Instructions For Preparation Of Alabama Partnership/limited Liability Company Return Of Income

(or W-2) on or before February 28, 2006. Also, every partnership, association,

amount of the Internal Revenue Code Section 179 expense deduction. Enter

or agent making payments of interest, rents, premiums, annuities, compensa-

the same amount on line 4, Schedule K, in the Federal Amount column.

tions, remunerations, emoluments or other fixed or determinable gains, profits,

Line 14. Casualty Losses. Enter as a negative amount the amount of

and income of $1,500.00 or more to any person, partnership, or fiduciary during

casualty losses. Enter the same amount on line 5, Schedule K, in the Federal

the taxable year is required to make an information return on Forms 96 and 99

Amount column.

showing the amount of such payment and the name and address of each recipi-

Line 15. Portfolio Income or (Loss) Less Expenses. Enter the net amount

ent. These forms may be obtained from the Alabama Department of

of income or (loss) resulting from reducing portfolio income by interest expense

Revenue, Income Tax Forms, P.O. Box 327470, Montgomery, AL 36132-

and other related expenses. Complete Schedule K by entering the gross

7470, and should be filed with the Alabama Department of Revenue,

amount of portfolio income on line 6 (in the Federal Amount column); the inter-

Montgomery, Alabama, on or before March 15, 2006.

est expense related to the portfolio income on line 7 (in the Federal Amount col-

Specific Instructions

umn); and, the remaining expenses related to the portfolio income on line 8 (in

the Federal Amount column). Please provide an explanation of the nature and

SCHEDULE A – Computation of Separately Stated and Nonseparately

amounts for the total amount entered on Schedule K, line 8.

Stated Income

Line 16. Other Separately Stated Items. Enter the net amount of other

Line 1. Enter the ordinary business income (loss) from page 1 of the feder-

separately stated business items. Attach a statement providing the type and

al Form 1065, U.S. Return of Partnership Income. Attach a copy of the com-

amount of each different separately stated item. Also enter the amount from line

plete federal Form 1065.

16 on line 9, Schedule K, in the Federal Amount column.

Reconciliation to Alabama Basis – Lines 2 through 10

Line 17. Net Separately Stated Items. Enter the sum of line 11 through line

Line 2. Enter the net amount of short-term and long-term capital gains

16.

(losses).

Line 18. Total Separately Stated and Nonseparately Stated Items. Enter

Line 3. Enter as a negative amount the amount that salaries and wages

the sum of line 10 and line 17.

were reduced on the federal return as a result of taking any of the different fed-

Line 19. Enter the Alabama apportionment factor from Schedule D, line 4.

eral employment credits claimed on the federal return.

The factor must be entered as percentage, with four decimal places.

Line 4. Enter the net amount of income or (loss) from rental real estate

Line 20. Nonseparately Stated Income Allocated and Apportioned to

activities.

Alabama. Enter the amount from Schedule D, line 7. See also the instructions

Line 5. Enter the net amount of income or (loss) from other rental activities.

for Schedule K, line 1 (Alabama Amount column).

Line 6. Enter the net amount of Internal Revenue Code Section 1231 gain

Signature Area

or (loss), but do not include any amount for casualty losses.

Indicate with a check mark if the Alabama Department of Revenue is author-

Line 7. Enter as a negative amount the amount of Internal Revenue Code

ized to discuss the return and its attachments with the preparer of the return.

Section 179 expense but only for property placed in service prior to 1990.

SCHEDULE B – Allocation of Nonbusiness Income, Loss, and Expense

Line 8. Enter the total amount of other items required to reconcile the fed-

The purpose of Schedule B is to report nonbusiness income, nonbusiness

eral ordinary business income (loss) to income on an Alabama basis. Attach a

losses, and nonbusiness expenses, as defined by Section 40-27-1, Code of

schedule clearly explaining the nature and amounts of the reconciling items.

Alabama 1975 . Nonbusiness items can be both nonseparately stated items

Line 9. Net Reconciling Items. Enter the sum of lines 2 through 8.

and separately stated items. Nonbusiness items are not subject to the multi-

Line 10. Net Alabama Nonseparately Stated Income or (Loss). Enter the

state apportionment requirements of Chapter 27, Title 40, Code of Alabama

sum of line 1 and line 9. This amount is carried to line 1, Schedule D,

1975 , but are allocated directly to Alabama or another state, in accordance with

the Multistate Tax Compact (Chapter 27, Title 40, Code of Alabama 1975 ).

Apportionment and Allocation of Income to Alabama.

See the Alabama Department of Revenue’s Web site

Separately Stated Items (Related to Business Income)

(

) for additional information concerning Alabama’s

Line 11. Contributions. Enter as a negative amount the amount of contribu-

mulitstate allocation and apportionment requirements.

tions. Enter the same amount on line 2, Schedule K, in the Federal Amount

Enter under the Nonseparately Stated Items heading on line 1a, line 1b,

column.

and line 1c a description of the nonseparately stated item.

Line 12. Oil and Gas Depletion. Enter as a negative amount the amount of

For each nonseparately stated item entered on line 1a, line 1b and line

oil and gas depletion. Enter the same amount on line 3, Schedule K, in the

1c:

Federal Amount column. The amount of oil and gas depletion claimed must be

computed in accordance with Section 40-18-16(b), which states: “…(2) Amount.

1. Enter on Column A the total gross income (from all states - everywhere)

In the case of oil and gas wells, the allowance for depletion shall be 12 percent

from the item.

of the gross income from the property during the taxable year, excluding from

2. Enter on Column B only the Alabama gross income from the item.

such gross income an amount equal to any rents or royalties paid or incurred by

3. Enter on Column C the expenses related to the gross income (every-

the taxpayer in respect to the property. Such amounts shall not exceed 50 per-

where) entered in Column A.

cent of the net income of the taxpayer, computed without allowance for deple-

tion, from the property, except that in no case shall the depletion allowance be

4. Enter on Column D only the expenses related to the Alabama gross

less than the amount allowable under federal income tax law. In the case of

income entered in Column B.

leases the deductions allowed by this paragraph shall be equitably apportioned

5. Enter on Column E the amount resulting from subtracting the expense

between the lessor and the lessee…”

amount in Column C from the gross income (everywhere) amount in Column A.

Line 13. IRC §179 Expense Deduction. Enter as a negative amount the

Instructions For Preparation Of Alabama Partnership/limited Liability Company Return Of Income - 2005 Page 2

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