PDF document
- 1 -
                                                                   INSTRUCTIONS FOR FORM I-1065  
                                                         CITY OF IONIA PARTNERSHIP RETURN 
                                                       For partnerships doing business in the City of Ionia

Filing Date and Remittance: 
An annual return is due on or before the last day of the fourth month following the         Partnership Filing an Information Return: 
end the partnership's taxable year.  Calendar year returns are due by April 30.             Partnerships filing information returns are required to complete: page 2: Schedules A, 
                                                                                            B, C and if appropriate Schedules D and E; and page 1: Identification and Information 
Partnerships electing to pay the tax for partners must remit the tax for all partners       section and column 1. 
when filing the return.  Tax due, if one dollar ($1.00) or more must be paid when the 
return is filed.                                                                            General Information: 
Make remittance payable to: City of Ionia                                                   The Partnership Return, Form I-1065, is designed to distinguish between that income 
Mail to: City of Ionia, Income Tax Division, PO Box 512, Ionia, MI 48846                    taxed to residents, nonresidents and corporations.  The purpose of the return is to set 
                                                                                            forth the entire net profit for the period covered and to show the distributive share of 
Partnerships Required to File a Return (I-1065)                                             each partner, indicating those who are residents of Ionia, nonresidents or corporations. 
Every partnership that has conducted business activities in the City of Ionia after         (If residency changes during the taxable period for any partner, use two lines to 
January 1, 1994, whether or not an office or place of business was maintained in the        indicate allocation of income by residency status in all schedules where applicable.) 
City, is required to make and to file an annual return.  Syndicates, joint ventures, 
pools and like organizations will also use form I-1065 (Partnership Return).  So-called 
"tax option" corporations or S corporations (under Sections 1371-1377, Internal             Ordinary business income of the partnership is reported in Schedule A.  This ordinary 
Revenue Code) must file as corporations on form I-1120.                                     business income is transferred to Schedule C, column 1, by showing the amount of 
                                                                                            ordinary income distributable to each partner. 
Option to pay tax and applicable tax rates: 
The partnership may elect to file an information return or to compute and pay the tax       Non-business income that may be taxable is reported in Schedule B, by type of 
due with respect to each partner's share of the net profits of the business.  The           income.  The taxable portion for resident, nonresident and corporate partners is 
partnership may pay the tax for partners only if it pays for ALL partners subject to        determined in this schedule in columns 2 through 5.  The taxable non-business 
tax. The income tax rate is 1% for residents and corporations and .5% for                   income is then transferred to Schedule C by showing the amounts applicable to the 
nonresidents.                                                                               individual partners.   
This election is available to all partnerships regardless of the residency status of the 
partners.  The partnership may pay the tax for the partners only if it pays the tax for all Column 1, on page 1 is the final summary transferred from Schedule C, column 7.  
partners subject to the tax.  The "Tax Payment by Partnership" Schedule, Page 1, 
Columns 1 through 7, is to be used to compute the tax to be paid.  Do not use this          Resident Partners are taxed on their entire distributive share of the net profits of the 
schedule if an informational return is filed.  [If the partnership elects to pay the tax on partnership, including that arising from business activities outside of  Ionia, interest, 
half of the partners, then such an election and payment of the tax is deemed to meet        dividends, rents, royalties, other income, and gains from the sale or exchange of 
the requirements for filing a return as provided in the Ordinance, for each partner who     property, either tangible or intangible, regardless of where such property was located. 
has no other income subject to City of Ionia Income Tax.]  However, an individual 
return shall be required from any partner having taxable income other than their            Nonresident Partners are taxed on their distributive share of the net profits of the 
distributive share of the net profits of the partnership.  In such cases, an individual     partnerships ordinary business income which is attributable to business activity in 
partner should enter their total partnership income form Federal Form 1040 on the           Ionia, plus net rentals of tangible property in the City and gains from the sale or 
appropriate line of Form I-1040.  Credits for exemptions and tax paid are to be shown       exchange of tangible property in the City.  Nonresidents are not taxed on their share of 
on the Form I-1040.                                                                         net rentals on property located outside the City, gains from the sale or exchange of 
                                                                                            tangible property located outside the City, gains from the sale or exchange of 
Partnership as a Taxpayer                                                                   securities or other intangible property, or on interest and dividends. 
If the partnership elects to pay the tax for the partners, the individual partners are not  When the receipt of interest and other intangible income is directly related to the 
required to file a return if such partners have no other income subject to tax.             nature of the business, such interest, etc., shall be considered business income taxable 
However, an individual return is required from any partner having taxable income            to nonresidents, and is to be included in the ordinary business income reported in 
other than his distributive share of the net profits of the partnership.  (In such          Schedule A, line 1.  
instances, a partner who is required to file an individual return should refer to the 
instructions for such return.)                                                              Corporate Partners are taxed on their distributive share of the partnership's ordinary 
                                                                                            business income attributable to business activity in Ionia, plus net rentals of tangible 
If the partnership elects to pay the tax on behalf of the partners then the partnership     property in the City and gains from the sale or exchange of tangible property in the 
assumes the status of a taxpayer to the following extent:  1.  Timely Payment.              City.  Corporations are not taxed on:  their share of net rentals of property located 
Payment must be made within four (4) months from the end of the fiscal year or              outside the City. 
period.  Payments made after the due date are subject to interest and penalty in the 
same manner as a delinquent payment from any other taxpayer.  2. Payment of                 Page 1 instructions 
estimated tax.  The election of a partnership to pay the tax on behalf of the individual    Column 1, Adjusted Partnership Income - Fill out all appropriate schedules on page 
partners also carries with it the requirement to file a Declaration of Estimated Income     2 of Form I-1065.  Transfer amounts from Schedule C (Distribution to Partners), 
Tax (Form I-1040ES).  Form I-1045ES must be filed, and quarterly estimated                  Column 7, to this column.  List the amounts in the same order as partners are listed on 
payments of the tax must be made, if the estimated tax for the partnership is expected      the upper half of page 1. 
to exceed $100.00.  If the partnership files Form I-1040ES and makes the required 
quarterly estimated payments, the partners will not be required to file a Declaration,      Column 2, Allowable Individual Deductions - Any non-taxable items included in 
unless they have additional income (not subject to Ionia withholding) on which City         Column 1 are to be deducted in Column 2.  Deductible items will include the dividend 
of Ionia income tax is expected to exceed $100.00.  The fiscal year for the partnership     exclusion, net operating loss carryover, etc., handled in accordance with the Federal 
will govern in establishing dates for filing the declaration and paying the estimated       Internal Revenue Code.  A net capital loss realized by any of the partners, in excess of 
tax.                                                                                        the partner's allowable capital loss deduction, must be added back in this column.  The 
                                                                                            allowable capital loss deduction for each partner is the lesser of (1) the net capital loss; 
Instructions for Tax Payment by the Partnership:                                            (2) the amount in Column 1, Page 1, computed without regard to capital gains and 
Partnerships electing to become the taxpayer should start preparation of the return on      losses; or (3) Three Thousand Dollars ($3,000.00).  Non-resident partners must 
page 2 with Schedules A and B.  If the partnership is subject to allocation of business     allocate net operating losses to Ionia at the percentage of business conducted in the 
income, Schedule D should be completed next.  Schedule C is then completed to               City of Ionia in the year in which the loss was sustained.  Any net operating or capital 
determine each partner's share of business and non-business income.  Partnerships           losses shall not be carried back to offset prior gains.  Such losses may only be carried 
with rental real estate must complete Schedule E.  Page 1 is to be totally completed.       forward in accordance with the Federal Internal Revenue Code.  Attach a schedule for 
                                                                                            all entries in Column 2.



- 2 -
                                                                                         Schedule C - Distribution to Partners 
Column 3, Exemptions - An exemption of Seven Hundred Dollars ($700.00) is                Complete this schedule according to the captions and transfer the figures in Column 7 
allowed for each partner (that is an individual), the partner's spouse, and each         to Page 1 only if the partnership is paying the tax for all partners.  Column 4 is a 
dependent. If the partner is a corporation, another partnership or any entity other than memorandum column only and is to be used to compute the amount of the exclusion to 
an individual there is no exemption.  In general the same rules apply in determining     be transferred to the individual partner's Form I-1040. 
dependents as under the Federal Internal Revenue Code.  A spouse may be taken as an      Schedule D - Business Allocation Formula 
exemption only if the spouse has no income subject to the Ionia income tax.              The Business Allocation Percentage Formula is to be used by NON-RESIDENT 
Exemptions are allowed for age and blindness.  Exemptions claimed on Form I-1065         owners of businesses with business activity both inside and outside the City of Ionia.  
cannot be claimed on Form I-1040.                                                        A separate accounting method may also be used. 

Column 5, Total Tax - Resident partners are taxed at1% of taxable income                 Line  19a.  Enter in column I the average net book value of all real and tangible 
(Column 4).  Non-resident partners are taxed at 1/2 of 1% of taxable income unless       personal property owned by the business regardless of location.  In column II show the 
they are a corporation. Corporate income is taxed at 1% whether a resident or not.       net book value of all real and tangible personal property owned by the business 
Report both dollar and cents in the tax computation.   Partners who changed              located in the City of Ionia.  The average net book value of real and tangible personal 
residency status during the year are to follow the instructions in the fourth paragraph  property may be determined by adding the net book values at the beginning of the year 
under "Resident vs. Non-resident Partners".                                              to the net book values at the end of the year and dividing the sum by two.  Any other 
                                                                                         method that accurately reflects the average net book value for the year will also be 
Column 6, Credits - Enter in this column, tax payments made by the partnership; or       permitted. 
the applicable credit for payments made by the partnership on behalf of Ionia resident 
partners for income taxes paid to another municipality, if the income on which such a    Line  19b.  Enter in column I the gross rentals for the year multiplied by eight for all 
tax was levied is included in this return.  Do not take credit for income taxes paid to  rented property regardless of location.  In column II enter the gross rentals for the year 
another municipality on behalf of partners who are not City of Ionia residents.  The     multiplied by eight for all rented property located in the City of Ionia.  Gross rentals 
credit shall be the lesser amount of either (1) the income tax paid to the other         refer only to real property, rented or leased, and should include the actual sums of 
municipality, or (2) 1/2 of 1% of the income subject to tax in the other municipality    money or other consideration payable, directly or indirectly by the taxpayer for the use 
after deduction of exemptions at Ionia's rate.                                           or possession of such real property for the year. 

Column 7, Balance of Tax Payable - Enter in this column the amount in Column 5           Line  20.  Enter in column I the total compensation paid to all employees during the 
less the amount in Column 6.                                                             year.  In column II enter the amount of compensation paid to employees for work done 
                                                                                         or services performed within the City of Ionia during the year. 
Instructions for Schedules on Page 2
                                                                                         Line  21   . Enter in column I the total gross receipts from all sales or services rendered 
Schedule A - Allocable Partnership Income                                                during the year.  In column II enter the amount of receipts derived from sales made or 
The ordinary income or loss reported on the Federal Form 1065 must be adjusted to        services rendered in the City of Ionia during the year. 
arrive at the partnership income to be apportioned to the non-resident partners on the 
basis of the Business Allocation Formula, Schedule D.  To Line 1, add those              Line  23.  In determining the average percentage, a factor shall be excluded only if it 
deductions on the federal return, such as partner’s salaries, and City of Ionia income   does not exist insofar as the taxpayers business operation is concerned.  In such cases, 
tax (if deducted).  Subtract the non-business income as developed in Schedule B, Line    the sum of the percentages shall be divided by the number of factors used. 
9.  The resulting answer on Line 6 is to be distributed on the basis of the partnership
agreement and shown Schedule C, Column 1, in the same order as the partners are          Payment of Tax or Refund Due 
listed in the upper half of Page 1.                                                      If the partnership has elected to pay the tax for the partners and the tax due is one 
                                                                                         dollar ($1.00) or more (please round up .50 to $1.00 and .49 and less may be dropped) 
Schedule B - Non-Business Income and Exclusions                                          it must be paid when filing this return.  Make check or money order payable to City of 
A direct determination can be made of certain partnership income as to whether or not    Ionia.  Mail both the return and payment to:  Income Tax Division, PO Box 512, Ionia, 
it was earned in the City.  A resident partner is taxed on all income regardless of      MI 48846. 
where earned but a non-resident partner is taxed only on that portion earned in the 
City.  In addition, the income tax ordinance exempts specific income of both residents   If your payments and credits exceed the amount of the tax, show the amount of the 
and non-residents (see note on Page 2).  In Column 1, insert amounts from the various    overpayment on page 1, line 11.  Indicate on line 12 whether you wish the 
pages, lines, and schedules of federal Form 1065 indicated.  In Columns II and IV,       overpayment to be credited to the next years estimated taxes or refunded by check.  
prorate Column 1 on the ratio of residents' and non-residents' percentages according     Amounts less than one dollar (1.00) will not be refunded or credited forward.  Refunds 
to the partnership agreement.  Determine the amount of non-taxable income in each        will be made as quickly as possible but please allow 90 days before making an inquiry. 
category in accordance with the exemptions allowed by the ordinance and show in 
Columns III and V.  The proportionate share for each individual is to be determined 
for lines 10 through 17, Columns III and V and reported on the individual partner's      Electronic payment or refund: Complete the information for electronic payment or 
Form I-1040. [If the partnership income is not divided evenly or if there is three or    refund.  Be sure to indicate refund or pay and sign the return as this is your 
more persons or partners, attach a schedule showing the distribution of income and       authorization to deposit or withdrawal from your account.  If this section is not 
exclusions.]                                                                             completed correctly the electronic option will be void.  This could mean additional 
                                                                                         penalty and interest for late payment if you are billed after the due date. 
Gains and losses from the sale or exchange of property are treated in the same 
manner, and the amount subject to tax determined on the same basis, as under the         Assistance 
Federal Internal Revenue Code.                                                           If you have any questions not answered by these instructions, or if you need assistance 
                                                                                         in preparing the return, please call (616) 523-0142.  Or, you can write or visit our 
Only the amount of gain or loss occurring after January 1, 1994 is to be recognized      office located in City Hall, 114 North Kidd Street, Ionia, MI 48846.  
for City of Ionia income tax purposes.  The amount of gain or loss occurring after 
January 1, 1994 is to be determined either by (1) computing the difference between       Website
the January 1, 1994 fair market value (December 3, 1993 closing price for trade          Income tax forms and instructions are available on the City of Ionia website, 
                                                                                         www.cityofionia.org. 
securities) or the cost if the date acquired was subsequent to January 1, 1994, and the 
proceeds from the sale or exchange, or by (2) using the gain or loss for the entire      NOTICE: These instructions are interpretations of the City of Ionia Income Tax 
holding period, as computed for Federal income tax purposes, and computing the           Ordinance.  The Ordinance will prevail in any disagreement between the 
taxable portion by applying the ratio of the number of months held after January 1,      instructions and the Ordinance.          
1994, divided by to the total number of months the property was held.  Fair market 
value is to be determined by an appraisal or similar reliable evidence. 






PDF file checksum: 1201134376

(Plugin #1/9.12/13.0)