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    4                                                                                   FINAL DRAFT — 10/2/23                                                                                    4
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    6                                                                                                                                                         *231861*                           6
    7  2023 Schedule M1AR, Accelerated Recognition of                                                                                                                                            7
    8  Installment Sale Gains                                                                                                                                                                    8
    9                                                                                                                                                                                            9
    10                                                                                                                                                                                           10
    11 YOURYour First Name and Middle Initial FIRST NAME, INI YOURLast Name LAST NAMEXXXXXXXXXXXXXXXXXXXX                                                  999999999Your Social Security Number  11
    12                                                                                                                                                                                           12
    13 MAILING ADDRESSXXXXX                                   CITYXXXXXXXXXXXX  MN   11223                                                                 1234                                  13
    14 Mailing Address                                        City                                             State            ZIP                          Final Year of Installment Agreement 14
    15 NAME OF SCORPORATION                                                                                    12345678                                    12345678                              15
    16 Name of S Corporation or Partnership                                                                    FEIN                                          Minnesota Tax ID Number             16
    17 Complete this schedule if you are reporting installment sale gains from a sale executed after December 31, 2016, of any interest in, or                                                   17
    18 assets of, an S corporation or partnership. These amounts are reported on federal Form 6252 or Minnesota Schedule KF, KPI, or KS.                                                         18
    19 Do not complete this schedule if you are a full-year Minnesota resident.                                                                                                                  19
    20                                                                                                                                                                                           20
    21 X       I elect to defer installment sale gains under Minnesota Statute 290.0137, paragraph (b), and agree to:                                                                            21
    22         •   File Minnesota income tax returns in all subsequent years when gains are recognized from an installment sale executed after                                                   22
    23             December 31, 2016                                                                                                                                                             23
    24         •   Allocate gains to Minnesota as though the gains were realized in the year of sale                                                                                             24
    25         •   Include all relevant federal tax documents reporting the installment sale with subsequent Minnesota tax returns                                                               25
    26 If you elect to defer, STOP HERE. Submit this form to verify your election. If you do not elect to defer installment sale gains, complete the                                             26
    27 rest of this schedule.                                                                                                                                                                    27
    28                                                                                                                                                                                           28
    29   1    Gross profit from Minnesota Schedule KF line 6a,  KPI line 7a, and KS line 7a, or                                                                                                  29
    30      federal Form 6252 line 16 in the year of the sale... ...... ..... ....... ..... ..... ...... ..... .                                           1             12345678                30
    31                                                                                                                                                                                           31
    32    2  Installment sale income received in prior years (see instructions).... ...... ..... ....... ..... ...    2                                                  12345678                32
    33    3   Installment sale income from Minnesota Schedule KF line 6b,  KPI line 7b, and KS line 7b,                                                                                          33
    34      or federal Form 6252 line 24 in the current year ...... ...... ...... ..... ..... ...... ..... ....                                            3             12345678                34
    35                                                                                                                                                                                           35
    36    4  Add lines 2 and 3 ... ...... ..... ....... ..... ..... ...... ..... ...... ...... ..... ....... ...                                           4             12345678                36
    37                                                                                                                                                                                           37
    38   5  Subtract line 4 from line 1. Enter the amount here and include on line 6 of Schedule M1MB .. ....                                              5             12345678                38
    39      Residents at the time of sale: Also include this amount on line 13 of Column B                                                                                                       39
    40        of Schedule M1NR. STOP HERE.                                                                                                                                                       40
    41                                                                                                                                                                                           41
    42    Nonresidents at the Time of Sale                                                                                                                                                       42
    43    6   Enter the S corporation’s or partnership’s apportionment percentage for the year of sale  .. ......                                          6             12345678                43
    44                                                                                                                                                                                           44
    45    7   Allocation percentage of nonbusiness income (see instructions)                         ... ...... ..... ....... ..... ....                   7             12345678                45
    46                                                                                                                                                                                           46
    47    8  Enter the amount from line 5 that is nonbusiness income                           (see instructions) .... ..... ...... .....                  8             12345678                47
    48                                                                                                                                                                                           48
    49    9  Subtract line 8 from line 5 .. ...... ...... ..... ...... ..... ....... ..... ...... ..... ...... ..                                          9             12345678                49
    50                                                                                                                                                                                           50
    51  10    Multiply line 7 by line 8  ..... ...... ..... ..... ...... ...... ..... ...... ...... ..... ...... .    10                                                 12345678                51
    52                                                                                                                                                                                           52
    53  11    Multiply line 6 by line 9  ..... ...... ..... ..... ...... ...... ..... ...... ...... ..... ...... .    11                                                 12345678                53
    54                                                                                                                                                                                           54
    55  12  Add lines 10 and 11. Enter the result here and include on line 13, Column B, of Schedule M1NR ...  12                                                        12345678                55
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    63                                                                                               9995                                                                                        63
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2023 Schedule M1AR Instructions
You must complete a Schedule M1AR for each year you have an installment gain to report.

Who should complete this schedule?
You may need to complete this schedule to report either:
•  Installment sale income from the sale of S corporation stock, a partnership interest, or the assets of an S corporation or partnership
•  Income from an S corporation, partnership, or trust that is reporting income from any installment sale of S corporation stock, a partnership 
  interest, or the assets of an S corporation or partnership
If you report income from either situation above, complete Schedule M1AR if all of these apply:
•  The installment sale was executed after December 31, 2016
•  You were a nonresident or become a nonresident while recognizing income from the installment sale gains
• The S corporation or partnership had a Minnesota filing requirement, or you were a Minnesota resident, in the year the sale occurred
Do not complete this schedule if you are a full-year Minnesota resident. You are not required to complete this schedule to report the install-
ment sale of property not connected to the sale of an S corporation or partnership, or if you had accelerated the gains from this installment 
sale in a prior year.

What information will I need to complete this schedule?
If you completed an installment sale and reported it (or should have reported it) on federal Form 6252 with your federal individual income 
tax return, you must include information from Form 6252 on this schedule.
If you own an interest in an S corporation, partnership, or trust that completed an installment sale, you will need information reported to you 
on one of these Minnesota schedules:
•  Schedule KS, Shareholder’s Share of Income, Credits, and Modifications
•  Schedule KPI, Partner’s Share of Income, Credits, and Modifications 
•  Schedule KF, Beneficiary’s Share of Minnesota Taxable Income  

What if installment gains from the sale are undetermined in the year of sale?
Complete and file Schedule M1AR even if the income from an installment sale is undetermined. This includes sales with no stated maximum 
selling price, such as a contingent payment sale. See IRS Publication 537 for more information.

How do I allocate nonbusiness income?
Partnership Interests
If you are declaring nonbusiness income from the sale of a partnership interest, and the assets of the partnership consist of more than:
•  50% tangible property at the time of sale, divide the original cost of tangible property in Minnesota by the original cost of all tangible 
  property of the partnership
•  50% intangible property, at the time of sale, use the partnership’s sales factor for the full tax period immediately before the tax period dur-
  ing which the partnership interest was sold
Single Member Limited Liability Companies (LLC)
If you are declaring nonbusiness income from the sale of an interest in a company that is disregarded for federal income tax purposes, al-
locate it to Minnesota as if the company did not exist and the sole member personally owned the company’s assets.
Goodwill and Noncompete Covenants
If you are declaring nonbusiness income from the sale of goodwill or a covenant not to compete, allocate it to Minnesota using the entity’s 
prior-year sales factor. This includes federal allocations of purchase price to goodwill following the sale of an S corporation or single member 
LLC.

Other Income
If the nonbusiness income is not assignable to Minnesota under the methods in this section, assign it to your state of domicile.

Multiple Methods
If multiple methods of nonbusiness allocation are required, include additional information with your return detailing how you applied each 
percentage to the separate parts of the purchase price and how the percentages result in the amount listed on line 5. 
Line Instructions
Line 2
Include installment sale gains you received in 2017 through 2022 for the sale reported on Schedule KPI, Schedule KS, Schedule KF, and 
federal Form 6252. Also include any amount previously taxed by Minnesota.

Line 6
Enter the S corporation’s or partnership’s apportionment percentage for the year of sale. This information is reported on:
•  Schedule KS, line 47, for S corporation shareholders
•  Schedule KPI, line 49, for partners in partnerships
• Schedule KF, line 6c, for trust beneficiaries
Enter the amount as a decimal carried to five decimal places.
Line 7
If you are declaring nonbusiness income from an installment sale, use the appropriate method detailed in the instructions of this schedule. If 
you use multiple methods of nonbusiness allocation, include additional information with your return explaining how you calculated and ap-
plied each percentage to the separate parts of the purchase price.
Enter the amount as a decimal carried to five decimal places.

Questions?
Forms and information are available on our website at www.revenue.state.mn.us.
If you have questions:
•  Visit our website at www.revenue.state.mn.us
•  Send us an email at businessincome.tax@state.mn.us
•  Call us at 651-556-3075