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of the partnership nor for sale in the regular course of business

(f) Apportionment of Income; Business Joint Venture and

shall be allocated to this State if the property sold is real or tan-

Business Partnerships. A corporation which is involved in a busi-

gible personal property situated in this state, or intangible

ness joint venture, or is a general partner in a business partner-

property having an actual situs or a business situs within this

ship, must include its pro rata share of the joint venture or part-

state. Otherwise the gains shall not be allocated to this state.

nership, property, payroll and gross receipts values in its own

apportionment formula.

(3) Net income of the above classes having been separately

allocated and deducted, the remainder of the net business

COMPUTATION OF TOTAL INCOME FOR GEORGIA PUR-

income shall be apportioned as follows:

POSES (Schedule 7)

THREE FACTOR FORMULA

Schedule 7 reflects flow thru income from the federal return

which is taxable to the individual partners. A resident partner is

(a) Property Factor. The property factor is composed of the

required to report his full share of partnership income or loss. A

average value of real and tangible personal property owned or

nonresident partner is required to report only his share of the

rented and used during the taxable year. Property owned is val-

Georgia apportioned and allocated income.

ued at its original cost. Property rented is valued at eight times the

net annual rental rate. The net annual rental rate is the annual

PAYMENTS MADE TO A PARTNER FOR SERVICES REN-

rental rate paid less any annual rental rate received from any sub-

DERED OR INTEREST ON CAPITAL CONTRIBUTIONS ARE

NOT DEDUCTIBLE IN COMPUTING THE NET INCOME OF

rentals. Averaging with respect to rented property is achieved

THE PARTNERSHIP.

automatically by the method of determining the net annual rental

rate of such property.

Schedule 7 is similar to the Federal Schedule K. Enter the total

amounts from each category on Schedule 7 where applicable.

(b) Payroll Factor. The payroll factor is the ratio of all salaries,

wages, commissions, and other compensation paid by the tax-

DISTRIBUTABLE INCOME TO PARTNERS (Schedule 3)

payer in this State for personal services performed by employees

This schedule provides space for showing identifying informa-

in connection with the trade or business of the taxpayer during

tion and distributable income to the individual partners.

the taxable year to the total salaries, wages, commissions, and

other compensation paid by the taxpayer for personal services

Enter for each partner*: 1. Name 2. Street and Number 3. City,

performed by employees in connection with its entire trade or

State and Zip Code 4. Social Security or Federal Identification

Number 5. Profit (Loss) sharing ratio 6. Georgia Source Income.

business, wherever conducted, during the taxable year.

Payments made to an independent contractor or any other per-

TOTAL GEORGIA SOURCE INCOME MAY BE DIFFERENT

son not properly classified as an employee are excluded.

THAN THE TOTAL NET INCOME DUE TO THE FACT THAT

Compensation is paid in this State if the employee’s service out-

SOME OF THE PARTNERSHIP INCOME (e.g., Guaranteed

side Georgia is incidental to the service performed in this State or

Payments) MAY NOT BE BASED ON THE PROFIT SHARING

some of the service is performed in Georgia and the base of oper-

RATIO, OR THE PARTNER IS A GEORGIA RESIDENT.

ations from which the service is directed is in this State, or some

*IF THE PARTNERSHIP HAS MORE THAN 2 PARTNERS,

of the service is performed in Georgia and the base of operations

ATTACH A SEPARATE SCHEDULE FOR THE ADDITIONAL

from which the service is directed is not in any State where some

PARTNERS IN THE SAME FORMAT.

part of the service is performed but the employee’s residence is

in Georgia.

PARTNERSHIPS WITH NUMEROUS PARTNERS MAY AVOID

FILING K-1’S, IF IT AGREES TO PROVIDE THEM UPON

REQUEST.

of gross receipts from business done within this State to total

gross receipts from business done everywhere. Receipts shall be

UNDER CERTAIN CIRCUMSTANCES, INCOME RECEIVED BY A

deemed to have been derived from business done within this

NONRESIDENT PARTNER OF A RESIDENT PARTNERSHIP

MAY BE EXEMPT FROM GEORGIA INCOME TAX. REFER TO

State only if received from products shipped to customers in this

GEORGIA CODE SECTION 48-7-23 AND 24.

State, or delivered within this State to customers.

The purpose of the gross receipts factor is to measure the mar-

BEGINNING JANUARY 1, 1994, WITHHOLDING IS REQUIRED

ketplace for the taxpayer’s goods and services.

ON NONRESIDENT PARTNERS OR AS AN ALTERNATIVE, A

COMPOSITE RETURN MAY BE FILED. NO PERMISSION IS

When receipts are derived from the sale of tangible personal

REQUIRED. FORM IT-CR IS AVAILABLE.

property, receipts shall be deemed to have been derived from

business done in this state if they were received from products

BUSINESS CREDITS

shipped to customers in this state or products delivered within

LOW EMISSION VEHICLE CREDIT

this state to customers.

Refer to Georgia Code Section 48-7-40.16.

When receipts are derived from business other than the sale of

BASIC SKILLS EDUCATION CREDIT

tangible personal property, receipts shall be deemed to have

Refer to Georgia Code Section 48-7-41.

been derived from business done in this state if they were

received from customers within this state or if the receipts are

EMPLOYER CREDIT FOR APPROVED EMPLOYEE

otherwise attributable to this state’s marketplace.

RETRAINING

Refer to Georgia Code Section 48-7-40.5.

(d) The apportionment factors determined above shall be

weighted 25% to property, 25% to payroll and 50% to

EMPLOYERS NEW JOB CREDIT

receipts. If the denominator for either the property or pay-

Refer to Georgia Code Section 48-7-40.

roll factor is zero, the weighted percentage for the other will

be 33-1/3% and the weighted percentage for the receipts

EMPLOYERS CREDIT FOR PROVIDING OR SPONSORING

factor will be 66-2/3%. If the denominator for the receipts is

CHILD CARE FOR EMPLOYEES

zero, the weighted percentage for the property and payroll

Refer to Georgia Code Section 48-7-40.6.

will change to 50% each. If the denominators for any two

factors are zero, the weighted percentage for the remaining

MANUFACTURER’S INVESTMENT TAX CREDIT

factor will be 100%. Fill in the applicable pecentage in

Refer to Georgia Code Section 48-7-40.2, .3 and .4.

Schedule 6 column d.

OPTIONAL INVESTMENT TAX CREDIT

(e) For the purpose of this section, the word “sale” shall

Refer to Georgia Code Section 48-7-40.7, .8 and .9.

include the extraction and recovery of natural resources and all

processes of fabricating and curing.

CIGARETTE EXPORT CREDIT

Refer to Georgia Code Section 48-7-40.20.

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Form 700 - Partnership Income Tax Return Instructions - Department Of Revenue - Georgia Page 2

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