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                                                                     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.

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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. 

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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.
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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).
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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

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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. 

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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
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