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8NEW HAMPSHIRE DEPARTMENT OF REVENUE ADMINISTRATION
FORM
NH-1040
PROPRIETORSHIP BUSINESS PROFITS TAX RETURN
LINE-BY-LINE INSTRUCTIONS (continued)
Instructions
STEP 2
Line 6
Combine Lines 1, 2(c), 3, 4(c) and 5(c) separately for Column A and Column B.
Figure
Line 7
COMPENSATION FOR PERSONAL SERVICES (SEE COMPENSATION WORKSHEET)
Your Tax
(continued)
Enter on Line 7 the value of the services performed by the proprietor during the taxable period. Enter the proprietor's
compensation in Column A and enter your spouse’s compensation in Column B. Compensation is only allowed for the
proprietor who actually renders personal services to the business organization. The MINIMUM statutory deduction of
$6,000 is allowed for actual services rendered during the current taxable period. RSA 77-A:4 limits the MAXIMUM
compensation deduction to the sum of the following amounts included in your federal income tax schedules after you
consider the amount of income attributable to the return on Business Assets and return on non-owner employees wages:
Prop-Comp worksheet should be used to make this calculation.
(1) Net profit (loss) from Federal Form 1040, Schedule C;
(2) Income (loss) from rental properties from Federal Form 1040, Schedule E;
(3) Net farm profit (loss) from Federal Form 1040, Schedule F;
(4) Not to exceed 15% of the sales price as shown on Federal Form 4797 or 6252 for the sale of business assets
provided you acted as the broker or agent and no other broker or agent was involved in the sale of the property.
(5) In instances where the proprietor acts as a co-broker, the maximum deduction shall be the difference
between the amount to be determined in (4) above and the amounts paid to other brokers or agents.
A business organization may utilize comparative compensation data from business organizations of similar size, volume
and complexity from industry statistics or from publications such as the most current editions of the Occupational Outlook
Handbook published by the US Department of Labor Statistics and available at and the New Hampshire
Wages and Benefits published by the New Hampshire Department of Employment Security and available at
, as a reference point. You must maintain adequate records to substantiate the activities
performed by you and the methods used to determine the rate of compensation for such activities.
Line 8
SUBTOTAL
Combine Line 6 and Line 7 separately for Column A and Column B. If a loss, show dollar amount in parenthesis, e.g. ($50).
If either column is negative, this amount represents the net operating loss (NOL) for you or your spouse available for
future deduction. This amount may be subject to carryback and apportionment provisions.
Line 9
NEW HAMPSHIRE NET OPERATING LOSS DEDUCTION
Enter the amount of carryforward loss available as shown on Line 11 of Form DP-132. A separate Form DP-132 must be
filed for you and your spouse. Form DP-132 must be attached to the return.
Line 10
OTHER ADDITIONS AND DEDUCTIONS
Enter in Column A the net total of all your other additions and deductions allowed or required under RSA 77-A:4. Enter the
net total of your spouse’s additions and deductions in Column B. Show negative amounts in parenthesis, e.g. ($50).
Line 11
ADJUSTED GROSS BUSINESS PROFITS
Combine Line 8 and Line 9 adjusted by Line 10. If negative, show in parenthesis e.g. ($50).
Line 12
NEW HAMPSHIRE APPORTIONMENT
Proprietorships which have business activity, including rental activity, both inside and outside this state AND which are
subject to income taxes (or a franchise tax measured by net income) in another state, or is subject to the jurisdiction of
another state to impose a net income tax or capital stock tax upon it, whether or not actually imposed by the other state,
must apportion its gross business profits to New Hampshire by using Form DP-80, Apportionment of Income. If you and
your spouse each conduct separate business activities both inside and outside New Hampshire, each must complete a
separate Form DP-80. Be sure to identify your form by using your social security number and your spouse’s form by
using your spouse’s social security number. Form DP-80 may be obtained from the web site at or
by calling (603) 271-2192. After completing Form DP-80, enter the apportionment percentage on Line 12 of your Form
NH-1040. Show to six decimal places. All others enter 1.00 on Line 12.
Line 13
Enter the product of Line 11 multiplied by Line 12. If negative, enter zero.
Line 14
Enter the product of Line 13 multiplied by 8.5%.
STEP 3
Line 15
CREDITS:
Enter the amount of credits allowed under RSA 77-A:5. Form DP-160, Schedule of Business Profits Tax Credits,
Figure
must be filed with the return to support all credits claimed on Line 15. If both you and your spouse are claiming
Your
credits on Line 15, then you must file two separate DP-160 Forms. Be sure to identify your form by using your social
Credits
security number and your spouse’s form by using your spouse’s social security number. Form DP-160 may be obtained
from our web site at or by calling (603) 271-2192.
DO NOT INCLUDE THE BET CREDIT ON THIS LINE.
Line 16
Enter the amount of Line 14 minus Line 15.
Line 17
BUSINESS ENTERPRISE TAX CREDIT
Business Enterprise Tax paid shall be applied as a credit against Business Profits Tax. Any unused portion of the credit
may be carried forward and allowed against Business Profits Tax due for up to 5 taxable periods from the period in which
the Business Enterprise Tax was paid.
To calculate the BET credit to be applied against this year’s BPT, complete the BET Credit worksheet for both you and your
spouse. The proprietor and spouse proprietor must calculate their BET Credits separately and should complete two
separate BET Credit Worksheets.
NH-1040
Instructions
Rev. 10/1//06
38
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