to explain any adjustments made 
to the amounts reported on Schedule NJK-1 by the partnership. 

The nonresident partner also will claim credit for $573 on Form NJ-1040NR for tax that has been paid on their 
behalf by the partnership. 

Question 2. What do I report if my partnership did not give me 

a Schedule NJK-1, Form NJ-1065?  

There may be instances when a partnership that has income or loss from New Jersey sources, or in which one or 
more of the partners is a New Jersey resident, does not comply with its responsibility to file Form NJ-1065 and 
provide each partner with Schedule NJK-1. 

If you did not receive Schedule NJK-1 from a particular partnership, and you are either a New Jersey resident or 
a nonresident who knows or believes that the partnership had income (loss) from New Jersey sources, contact 
the partnership immediately to obtain Schedule NJK-1. If you are unable to obtain Schedule NJK-1, you will have 
to use the information from the federal Schedule K-1 that the partnership provided to complete Reconciliation 
Worksheet A. 

Reconciliation Worksheet A will enable you to determine the proper amount to report as your distributive share 
of partnership income for New Jersey tax purposes. To complete the worksheet, you will have to obtain certain 
information from the partnership in addition to the amounts provided on federal Schedule K-1 (e.g., the amount 
of taxes based on income and the amount of interest income attributable to obligations that are exempt for New 
Jersey Income Tax purposes). 

Exempt Obligations contains more information about obligations that are exempt from New Jersey Income Tax. 

Both resident partners and nonresident partners who have income from New Jersey sources must complete a 
Reconciliation Worksheet A for each federal Schedule K-1 received from a partnership that did not also provide 
a corresponding Schedule NJK-1. 

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                             Partnership Income 

                             Understanding Income Tax 

Adjust the amount of partnership income (loss) from line 17 of the completed Reconciliation Worksheet A to 
reflect any qualified,  unreimbursed business expenses before entering  an amount on Schedule NJ-BUS-1. 
Combine the adjusted amount with the adjusted income (loss) from any other partnerships and then enter the 
adjusted total on the “Distributive Share of Partnership Income” line of Form NJ-1040, Column A of Form NJ-
1040NR, or Form NJ-1041. Nonresidents with other New Jersey-sourced income must report their partnership 
income from all sources by calculating as if they were a New Jersey resident. (See instructions for line 17 of 
Reconciliation Worksheet A.)    

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  Partnership Income 

  Understanding Income Tax 

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Partnership Income

Understanding Income Tax

Instructions for Partner’s Reconciliation Worksheet A

Partnership Information

Enter the name and federal identification number of the partnership that issued the Schedule K-1, federal Form
1065 that is being reconciled. Enter your tax year.

Income Information
Line 1 – Ordinary Income (Loss) From Trade or Business Activities
Enter on line 1 the amount of ordinary income (loss) reported on line 1, Schedule K-1, federal Form 1065.

Line 2 – Net Income (Loss) From Rental Real Estate Activities
Enter on line 2 the amount of net income (loss) from rental real estate activities reported on line 2, Schedule K-
1, federal Form 1065.

Line 3 – Net Income (Loss) From Other Rental Activities
Enter on line 3 the amount of net income (loss) from other rental activities reported on line 3, Schedule K-1,
federal Form 1065.

Line 4 – Guaranteed Payments to Partner
Enter on line 4 the amount of guaranteed payments reported on line 4, Schedule K-1, federal Form 1065.

Line 5 – Interest Income
Enter on line 5 the amount of interest income reported on line 5, Schedule K-1, federal Form 1065.

Line 6 – Dividend Income
Enter on line 6 the amount of dividend income reported on line 6a, Schedule K-1, federal Form 1065.

Line 7 – Royalty Income
Enter on line 7 the amount of royalty income reported on line 7, Schedule K-1, federal Form 1065.

Line 8 – Net Short-Term Capital Gain (Loss)
Enter on line 8 the amount of net short-term capital gain (loss) reported on line 8, Schedule K-1, federal Form
1065.

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Partnership Income

Understanding Income Tax

Line 9 – Net Long-Term Capital Gain (Loss)
Enter on line 9 the amount of long-term capital gain (loss) reported on lines 9a, 9b, and 9c, Schedule K-1, federal
Form 1065.

Line 10 – Net IRC Section 1231 Gain (Loss)
Enter on line 10 the net IRC Section 1231 gain or loss reported on line 10, Schedule K-1, federal Form 1065.

Line 11 – Other Income (Loss)
Enter on line 11 any other income (loss) that is not included on lines 1 through 10 above. This will include the
amount reported on line 11 of Schedule K-1, federal Form 1065. If you report any amount on this line, enclose a
schedule with your return that identifies the income or loss.

Line 12 – Tax-Exempt Interest Income
Enter on line 12 the amount of tax-exempt interest income reported on line 18, Schedule K-1, federal Form 1065.

Line 13 – Subtotal
Add the amounts on line 1 through 12, and enter the result on line 13.

Line 14a – Taxes Based on Income
Enter on line 14a your share of the amount of taxes, based on income that was taken as a deduction by the
partnership on federal Form 1065 to determine the amount of ordinary income (loss) that you reported on line
1, above. Obtain this information from the partnership if you do not already have it.

Line 14b – Other Additions – Specify
Enter on line 14b any other items that were deducted from, or not included on, lines 1 through 12 above that
are not excludable under the New Jersey Gross Income Tax Act. Include the net addition adjustment from
Worksheet GIT-DEP. Specify each item reported. If the amount reported on line 13 above included any loss
incurred in connection with the disposition of exempt New Jersey or federal obligations, you must add back the
amount of such loss on this line. Obtain this information from the partnership if you do not already have it.

For tax years and for assets placed in service beginning on or after January 1, 2004, a New Jersey depreciation
adjustment is required if federal income is included: the deduction of the 50% federal special depreciation
allowance or IRC Section 179 expense, IRC Section 179 recapture income, or a gain or loss on the disposition of
such asset. Use Gross Income Tax Depreciation Adjustment Worksheet GIT-DEP to calculate the adjustment.
Include any net addition adjustment from Worksheet GIT-DEP, if applicable.

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Partnership Income

Understanding Income Tax

For New Jersey Income Tax purposes, the partnership can deduct IRC Section 179 expenses up to a maximum of
$25,000 (or $60,000 if New York Liberty Zone property is included). To determine the total amount deducted
federally by the partnership, divide the IRC Section 179 expense listed on your federal K-1 by your ownership
percentage. If the total federal deduction exceeded $25,000 (or $60,000 if New York Liberty Zone property is
included), you must use Worksheet GIT-DEP to calculate your New Jersey depreciation adjustment. To complete
the form, you will need to obtain the necessary information from the partnership, including the federal special
depreciation allowance.

Line 14c – Total Additions
Add the amounts on lines 14a and 14b and enter the result on line 14c.

Line 15 – Subtotal
Add the amounts on line 13 and 14c and enter the result on line 15.

Line 16a – IRC Section 179 Expense
Enter on line 16a any IRC Section 179 expense deduction reported on line 12, Schedule K-1, federal Form 1065.

Line 16b – Excess Meal and Entertainment Expense
Enter on line 16b the meal and entertainment expenses that were not deductible for federal income tax purposes.
Obtain this information from the partnership if you do not already have it.

Line 16c – Interest Income From Federal Obligations
Enter on line 16c any interest from federal obligations that is excludable from New Jersey income and was
included in the amounts reported on lines 5 or 6 above. Obtain this information from the partnership if you do
not already have it.

Amounts excludable from income include interest and dividends both on obligations of the State of New Jersey
or any of its political subdivisions (cities and counties), and from tax-exempt obligations of the United States
government, its territories, or agencies. Distributions from New Jersey qualified investment funds also are
exempt, as are distributions from other investment funds, as long as the distribution came from obligations
described in New Jersey law at N.J.S.A. 54A:6-14, et seq. Add lines 16c and 16d, and include the total on line 16b,
Form NJ-1040.

Line 16d – Interest Income From New Jersey Obligations
Enter on line 16d the amount of interest income from New Jersey obligations that is excludable from New Jersey
income, and was included in the amount reported on lines 6 or 12 above. Obtain this information from the
partnership if you do not already have it.
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Partnership Income

Understanding Income Tax

Line 16e – Other Subtractions – Specify
Enter on line 16e any other items that are excludable or deductible from the income (loss) included in the subtotal
reported on line 13 of this worksheet. Include on this line any gains from the sale of exempt federal or New Jersey
obligations, the net subtraction adjustment from Worksheet GIT-DEP, and the contribution you made through
the partnership to an IRC Section 401(k) plan. Contributions in excess of federal limits and taxable for federal
income tax purposes cannot be included on this line. Obtain this information from the partnership if you do not
already have it.

If assets were placed in service on or after January 1, 2004, and the federal 50% Special Depreciation Allowance
or Section 179 expense was deducted, then a New Jersey depreciation adjustment is required for subsequent tax
years. Use Gross Income Tax Depreciation Adjustment Worksheet GIT-DEP to calculate the adjustment. Include
any net subtraction adjustment from Worksheet GIT-DEP, if applicable.

Complete Form 501-GIT to calculate the New Jersey Domestic Production Activities Deduction to report when
determining the distributive share of partnership income.

Line 16f – Total Subtractions
Add the amounts on lines 16a through 16e and enter the result on line 16f.

Line 17 – Partnership Income (Loss)
Subtract line 16f from line 15 and enter the result on line 17. This amount represents your distributive share of
partnership income from all sources for New Jersey Income Tax purposes. You can deduct any allowable,
unreimbursed business expenses before entering the adjusted amount on Schedule NJ-BUS-1 of Form NJ-1040,
Form NJ-1040NR, or Form NJ-1041. (See Adjustments to Income .) Combine the adjusted amount with the
income (loss) from any other partnerships listed on Schedule NJ-BUS-1 and report on Form NJ-1040, Column A
of Form NJ-1040NJ, or on Form NJ-1041.

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                                     Partnership Income 

                                 Understanding Income Tax 

Nonresidents must include New Jersey derived partnership income in the adjusted distributive share of 
partnership income allocated to New Jersey in Column B, Form NJ-1040NR or on Schedule E, Form-1041. A 
nonresident’s partnerships income not derived from New Jersey sources should only include this amount on 
Schedule NJ-BUS-1 and in Column A of Form NJ-1040NR or on Form NJ-1041. 

Question 3. How do I determine my reportable income from a 

partnership if I was a part-year resident/part-year nonresident? 

Residents 

As a part-year resident, you are required to file a part-year resident return (Form NJ-1040) covering the portion 
of your tax year that you resided in New Jersey. The return must include the prorated amount of your distributive 
share of partnership income that was realized by the partnership during the portion of  itsfiscal year in which you 
were a New Jersey resident. 

If the partnership was completely liquidated (see question 7), you also must report the prorated amount of your 
net  gain  (loss)  from  a  disposition  of  assets  as  a  result  of  a  complete  liquidation  that  was  realized  by  the 
partnership during the portion of its fiscal year that you were a New Jersey resident. 

To determine the prorated amount of distributive share of partnership income to include on Schedule NJ-BUS-
1 of Form NJ-1040, first calculate your residency percentage by adding up the number of days in the partnership’s 
fiscal year that you were a New Jersey resident. Determine what percentage of 365 that number represents (use 
366 for leap years). Then deduct any allowable, unreimbursed business expenses from the amount of distributive 
share of partnership income in Column A, Schedule NJK-1. (See Adjustments to Income .) Multiply that result by 
the residency percentage. 

Example 2 
A partnership’s fiscal year begins on July 1, 2021, and ends on June 30, 2022. The taxpayer moved out of New 
Jersey on April 30, 2022 (spending 304 days as a resident during the partnership’s fiscal year). 

Therefore, this taxpayer’s residency percentage would be:  

                                              304 ÷ 365 = 83.3% 

If you have a different tax year than your partnership, you must report your distributive share of partnership 
income for the partnership’s tax year that ended  within your tax year. 

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                             Partnership Income 

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If you did not receive a Schedule NJK-1 from your partnership, deduct any allowable, unreimbursed business 
expenses from the amount on line 17 of your completed Reconciliation Worksheet A. Then multiply the result by 
the residency percentage, as determined above, to calculate the portion of your distributive share of partnership 
income  to  include on Schedule  NJ-BUS-1  of  Form NJ-1040.  For  more  information  regarding  Reconciliation 
Worksheet A, see question 2. 

If the partnership was completely liquidated, the Schedule NJK-1, Form NJ-1065 you receive from your 
partnership will separately state  your net gain  (loss) from  a  disposition  of assets as a result of  a complete 
liquidation. To determine the prorated amount to include on Form NJ-1040, multiply the amount of net gain 
(loss) from the disposition of assets as a result of a complete liquidation reported in Column A, Schedule NJK-1 
by the residency percentage. The result is the gain (loss) to be included on your Form NJ-1040 in the category, 
“Net gains or income from disposition of property.” 

If you did not receive a Schedule NJK-1 from your partnership, multiply the amount on line 18 of your completed 
Reconciliation Worksheet A – Liquidated by the residency percentage, as determined above, to calculate the 
portion of your net gain (loss) from a disposition of assets resulting from a complete liquidation, and include it 
as “Net gains or income from disposition of property” on Form NJ-1040. 

For more information regarding Reconciliation Worksheet A – Liquidated, see question 3. 

Nonresidents 

As a part-year, nonresident partner, you are required to file a part-year Form NJ-1040NR covering the portion 
of your tax year that you were not a New Jersey resident, but only if you had income from New Jersey sources 
during that period. Your part-year Form NJ-1040NR must include in Column A the prorated amount of your 
distributive share of partnership income from all sources and, in Column B, the prorated  amount of your 
distributive share of partnership income that was derived from New Jersey sources.  

If the partnership was completely liquidated (see question 7), you also must report the prorated amount of your 
New Jersey-sourced net gain (loss) from the sale of assets realized by the partnership during the portion of its 
fiscal year that you were a nonresident of New Jersey.  

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                                  Partnership Income 

                               Understanding Income Tax 

Calculate your nonresidency percentage by adding up the number of days in the partnership’s fiscal year that 
you were not a New Jersey resident. Determine what percentage of 365 that number represents (use 366 for leap 
years.) To determine the prorated amount of distributive share of partnership income to include on Schedule NJ-
BUS-1 for Column A of Form NJ-1040NR, deduct allowable, unreimbursed business expenses from the amount 
of your distributive share of partnership income from everywhere reported in Column A, Schedule NJK-1. (See 
Adjustments to Income.) Then multiply that result by the nonresidency percentage. 

Example 3 
From the facts given in example 2, the taxpayer’s nonresidency percentage is: 

                                  61 ÷ 365 = 16.7% 

To determine the  prorated amount to include in Column  B,  Form  NJ-1040NR, deduct any allowable, 
unreimbursed business expenses from the amount of your distributive share of partnership income from New 
Jersey sources reported in Column B, Schedule NJK-1, Form NJ-1065. Multiply the result by the nonresidency 
percentage, as calculated above.  

If the partnership was completely liquidated, determine the prorated amount of your net gain (loss) from a 
disposition of assets by multiplying your nonresidency percentage by the net gain (loss) from the asset sale as a 
result of a complete liquidation listed in Column A of your Schedule NJK-1. The result is the gain (loss) to be 
included in Column A, Form NJ-1040NR in the category, “Net gains or income from disposition of property.” 

To determine the prorated amount of your net gain (loss) from the sale of assets as a result of a complete 
liquidation from New Jersey sources, multiply the gain (loss) from a disposition of assets as a result of a complete 
liquidation from New Jersey sources listed in Column B of your Schedule NJK-1 by your nonresidency percentage. 
The result is the gain (loss) to be included in Column B, Form NJ-1040NR in the category, “Net gains or income 
from disposition of property.” 

If you did not receive a Schedule NJK-1 from your partnership, and you know or believe that the partnership had 
income from New Jersey sources, you should contact the partnership immediately.  

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                              Partnership Income 

                              Understanding Income Tax 

You must perform a calculation if your partnership had no income from New Jersey sources, but you had other 
types of income from New Jersey sources during the period that you were a nonresident. Multiply either the 
amount on line 17, Reconciliation Worksheet A or the amounts on lines 17 and 18, Reconciliation Worksheet A 
– Liquidated, by the nonresidency percentage after first deducting allowable, unreimbursed business expenses. 
You must include the result(s) on Schedule NJ-BUS-1 for Column A of Form NJ-1040NR. For more information 
regarding  Reconciliation  Worksheet  A,  see question  2,  or  for  more  information  regarding  Reconciliation 
Worksheet A – Liquidated, see question 7. 

Question 4. How do I allocate losses reported by more than one 

of my partnerships if total losses exceed partnership income? 

When you have income from one partnership and losses from two or more other partnerships that, in total, 
exceed the positive partnership income, you must allocate the losses among the partnerships with losses. To 
determine the usable portion of each partnership’s loss,  you must divide each partnership’s loss by total 
partnership losses and then multiply this percentage by total partnership income. 

  Partnership A’s Loss 
                               ×  Total Partnership Income  =  Usable portion of partnership A’s losses 
  Total Partnership Losses 

  Example 4 
  A taxpayer has three partnerships whose adjusted distributive shares of partnership income/loss for 2021 are as 
  follows: 
  Partnership A                              $ 15,000  
  Partnership B               ($ 10,000)   
  Partnership C               ($ 20,000)   

  The usable portion of each partnership’s loss is determined as follows: 
                              ($ 10,000) 
  Partnership B                                         ×  $15,000  =  ($ 5,000) 
                              ($ 30,000) 
                              ($ 20,000) 
  Partnership C                                         ×  $15,000  =  ($10,000) 
                              ($ 30,000) 
You need to determine the usable portions of each loss for your New Jersey partnership basis. (See question 5.) 
We provided a worksheet to aid you in calculating the usable portion of each partnership’s loss (Worksheet B). 

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Question 5. How do I determine the basis in my partnership(s) 

for New Jersey Income Tax purposes? 

Calculate the partnership basis each year. Annually updating your New Jersey basis will provide you with the 
documentation needed to determine your gain or loss from the disposition of property when you sell your 
investment, or the partnership is dissolved. 

To calculate your basis, you will need to know the following information: 

  •   Your initial contribution to the partnership; 
  •   Additional contributions by year; 
  •   Withdrawals by year; 
  •   Income reported over your period of ownership; 
  •   Losses used  over your period of ownership. We have included Worksheet C to assist you in tracking your 
      basis in your partnership interests from year to year. 

 Example 5 
 A taxpayer owns an interest in three partnerships. The following facts are needed to determine the basis in 
 each partnership at the end of 2021: 
  
                                        Contributions/(Withdrawals) 
 Partnership                            A                    B                C 
 2019                      $10,000                           $10,000          $10,000 
 2020                                   —                    —                $ 5,000 
 2021                                   —                    ($ 3,000)        — 
                                                                               
                                             Income/(Loss) 
 Partnership                            A                    B                C 
 2019                      ($ 2,000)                         ($ 1,500)        ($ 5,000) 
 2020                      ($ 5,000)                         ($ 4,000)        ($ 7,000) 
 2021                      $15,000                           ($10,000)        ($20,000) 

Income  (loss)  reflects  the  deduction  of  any  unreimbursed  business  expenses  that  met  the  criteria  given  in 
Adjustments to Income .                               

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                             Partnership Income 

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 Example 5 (continued)  
  
                                                            Basis Calculation 

 Partnership               A                        B                 C             
 Initial Contribution      $10,000                  $10,000           $10,000       
 Additional Contribution     0                              0          5,000        
 Withdrawals                 0                      (3,000)                   0     
 Income/Used Loss 2019       0                              0                 0     
 Income/Used Loss 2020       0                              0                 0     
 Income/Used Loss 2021     15,000                   (5,000)*          (10,000)*     
                                                                                    
 Basis as of 12/31/21      $ 25,000                 $ 2,000           $ 5,000       

Do not include the losses incurred in Tax Years 2019 and 2020 when determining the taxpayer’s basis for New 
Jersey tax purposes since they did not report income in those years. 

* See question 4 for information on how to allocate losses. 

Question 6. How do I determine the gain (loss) from the sale of 

my partnership interest? 

Residents 

If you were a New Jersey resident at the time you disposed of your partnership interest, you must include in your 
income the gain or loss from the disposition, including any dissolution of a partnership for which you received 
no value. N.J.S.A. 54A:5-1c requires that you use the federal adjusted basis to calculate your gain or loss from the 
disposition of property.  

However, a decision rendered by the New Jersey Supreme Court in Koch v. Director , 157 N.J. 1 (2000), requires 
that a separate New Jersey basis be determined. Only the amount of your used loss for New Jersey purposes will 
result in a reduction of your partnership basis. 

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              Partnership Income 

              Understanding Income Tax 

Nonresidents 

If you were a nonresident at the time you disposed of your partnership interest, do not include the gain (loss) 
from the disposition of your partnership interest in your income from New Jersey sources in Column B, Form NJ-
1040NR.  

However, if you had other types of income from New Jersey sources in the year of disposition and are required 
to file a New Jersey nonresident return, you must calculate the gain (loss) from the disposition of your partnership 
interest. Calculate the gain (loss) as if you were a New Jersey resident, and include it as “Net gains or income 
from disposition of property” in Column A, Form NJ-1040NR. 

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                                          Partnership Income 

                                    Understanding Income Tax 

Enter the partnership’s tax year in the first column. 

   (A) Enter the ending balance from Column E of the prior tax year; 

   (B) Enter the amount of capital you contributed to the partnership during the tax year; 

   (C) Enter the amount of your “Adjusted New Jersey Partnership Income,” or the amount of your “Usable 
       Portion of New Jersey Partnership Loss.” Report these amounts in either Column B or Column C of 
       Worksheet B if you have income from one partnership and losses from two or more other partnerships 
       that exceed your positive income. If you have no partnership with positive income, you have no “Usable 
       Portion of New Jersey Partnership Loss.” Additionally, add any tax-exempt income and subtract any 
       nondeductible expenses; 

   (D) Enter the amount of your withdrawals from the partnership during the tax year; 

   (E) Enter the net amount of Columns A through D.  

 Example 6A 

 FACTS:                                                  
 • Interest in only one partnership                     • Partnership incurred  a $2,000 loss each year;  the 
 • Purchase price in 2011: $15,000                        losses were not used for  New Jersey  Income Tax 
                                                          purposes 
 • No additional contributions of capital               • Schedule NJK-1 received from the partnership for 
                                                          2021 is marked “Final Return” 
 • No withdrawals over period of ownership              • Nothing received in  exchange for  interest in the 
                                                          partnership upon dissolution 
 • No income from the partnership ever reported 
                                                        • Nothing received in exchange for interest in the 
   to New Jersey 
                                                          partnership upon dissolution 
 BASIS CALCULATION:                                     GAIN (LOSS) from DISPOSITION OF PROPERTY: 
   Purchase Price                          $  15,000      Sale Price                        $           0 
   Capital Contributions                         0        Less Ending Basis                 _(15,000) 
   Withdrawals                                   (0)      Less Disp. of Property            $(15,000) 
   Reported Income                         ________0                                        
                                                                                            
   Basis in Partnership                    $  15,000                                        
                                                                                            
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                                    Partnership Income 

                                    Understanding Income Tax 

The cost basis for the partnership interest in this example is $15,000. Since you received no consideration for 
your partnership interest, you incurred a $15,000 loss from the dissolution of the partnership, which can be used 
to offset any other gains that occur in the same tax year in the income category, “Net gains or income from 
disposition of property.” 

 Example 6B 

 FACTS: Same as example 6A above, except the partnership interest sold for $50,000. 
 GAIN (LOSS) from DISPOSITION OF PROPERTY: 
   Sale Price                       $ 50,000 
   Less Ending Basis                  (15,000) 
   Gain Disp. of Property           $ 35,000 

In this case, a $35,000 gain results from the sale of your partnership interest. You can either add this gain to other 
gains, or use it to eliminate losses from the disposition of property that occur in the same tax year. 

 Example 7A 

 FACTS:                                             
 • Interest in only one partnership                • Partnership incurred a $2,000 loss each year (2014-
 • Purchase price in 2011: $15,000                   2021);  the  losses  were  not  used  for  New  Jersey 
                                                     Income Tax purposes 
 • Additional contributions of capital: $5,000     • Schedule NJK-1 received from the partnership for 
                                                     2021 is marked “Final Return” 

                                                   • Net gain (loss) from a disposition of assets as a result 
 • Withdrawals over period of ownership: $4,000 
                                                     of a complete liquidation was $26,000 
 • Partnership reported income in 2012 of $1,500   • Received final distribution of $30,000 from interest in 
   and $2,500 in 2013                                the partnership upon dissolution 
  
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                               Partnership Income 

                              Understanding Income Tax 

 BASIS CALCULATION:                                 GAIN (LOSS) from DISPOSITION OF PROPERTY: 
 Purchase Price                $  15,000            Sale Price                    $     30,000 
 Capital Contributions                     5,000    Less Ending Basis             _(46,000) 
 Withdrawals                               (4,000)  Less Disp. of Property        $(16,000) 
 Reported Partnership Income               4,000                                  
 Net Gain from Disposition of                                                     
                               
 Liquidated Assets             __26,000 
                                                                                  
 Basis in Partnership          $  46,000                                          

The cost basis for the partnership interest in this example is $46,000. Since you received $30,000 as a final 
distribution from your partnership interest, you incurred a $16,000 loss from the dissolution of the partnership. 
This can be used to offset your $26,000 gain from the disposition of assets as a result of a complete liquidation, 
or any other gains that occur in the same tax year in the income category, “Net gains or income from disposition 
of property.” 

 Example 7B 

 FACTS: Same as example 7A above, except partnership interest sold for $50,000. 
 GAIN (LOSS) from DISPOSITION OF PROPERTY: 
 Sale Price                   $ 50,000 
 Less Ending Basis              (46,000) 
 Gain Disp. of Property       $    4,000 

The $4,000 gain should be added to your $26,000 gain from the disposition of assets as a result of a complete 
liquidation and any other gains (losses) from the sale of property that occur in the same tax year. 

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                                   Partnership Income 

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 Example 8A 

 FACTS: You have interests in two partnerships (A & B) 

               Partnership A                                     Partnership B 
 • Purchase price in 2011: $15,000                   • Purchase price in 2016: $10,000 
 • No additional contributions of capital            • No additional contributions of capital 
 • No withdrawals over period of ownership           • No withdrawals from this partnership 
 • No income from Partnership A ever reported to     • Partnership B reported income of $500 in years 
   New Jersey                                          2017-2021 
 • Partnership A incurred a $2,000 loss each year    • This is an ongoing partnership 
 • Schedule NJK-1 received from Partnership A for       
   2021 is marked “Final Return” 
 • Nothing received in exchange for interest in the     
   partnership upon disposition 
  
 BASIS CALCULATION – Partnership A:                   
   Purchase Price                     $  15,000                                         
   Capital Contributions                    0                                           
   Withdrawals                             (0)                                          
   Reported Income Partnership A      __(2,500)                                         
   Basis in Partnership               $  12,500                                         
                                                                                        
 GAIN (LOSS) from DISPOSITION OF PROPERTY:                                              
   Sale Price                         $          0                                      
   Less Ending Basis                  _(12,500)                                         
   Loss from Disp. of Property        $(12,500)                                         

You have a $12,500 loss. You can either subtract this loss from any gains or add it to losses from dispositions of 
property that occur in the same year. In each year, $500 of the $2,000 loss from Partnership A was used to offset 
the $500 of income from Partnership B. The $2,500 of used losses reduces your partnership basis. 

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                                   Partnership Income 

                               Understanding Income Tax 

 Example 8B 

 FACTS: You have interests in two partnerships (A & B) 

                Partnership A                                      Partnership B 
 • Purchase price in 2011: $15,000                     • Purchase price in 2017: $10,000 
 • Additional contributions of capital: $5,000         • No additional contributions of capital 
 • Withdrawals over period of ownership: $1,000        • No withdrawals from this partnership 
                                                       • Partnership B reported income of $500 in years 
 • Losses 2011-2019: $2,000 each year 
                                                         2017-2021 
 • Partnership A reported income of $1,500 in          • This is an ongoing partnership 
   2020;  $10,000  in  2021  (attributed  to  Section 
   1231 gain) 
 • Partnership interest sold for $50,000                  
  
 BASIS CALCULATION – Partnership A:                     
   Purchase Price                     $  15,000                                           
   Capital Contributions                      5,000                                       
   Withdrawals                           (1,000)                                          
   Used Losses                           (1,500)                                          
   Reported Income Partnership A         __11,500                                         
   Ending Basis                       $  29,000                                           
                                                                                          
 GAIN (LOSS) from DISPOSITION OF PROPERTY:                                                
   Sale Price                         $  50,000                                           
   Less Ending Basis                  _(29,000)                                           
   Gain from Disp. of Property           $21,000                                          

You have a $21,000 gain. You can either add this gain to other gains or use it to offset losses from the disposition 
of property that occurs in the same tax year. 

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                Partnership Income 

                Understanding Income Tax 

                Instructions 

 • Report the name, FID number, and either adjusted losses or income of each partnership on the lines above. 
   Add the adjusted losses (A#) and income (B#), and report the totals of each in Blocks A and B. 

 • Divide each partnership’s adjusted New Jersey partnership loss (A#) by your total adjusted New Jersey 
   partnership loss (A). Multiply that percentage by your total adjusted New Jersey partnership income (B). 
   The result is the partnership’s usable loss (C#) that is to be entered in the partnership’s corresponding 
   block entitled, “Usable Portion of New Jersey Partnership Loss.” 

 • Add the usable losses and report the total in Block C. The total in Block C should equal the amount reported 
   in Block B. 

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                                   Partnership Income 

                              Understanding Income Tax 

Enter the partnership’s tax year in the first column. 

 (A) Enter the ending balance from Column E of the prior tax year; 

 (B) Enter the amount of capital you contributed to the partnership during the tax year; 

 (C) Enter the amount of your “Adjusted New Jersey Partnership Income,” or the amount of your “Usable 
     Portion of New Jersey Partnership Loss.” Report these amounts in either Column B or Column C of 
     Worksheet B if you have income from one partnership, and losses from two or more other partnerships 
     that exceed your positive income. If you have no partnership with positive income, you have no “Usable 
     Portion of New Jersey Partnership Loss.” Additionally, add any tax-exempt income and subtract any 
     nondeductible expenses; 

 (D) Enter the amount of your withdrawals from the partnership during the tax year; 

 (E) Enter the net amount of Columns A through D.  

Question  7.  What do I report in the year my partnership was 

completely liquidated? 

Under Income Tax regulation N.J.A.C. 18:35-1.3(d)2, a complete liquidation of a partnership is deemed to occur 
in the tax year when: 

 •   All its partners discontinue all partnership activities;  
 •   All its assets have been distributed to the partners; and  
 •   The partners are required to recognize a gain or loss on the disposition of their partnership interests for 
     federal income tax purposes.  

If the complete liquidation meets the three criteria above, separately report the partnership’s gain or loss from 
the sale or disposition of its assets as, “Net gains or Income from Disposition of Property.” 

If a partnership was completely liquidated, the partnership will provide you with a Schedule NJK-1, Form NJ-1065 
that separately states  your distributive share of partnership income (loss) and  your net gain (loss) from  a 
disposition of assets as a result of a complete liquidation. 

If a partnership was completely liquidated, and you did not receive Schedule NJK-1 from the partnership, you 
must complete Reconciliation Worksheet A – Liquidated to determine the correct amount of distributive share 
of partnership income (loss) and net gain (loss) from a disposition of assets. To complete Worksheet A Liquidated, 
you must obtain the necessary information from the partnership. 
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 Partnership Income 

 Understanding Income Tax 

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                                  Partnership Income 

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Instructions  for  Partner’s  Reconciliation  Worksheet  A  - 

Liquidated 

Obtain the necessary information from the partnership, including the partnership’s gain or loss from a liquidation 
of the partnership’s assets before properly completing Reconciliation Worksheet A – Liquidated.  

Partnership Information 

Enter the following information:  

 • Name and federal identification number of the partnership that issued the Schedule K-1, federal Form 
   1065 that is being reconciled; 
 • Your tax year; 
 • The date the partnership and all its partners discontinued all business activities; 
 • The date all the partnership assets were distributed to the partners; and  
 • Whether all the partners are required to recognize a gain or loss on the disposition of their partnership 
   interests for federal income tax purposes this tax year. 

Follow the Instructions for Partner’s Reconciliation Worksheet A. 

Column A – For each line, enter the partnership income, gains, losses, and New Jersey adjustments from and 
applicable  to the partnership’s operations, activities, and transactions that do not pertain to  the sale or 
disposition of its assets as a result of a complete liquidation.                        

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                                     Partnership Income 

                                 Understanding Income Tax 

Column B – For each line, enter the partnership’s gains or losses and New Jersey adjustments that are applicable 
to the sale or disposition of its assets as a result of a complete liquidation. 

Connect With Us. 

Email your State tax questions;  

Visit a Regional Information Center; 

Call (609) 292-6400;  

Follow us: 

The forms and amounts referred to in this Bulletin are those for Tax Year 2021. This document is designed to 
provide guidance to taxpayers and is accurate as of the date issued.  

Any reference in this publication to a spouse also refers to a spouse who entered into a valid same-sex marriage 
in another state or foreign nation and a partner in a civil union (CU) recognized under New Jersey law. 

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