Taxability of Partnership Income under the Michigan Uniform City Income Tax Ordinance Partnerships Required to File a Return Every partnership with business activity in the city, whether or not an office or place of business was maintained in the city, is required to file an annual return. Syndicates, joint ventures, pools and like organizations and Limited City of Grayling Liability Companies (LLC's) electing to be taxed as partnerships at the federal level will also use Form GR-1065. Partners who are individual RESIDENTS are taxed on their entire distributive share of the net profits of the partnership, including that arising from business activities outside the city: ordinary business income, interest income, dividend income, rents, royalties, other income, and gains from the sale or exchange of property, either tangible or intangible, regardless of where the property is located. Partners who are individual NONRESIDENTS including estates and trusts are taxed on their distributive share of the 2022 Partnership partnership’s ordinary business income which is attributable to business activity in the city, plus net rentals of tangible property located in the city and gains from the sale or exchange of tangible Income Tax Return property in the city. Nonresidents are not taxed on their share of net rentals of property located outside the city, gains from the sale or exchange of tangible property located outside the city, gains FORM GR-1065 from the sale or exchange of securities or other intangible property, or non-business interest and dividend income. When the receipt of interest and other intangible income is directly related to the nature of the business, such interest, etc., is business income taxable to a nonresident, and is to be included in ordinary business income in Schedule A. Partners who are CORPORATIONS are taxed at the corporate tax rate on their distributive share of the partnership’s: ordinary MAILING ADDRESS: business income attributable to business activity in the city; net rentals of tangible property; and gains from the sale or exchange CITY OF GRAYLING of tangible property attributable to business activity in the city. INCOME TAX DIVISION Thus, all taxable income of a corporate partner (net profits of a corporation) is determined by the business allocation PO BOX 515 percentage of the partnership. EATON RAPIDS, MI 48827-0515 Partners who are PARTNERSHIPS, LLC’s electing to be taxed as a partnership, JOINT VENTURES, ETC. (downstream partnership) are taxed based upon their partner’s entity classification and share of partnership income. CITY WEBSITE: DUE DATE OF PARTNERSHIP RETURN Calendar year taxpayers must file by April 30, 2022. Fiscal WWW.CITYOFGRAYLING.ORG year taxpayers must file by the last day of the fourth month after the end of their fiscal year or short period return. EXTENSION OF TIME TO FILE A PARTNERSHIP RETURN For partnerships electing to pay tax, Form GR-7004, Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns, must be filed on or before the due date for filing Email: graylingtax@issi-central.com the partnership return. An extension is automatically granted upon filing of Form GR-7004 and payment of the tentative tax balance Phone: (989) 348-7750 due (Form GR-7004, line 3). Failure to pay the balance due invalidates the extension request. Interest and penalty will Fax: (517)441-9719 be assessed on taxes paid late even if an extension of time to file is granted. For partnerships filing an information return, a six month extension of time to file is automatically granted. Do not file Form GR-7004, Application for Automatic Extension of Time to File Certain Business Income Tax, information and Other Returns. REQUIRED RETURN ATTACHMENTS When filing a city’s partnership return, Form GR-1065, certain schedules and copies of federal forms are required to be attached. See page 6, Appendix A for a listing of attachments GENERAL INFORMATION and attachment order. Disclaimer OBTAINING PARTNERSHIP RETURN FORMS These instructions are interpretations of the Uniform City Income Tax Ordinance, MCLA 141.601 et seq. The Ordinance will prevail in any Partnership return forms are not mailed to partnerships. The disagreement between these instructions and the Ordinance. forms are available for download on the city's website. Page 1 |
ALLOCATE AND APPORTION - DEFINED PAGE 1 INSTRUCTIONS The word allocate in these instructions means to determine partner’s A partnership filing an information return is required to complete taxable portion of the type of partnership income using: the partner’s the Identification and Information section and the Signature section classification and the Business Allocation Percentage calculated on of Form GR-1065. Also in the Disclosure of Return Information Schedule D, Business Allocation Percentage, line 5; or in the case of a section, the partnership may elect to allow disclosure of return taxpayer authorized by the Income Tax Administrator of the city, the information between a designated individual or firm and the city’s special allocation formula percentage calculated on Schedule D, line c. income tax department. The meaning of the word apportion as used in these instructions A partnership electing to pay tax is required to complete all of means to: directly determine the partner’s taxable income based upon Form GR-1065 and specifically to mark (X) the box on line F. the partner’s classification; or the partner’s classification and the location of the source of the income. IDENTIFICATION AND INFORMATION PARTNERSHIPS FILING AN INFORMATION RETURN All partnerships are to provide the information requested and answer A partnership is required to file an information return unless the all questions in this section. partnership elects to compute and pay the tax due on behalf of all partners. Partnerships filing information returns are required to TAX complete: Form GR-1040 (Identification and Information and Line 1. Add the totals from Schedule 2, Tax Calculation Signature sections), Schedule 1, Schedule A, Schedule B, Schedule, columns 8 and 9, and enter on line 1. Schedule C and if appropriate Schedule D and Schedule E. PAYMENTS AND CREDITS The Partnership Return, Form GR-1065, is designed to distinguish Line 2. Enter the total payments and credits for each type of between income taxed at the resident, nonresident or corporation tax payment listed on lines 2a through 2d and, for resident individual tax rates. The purpose of the return is to set forth the entire net partners, the total of any credits for tax paid to another city on line 2e. profit for the tax period and to show the distributive share of each Enter the total of the payments and credits on line 2f. partner and indicate the entity type of the partner and, if an individual, the residency status of the partner. If residency changes during the BALANCE DUE year for any individual partner, use two lines to indicate allocation of Line 3. If total tax (line 1) is greater than the total tax payments (line income by residency status. On Schedule 1, Partner Information 2f) subtract line 2f from line 1 and enter balance of tax due. The Schedule, enter the start date of residency on the resident line balance due must be paid when filing the return. and the end date of residency on the nonresident line. To pay with a check or money order make the check or money Ordinary business income of the partnership is reported in order payable to the City of Grayling, place the payment in front of the Schedule A. Each partner’s distributable share of the ordinary return and mail the payment and return to the address listed . business income is reported on Schedule C, column 1. OVERPAYMENT Partnership income not reported in Schedule A is reported in Line 4. If the total payments and credits (line 2f) is greater than the Schedule B, by type of income and the taxable and nontaxable tax due (line 1) subtract line 1 from line 2f and enter the overpayment portions for partners taxed at the resident, nonresident or amount. corporation tax rate. The taxable income from Schedule B, columns 6 and 7 is reported by partner in Schedule C, columns CREDIT FORWARD 6 or 7. Line 5. Enter all or the portion of the overpayment to be credited forward. Schedule K-1 (Form GR-1065), Partners Share of Income, Exclusions, Deductions, Credits and Tax Paid, is to be provided to each partner to DONATIONS assist them in filing their city income tax return. Line 6. Donate all or any portion of overpayment. PARTNERSHIPS ELECTING TO PAY TAX REFUND A partnership may elect to pay tax on behalf of all of its partners. When Line 7. Enter the amount overpayment to be refunded. A refund will be the partnership pays the tax, the individual partners are not required to issued via a paper refund check. file a return. However, a city’s income tax return is required from any DISCLOSURE OF RETURN INFORMATION partner having city taxable income other than the distributive share of Line 9. By marking (X) the “Yes” box (line 9a) and completing lines 10a the net profits of the partnership. In such instances, a partner required and 10b in the Disclosure of Return Information section, the partnership to file a return should refer to the city’s income tax return instructions for is authorizing the city’s Income Tax Department to contact the preparer reporting partnership income and claiming credit for tax paid by the for answers to any questions that may arise relating to its return and to partnership. Partnerships electing to pay the tax on behalf of the answer any questions from the preparer about the return. Also, by partners assume the status of taxpayer to the following extent: (1) marking (X) the “Yes” box (line 9a) and completing lines 10a and 10b, timely payment must be made; and (2) estimated income tax payments, the partnership is authorizing the preparer to: provide the city’s Income Tax Department with any information about or missing from the return; Form GR-1065ES, are required if the total 2023 estimated tax for the respond to notices about math errors, offsets and return preparation; and partnership is expected to exceed $100. The calendar or fiscal year of contact the Income Tax Department for information about the return or the partnership will govern in establishing the due dates for making the status of any related refund or payments. estimated tax payments. Partnerships electing to pay tax must prepare All cities accepting returns following the partnership common form format and file all the forms and schedules required for an information return allow the check box for authorization for disclosure of return information. and complete Schedule 2, Tax Calculation Schedule, and Form GR-1065, lines 1 through 8. Schedule 2 details each partner’s share of SIGNATURE Line 11. In the Signature section the partner or member representing the the city’s taxable income, deductions, exemptions, tax at the resident, entity must sign the return (line 11b), and enter the following data: the nonresident or corporation tax rate and any credit for tax paid to date the returned was signed (line 11a); the printed name of the partner another city. Form GR-1065, lines 1 through 8, reports: the tax; all or member signing the return (line 11c); and a day time phone number payment and credits; any balance due or overpayment; and how any for the partner or member. overpayment is to be credited, donated or refunded. Line 12. The preparer must sign the return (line 12a) and enter the Payment of tax for partnership partners (downstream partnership) following data: the printed name of the preparer (line 12b); the name and requires a supplementary schedule showing the detail of the calculation address of the preparer’s firm (line 12c through 12f); the date prepared (line 12g); and the preparer’s telephone number (line 12h) of tax due. An alternative to filing a detailed schedule is calculation of Line 13. The NACTP number of the software used to prepare the return taxable income for the downstream partnership as a resident partner must be entered on line 13. and calculation of the tax at the city’s resident tax rate. Page 2 |
INSTRUCTIONS FOR OTHER SCHEDULES The total adjusted ordinary business income reported on Schedule A, line SCHEDULE 1 – PARTNER INFORMATION SCHEDULE 6, is allocated to the partners in Schedule C. The total reported on Schedule C, column 1, must equal the amount listed on Schedule A, line 6. All partnerships must complete the Partner Information Schedule. See Income not included in Schedule A is reported in Schedule B, Partnership Appendix P, Partner Classification Table, for information to complete Income not reported in Schedule A. Instructions for the Schedules indicate columns 3, 4 and 5. Column 3 data entry is based upon federal Schedule how amounts are allocated or apportioned to the partners. K-1 (Form 1065) instructions for Item I. If column 3 for the partner equals individual, nominee for an individual or a disregarded entity owned by an individual, enter the residency SCHEDULE B – PARTNERSHIP INCOME NOT INCLUDED IN classification in column 4 (R, N, PR or PN). If column 4 for the partner SCHEDULE A equals part-year resident (PR or PN), report the resident portion (PR) and Schedule B is used to report income not included in Schedule A (Adjusted nonresident portion (PN) on separate partner lines and in column 5 enter Ordinary Business Income) and allocate or apportion this income between the residency start date (mm/dd/yyyy) for the tax year on the resident (PR) partners taxed at the individual resident, corporation or individual line and the residency end date for the year on the nonresident (PN) line. nonresident tax rates. Enter the income by category as reported on the SCHEDULE 2 – TAX CALCULATION SCHEDULE (Disregard if federal Form 1065, Schedule K or page 1, on Schedule B, column 1. information return) The various types in partnership income are taxed differently based upon Partnerships electing to pay tax for partners must complete Schedule 2, the partner entity classification. Refer to Appendix Bfor information on the Tax Calculation Schedule. Partnerships filing an information return tax-ability of the various types of partnership income for the various types disregard this schedule. of partner entities. Also refer to the instructions below for Columns 1, 2 and 3. Enter partner’s name, entity type and tax additional information on exclusion or tax-ability of the various types of identification number as listed on Partner Information Schedule. partnership income. Column 4. Enter partner’s total city income as reported on Schedule C, Interest Income and Dividend Income. All partners may exclude interest column 7. and dividend income from obligations of the United States, the states or subordinate units of government. Interest and dividend income is totally Column 5. Allowable partner deductions which relate to the partnership excluded for nonresident individuals, estate and trust partners. are deducted in column 5. These deductions include the self-employed pension plan deduction and any other deduction allowed the partner Sale or Exchange of Property. This category includes sales and under the city’s income tax ordinance. This column is also used to adjust exchanges of short-term, long-term and Section 1231 property. The portion (add back) for a net capital loss realized by any of the partners, in excess of the gain or loss attributable to the period prior to the applicable effective of the partner's maximum allowable ($3,000) capital loss deduction. date of the ordinance is exclud blei for all partner entity types. Therefore, a net capital loss realized by any of the partners, in excess of Rent and Royalty Income. Enter the excludible and taxable portions the partner's allowable capital loss deduction must be added back in of rental income from rental real estate activities, rental income from column 5. The allowable capital loss deduction for each partner is the other rental activities or royalty income. lesser of (1) the net capital loss, (2) the amount in column 4, computed Other Income. Enter the excludible and taxable portions of other income. without regard to capital gains and losses, or (3) $3,000. Capital loss Ordinary Income from Other Partnerships. Enter each partner’s carryovers may be carried forward to the same extent allowed in the excludible and taxable portions of ordinary income (or loss) from other Internal Revenue Code, but may not be carried back to prior years. Attach partnerships. Attach a worksheet for each partnership, estate or trust that a schedule detailing computation of amounts reported in column 5. details the name, address, FEIN and the apportionment of this income. Column 6. Personal and dependency exemptions are allowed to be The ordinary business income of another partnership is allocated based claimed for each partner who is an individual resident or nonresident, upon the other partnership’s business allocation percentage for the city to the same extent allowed on the partner’s federal income tax return. and/or the entity type of partner. Total Apportioned Income. Summarize the taxable portion of income Additional exemptions are allowed if the taxpayer or spouse is 65 years of from the categories reported on Schedule B. The totals from Schedule C, age or older, or is blind. In general, the same rules apply in determining columns 6 and 7 must equal the totals reported on Schedule B, columns 6 dependents as under the federal Internal Revenue Code. A spouse may and 7 respectively. be taken as an exemption on the partnership return only if such spouse has no income subject to the city’s income tax. Exemptions for a partner SCHEDULE C – DISTRIBUTION TO PARTNERS whose residence status has changed from a resident to a nonresident or Column 1. Enter in column 1 each individual partner's share of ordinary from a nonresident to a resident of the city during the taxable year are first adjusted business income from Schedule A, line 6. If Sec. 179 depreciation applied against income while a resident, with the balance, if any, applied to is included in Schedule A and the partners have unequal credits for such the city’s income while a nonresident. A partner’s personal and additional depreciation (e.g., if one partner is single and one is married dependency exemptions may not be claimed on more than one filing jointly for federal income tax purposes), the apportionment of income partnership return. Partners who are estates or trusts to partners may require a special computation. are allowed one exemption. Exemptions are not allowed to any other Column 2. Enter the amount of guaranteed payments to partners receiving partners (i.e., corporations, partnerships, etc.) them. Guaranteed payments are taxable in the same manner as a distributive share of the partnership’s profits. Column 7. Enter the taxable income, column 4 less columns 5 and 6. Column 4. Enter the appropriate business allocation percentage based Column 8. Enter tax due at the resident or corporation tax rate applicable upon partner entity type. Individual resident and partnership partners use a for all taxpayers except nonresident individuals, estates or trusts. 100% allocation. Individual nonresident, estate, trust, corporation, exempt Column 9. Enter tax due at the nonresident tax rate applicable from entity and foreign government partners enter the business allocation Appendix A for nonresident individuals, estates or trusts only. percentage from Schedule D, line 5, or the special allocation percentage Column 10. The tax paid for each partner is equal to the tax due (column authorized. Disregarded entity and nominee partners enter the appropriate 8 or 9) less, for resident individual partners only, any credit for tax paid to allocation percentage based upon the entity type of the actual owner of the another city (Schedule G, column 6, for the partner). The total of column partnership interest. 10 should equal the actual amount of tax paid by the partnership; the sum Column 6. Enter taxable portion of the individual resident, corporation or of the amounts reported on page 1 lines 2a, 2b, 2c, 2d and 3 less line 4, other partners Schedule B income. the tax overpayment. Column 7. Enter the taxable portion of the individual nonresident, Estate or trust partners Schedule B income. SCHEDULE A - ALLOCABLE ORDINARY BUSINESS INCOME (LOSS) Column 8. Add the amounts reported for each partner in columns 5, 6 and 8 and enter the total for the column. Also enter the amount for each partner Schedule A is used to report and adjust the ordinary business income of and the column total in column 1, page 1 of the return. the partnership. The ordinary business income as reported on federal Form 1065, page 1, line 22, must be adjusted for the following; city income tax deducted on the federal return must be added back; interest and any SCHEDULE D – BUSINESS ALLOCATION PERCENTAGE other costs incurred with the production of tax exempt income must be The business allocation percentage is to be applied to the distributive added back; the federal Section 179 deduction and other deductions share of business income of CORPORATE AND NONRESIDENT partners allowed must be deducted; and ordinary income (loss) from another if business activity of the partnership is conducted both within and outside partnership must be removed (as it is reported in Schedule B). the city. Page 3 |
Elective use of the Multi-state Tax Compact apportionment provisions is Part II. Information About the Partner no longer allowed. On 09/14/2014 the Multi-state Tax Compact On each Schedule K-1 complete the information for the partner for items E provisions of Michigan law were retroactively repealed effective through I1 and J through M as it was completed on the partner’s federal 01/01/2008. Schedule K-1 (Form 1065). For item I2, if the partner code for item I1 is a code that represents an individual, estate or trust, enter in item I2 the Line 1a. Enter in column 1 the average net book value of all real and following code for the partner: R for resident partner, N for a nonresident tangible personal property owned by the business, regardless of location; partner, PR for the resident portion and PN for the nonresident portion of and in column 2 report the net book value of the real and tangible personal the year for a part-year resident partner. See Partner Classification property owned and located or used in the city. The average net book Table for additional information. For Item I3, mark (X) the box if the value of real and tangible personal property may be determined by adding partner is a retirement plan. For item N enter the partner’s partner the net book values at the beginning and end of the year and dividing the number as reported on Form GR-1065, Schedule 1. When a partner is sum by two. a part-year resident, two Schedule K1’s (Form GR-1065) are to be issued, one for the resident portion of the year and one for the nonresident Line 1b. Enter in column 1 the gross annual rent multiplied by 8 for all portion of the year as two lines are required for reporting the partner’s rented real property regardless of location. In column 2 show the gross income. annual rent multiplied by 8 for rented real property located in the city. Gross annual rent refers to real property only, rented or leased during the If the partnership elects to pay tax and the partner is a partnership, mark taxable period, and should include the actual sums of money or other (X) the item D box and enter the partnership partner’s identification consideration payable, directly or indirectly, by the taxpayer for the use or number. Complete the other items for this partnership partner. Parts III and possession of such property. Part IV for this downstream partnership is a compilation of their partner’s Schedules K-1. Also, complete a Schedule K-1 (Form CF-1065) for each Line 2. Enter in column 1 the total compensation paid to all employees partner of the downstream partnership completing item D for the during the year and in column 2 show the amount of compensation paid to downstream partnership and completing Part II, Part III and Part IV for employees for work or services performed within the city. each downstream partnership partner. Line 3. Enter in column 1 the total gross revenue from all sales or services Part III. Partner’s share of Current Year Income, rendered during the year, and in column 2 show the amount of revenue Exclusions/Adjustments and City Income derived from sales made or services rendered in the city during the year. This part of the Schedule K-1 (Form GR-1065) is divided into three To allocate net profit (or loss), a partnership must have business activity columns: Column A, Federal Partnership Return Data; column B, outside of the city. Exclusions and Adjustments; and column C, City Taxable Income. SCHEDULE E – RENTAL REAL ESTATE Column A, Federal Partnership Return Data If the business activity of the partnership includes rental of real estate, list Column A, line 1, lines 2 through 13 and line 20 are used for reporting income, deductions and other information as reported on the federal the complete address and the gain or loss from each separate piece of Schedule K-1 (Form 1065) for the partner. In each line of column A enter rental real estate in Schedule E. the data as reported in the federal Schedule K-1 except for lines 1a, 11, 13 and 20 follow the instructions below. SCHEDULE G – CREDIT FOR TAX PAID TO ANOTHER CITY Line 1a. Ordinary income from other partnerships. This line on the ON BEHALF OF RESIDENT PARTNERS city Schedule K-1 (GR-1065) is used to properly report ordinary business income from other partnerships, estates and trusts. Column A of this line is If the partnership incurs an income tax liability to any other city in addition blank or zero (0) as this line is not on the federal Schedule K-1. to this city, a credit is allowed for tax paid to the other city on income of a Codes for lines 11, 13 and 20. In boxes 11, 13 and 20, identify each item resident individual that is taxable by both cities. The credit is limited to the by entering the federal code in the column to the left of Column A. smaller of: (1) the income tax paid to the other city on behalf of the resident partner; or (2) the amount of tax that would be due on the same amount of Line 13. Other deductions. In box 13 report only the federal coded items income of a nonresident of this city after deducting the value of the that affect city income of the partner. There are only a few (line 13) other exemptions claimed by the partner for this city (Form GR-1065, deductions that affect a partner’s city income. Deductions that are claimed on Schedule 2, column 6). DO NOT take credit for income taxes paid to any the partner’s federal return Form 1040 as adjustments to income or itemized deductions are not reported on line 13. If you have a question other city on behalf of nonresident, corporate or partnership partners. about reporting a line 13 item, please contact the city for an answer. An example of a line 13 is item I, deductions – royalty income. SCHEDULE K-1 (Form GR-1065) – PARTNER’S SHARE OF Line 20. Other information. In box 20 report only the federal coded items INCOME, EXCLUSIONS, DEDUCTIONS, CREDITS AND TAX that affect city income. There are few items of (line 20) other information that affect the partner’s city income. If you have a question about reporting a PAID line 20 item, please contact the city for an answer. An example of a line 20 item is M, recapture of section 179 deduction. Partnership Instructions for Schedule K-1 (Form CF-1065) A partnership is required to prepare and give Schedule K-1 (Form Column B, Exclusions and Adjustments GR-1065) to each person who was a partner in the partnership at any Complete column C, City Taxable Income, lines 1 through 13, before completing column B. Once the column C amount for a line is determined time during the year. Schedule K-1 (Form GR-1065) must be provided to and entered, the column B amount for the line is calculated by subtracting each partner on or before the day on which the partnership return is the amount in column C from the amount in column A. Enter in the required to be filed. calculated amount in Column B for the line. If a line in any column is blank, it Partnerships electing to pay tax that have a partnership partner is to be read as a zero (0). (downstream partnership) are also required to provide Schedule K-1 (Form GR-1065) to each partner of the downstream partnership (or chain of downstream partnerships) if the tax for the downstream partnership is Column C, City Taxable Income calculated based upon the downstream partnership’s partner’s The amount of city taxable income for each partner is calculated in schedules classification. attached to the partnership return. Enter the data for each line of Column C as determined in the schedule noted for the line. If the return is for a fiscal year or a short tax year fill in the fiscal tax year spaces at the top of each Schedule K-1. If this is a final or an amended Line 1. Ordinary business income. Enter the amount of the partner’s ordinary K-1, mark (X) the appropriate box at the top of each Schedule K-1. business income as reported on Form GR-1065, Sch. C, col. 4. On each Schedule K-1, enter the information about the partnership and the Line 1a. Ordinary income from other partnerships. Enter the amount of the partner in Parts I and II (items A through M). In Part III, enter: in column A partner’s taxable share of ordinary income from other partnerships as reported on Form GR-1065. the amounts from the partners federal Schedule K-1 (Form 1065); in column B the amounts of exclusions or adjustments to the amounts in Line 2. Net rental real estate income (loss). Enter the amount of the partner’s column A; and in Column C the partner’s city taxable share of each item of share of net rental real estate income (loss) as reported on Form GR-1065. income, deduction or information. Line 3. Other rental income (loss). Enter the amount of the partner’s taxable share of other rental income (loss) as reported on Form GR-1065. Line 4. Guaranteed payments to partners. Enter the amount of the partner’s Part I. Information About the Partnership guaranteed payments as reported on Form GR-1065, Schedule C, column 2. On each Schedule K-1, enter (A) the identifying number of the partnership, Line 5. Interest income. Enter the amount of the partner’s taxable share of and its (B) name and address. Also enter the (C) partnership’s business interest income as reported on Form GR-1065. allocation percentage (Form GR-1065, Schedule D, line 5 or special formula line d). Page 4 |
Line 6. Dividend income. Enter the amount of the partner’s taxable PARTNER CLASSIFICATION TABLE share of dividend income as reported on Form GR-1065. Information for completing Partner Information section on Form GR-1065, page 1 Line 7. Royalties. Enter the amount of the partner’s taxable share of Enter federal classification in column 3; if column 3 equals individual owner, enter royalties as reported on Form GR-1065. residency classification in column 4; and if column 4 equals part-year resident, enter residency start and end dates in column 5 Line 8. Net short term capital gain (loss). Enter the amount of the Column 4 Column 5 partner’s taxable share of net short term capital gain (loss) as reported on Column 3 Individual Partner Residency Form GR-1065, Schedule B11, column 3. Federal Classification Residency Status Dates Line 9. Net long term capital gain (loss). Enter the amount of the Description Entry Description Entry Description partner’s taxable share of net long term capital gain (loss) as reported on Form GR-1065. Individual I Resident R Line 10. Net section 1231 gain (loss). Enter the amount of the partner’s Nonresident N taxable share of net section 1231 gain (loss) as reported on Form Part-year resident, PR Residency GR-1065. resident portion start date Line 11. Other income. Enter the amount of the partner’s taxable share of Part-year resident, PN Residency other income as reported on Form GR-1065. nonresident portion end date Corporation C Line 12. Section 179 deduction. Enter a zero (0) or leave blank as this Estate F Nonresident N deduction is already included in the amount reported in column C, line 1. Trust F Nonresident N Line 13. Other deductions. The amount to enter on this line must be Partnership P calculated based upon the type of other deduction and the taxability of the Disregarded Entity DE If DE owner is an individual city income related to the deduction. Example: Item I, deductions – royalty income, would be deductible at the same percentage the related royalty Resident R income is taxable by the city. There are very few other deduction items that Nonresident N relate to city income. Part-year resident, PR Residency Line 20. Other Information. The amount to enter on this line must be resident portion start date calculated based upon whether the other information is city income or a Part-year resident, PN Residency deduction allowed to determine city income. Example: Item M, recapture of nonresident portion end date section 179 deduction, would be taxable at the same percentage the Exempt Organization E related property was taxable by the city. There are very few other Foreign Government FGOV information items that relate to city income. Nominee Type Nominee Individual NI If actual owner is an individual: Part IV. Partner’s City Deductions, Credits and Tax Paid Resident R Part IV is divided into three sections. Refer to the following instructions to Nonresident N complete this section. Part-year resident, PR Residency D – Partner’s deductions for items paid by the partnership. Report the resident portion start date partner’s share of deductions allowed under the city’s income tax Part-year resident, PN Residency ordinance nonresident portion end date that were paid by the partnership. These deductions are the partner’s: IRA Nominee Corporation NC deduction; Self-employed, SEP, SIMPLE and qualified plans deduction; Nominee Estate or Trust NF Nonresident N Renaissance Zone deduction; etc. Nominee Partnership NP C – Credit for tax paid by partnership to another city. Report the Nominee Disregarded NDE If actual owner of the DE is tax paid to other cities by partnership on behalf of partner who is a Entity an individual: resident of the city named at the top of the Schedule K-1. Resident R Nonresident N T – Income tax paid by the partnership. Report the actual tax paid Part-year resident, PR Residency by partnership on behalf of partner to the city named at the top of resident portion start date the Schedule K-1. This is the amount reported on Form Part-year resident, PN Residency GR-1065, Schedule 2, column 10, for the partner. nonresident portion end date Nominee Exempt NE Organization Nominee Individual NIRA Retirement Arrangement Partner Instructions for Schedule K-1 (Form GR-1065) Nominee Foreign NFGOV Instructions for partner’s reporting their partnership income on their Government individual return (Form GR-1040), corporate return (Form GR-1120) or partnership return (GR-1065) are part of Schedule K-1 (Form GR-1040). SCHEDULE N – SUPPORTING NOTED AND SCHEDULES If supporting notes or schedules are needed to explain items reported elsewhere on the partnership return, use this attachment for those notes, calculation or explanations. SCHEDULE RZ OF (Form GR-1065) – Partnership Renaissance Zone Deduction NOT APPLICABLE Page 5 |
COMMON CITY PARTNERSHIP INCOME TAX FORM, GR-1065 APPENDIX A Required Return Attachments and Attachment Order Returns should be filed with schedules and attachments in the order noted below. If a form, schedule or worksheet is not used do not attach it; skip the number and keep the remaining pages in attachment order Required Forms and Attachments Attachment Order When Forms, Schedules or Attachments are Required Form GR-1065, page 1 Top page All returns Schedule 1 – Partner Information Schedule Attachment 1 All returns Schedule 2 – Partner Income and Tax Calculation Schedule Attachment 2 Partnerships filing information returns complete columns 1 - 4. Partnerships electing to pay tax must complete entire schedule. Schedule A – Allocable Partnership Ordinary Business Income Attachment 3 All returns Schedule B – Apportioned Income (Income not Included in Schedule B – Schedules A or F) Attachment 4 All returns (including returns where Schedule B is blank) Schedule C – Distribution to Partners Attachment 5 All returns Schedule D – Business Allocation Percentage Attachment 6 Returns with a business allocation percentage of less than 100% Schedule E – Rental Real Estate Attachment 7 Returns reporting rental real estate activities Schedule G – Credit for Tax Paid to Another City in Behalf of Attachment 8 Returns for partnerships electing to pay tax who are claiming Schedule G – Resident Partners credit for tax paid to another city Schedule K-1 (Form GR-1065) Attachment 9 Partner's Share of Income, Exclusions, Deductions, Credits and Tax Paid Schedule N – Supporting Notes and Statements Attachment 10 If Supporting notes or schedules attached Federal Schedule F (Form 1040) Fed form # order If included in federal return Federal Form 1065, Page 1 Fed form # order All returns Federal Schedule D, (Form 1065) Fed form # order If included in federal return Federal Schedule K, (Form 1065) Fed form # order All returns Federal Form 1125-A, Cost of Goods Sold Fed form # order If included in federal return Federal Form 4562, Depreciation and Amortization Fed form # order If included in federal return Federal Form 4797, Sales of Business Property Fed form # order If included in federal return Federal Form 6252, Installment Sale Income Fed form # order If included in federal return Federal Form 8582, Passive Activity Loss Limitations Fed form # order If included in federal return Federal Form 8824, Like-Kind Exchanges Fed form # order If included in federal return Federal Form 8825, Rental Real Estate Income and Expenses of a Federal Form 8825, Partnership or an S Corporation Fed form # order If included in federal return Supplementary schedules to federal forms and schedules Schedule order If included in federal return All supplementary schedules to federal forms and schedules must be attached. Failure to attach forms, schedules or worksheets noted above to a return may delay the processing of the return. Page 6 |
COMMON PARTNERSHIP INCOME TAX FORMS, GR-1065 APPENDIX B TAXABILITY OF PARTNERSHIP INCOME UNDER THE MICHIGAN UNIFORM CITY INCOME TAX ORDINANCE TYPE OF ORDINARY GUARANTEED INTEREST DIVIDEND NET SHORT- NET LONG- SECTION 1231 NET INCOME NET INCOME ROYALTY OTHER ORDINARY INCOME → BUSINESS PAYMENTS TO INCOME INCOME TERM GAIN TERM GAIN GAIN OR LOSS (LOSS) FROM (LOSS) FROM INCOME INCOME INCOME FROM INCOME OF PARTNER (LOSS) (LOSS) RENTAL REAL OTHER OTHER PARTNER PARTNERSHIP ESTATE RENTAL PARTNERSHIPS ENTITY ↓ ACTIVITIES ACTIVITIES Individual 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable 100% taxable Resident Partner Individual Taxable on the Taxable on the Not taxable Not taxable Taxable if Taxable if Taxable if Taxable if Taxable if Taxable on the Taxable on the Taxable on the Nonresident partnership's partnership's property located property located property located property located property located partnership's partnership's originating Partner business business in city Not in city Not in city Not in city Not in city Not business business partnership's allocation allocation taxable if taxable if taxable if taxable if taxable if allocation allocation business allocation percentage percentage property located property located property located property located property located percentage percentage percentage portion portion portion outside of city outside of city outside of city outside of city outside of city portion portion Corporate Taxable on Taxable on the Taxable on Taxable on Taxable on Taxable on Taxable on Taxable on Taxable on Taxable on Taxable on Taxable on the Partner partnership's partnership's partnership's partnership's partnership's partnership's partnership's partnership's partnership's partnership's partnership's originating business business business business business business business business business business business partnership's allocation allocation allocation allocation allocation allocation allocation allocation allocation allocation allocation business allocation percentage percentage percentage percentage percentage percentage percentage percentage percentage percentage percentage percentage portion portion portion portion portion portion portion portion portion portion portion portion Estate or Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the Taxed on the same Trust Partner same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as basis as an an individual an individual an individual an individual an individual an individual an individual an individual an individual an individual an individual individual nonresident nonresident nonresident nonresident nonresident nonresident nonresident nonresident nonresident nonresident nonresident nonresident partner partner partner partner partner partner partner partner partner partner partner partner Partnership DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income DSP Income split Partner split per DSP split per DSP split per DSP split per DSP split per DSP split per DSP split per DSP split per DSP split per DSP split per DSP split per DSP per DSP (Downstream agreement and agreement and agreement and agreement and agreement and agreement and agreement and agreement and agreement and agreement and agreement and agreement and Partnership - taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on taxed based on DSP) DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's DSP partner's entity entity entity entity entity entity entity entity entity entity entity entity classification classification classification classification classification classification classification classification classification classification classification classification Disregarded Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Entity Partner same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as the the owner of the the owner of the the owner of the the owner of the the owner of the the owner of the the owner of the the owner of the the owner of the the owner of the the owner of the owner of the disregarded disregarded disregarded disregarded disregarded disregarded disregarded disregarded disregarded disregarded disregarded disregarded entity entity entity entity entity entity entity entity entity entity entity entity Exempt Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Organization same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a Partner corporate corporate corporate corporate corporate corporate corporate corporate corporate corporate corporate corporate partner partner unless partner unless partner unless partner unless partner unless partner unless partner unless partner unless partner unless partner unless partner unless unless the the partnership the partnership the partnership the partnership the partnership the partnership the partnership the partnership the partnership the partnership the partnership partnership income income of the income of the income of the income of the income of the income of the income of the income of the income of the income of the income of the of the partnership partnership is partnership is partnership is partnership is partnership is partnership is partnership is partnership is partnership is partnership is partnership is is not taxable not taxable not taxable not taxable not taxable not taxable not taxable not taxable not taxable not taxable not taxable not taxable under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC under the IRC Foreign Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Government same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a corporate corporate corporate corporate corporate corporate corporate corporate corporate corporate corporate corporate partner partner partner partner partner partner partner partner partner partner partner partner Nominee Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Taxable on the Partner same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as same basis as the the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner actual owner (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an IRA IRA arrange- IRA arrange- IRA arrange- IRA IRA IRA IRA IRA IRA IRA arrange- IRA arrangement, not ment, not ment, not ment, not arrangement, arrangement, arrangement, arrangement, arrangement, arrangement, ment, not arrangement, taxable taxable taxable taxable not taxable not taxable not taxable not taxable not taxable not taxable taxable not taxable Page 7 |