Instructions For Form Nh-1040 - Business Profits Tax Return - 1999 Page 2
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3NEW HAMPSHIRE DEPARTMENT OF REVENUE ADMINISTRATION
FORM
BUSINESS PROFITS TAX RETURN
NH-1040
Instructions
LINE-BY-LINE INSTRUCTIONS (continued)
Line 5 (continued)
STEP 2
(continued)
Line 5(a) and 5(b). If you need additional space, please attach a schedule.
Column 1: Enter the original date of the sale.
Column 2: Enter the taxable amount of gain or loss from Federal Form 6252 for this tax year.
If a loss, show dollar amount in parenthesis, e.g. ($50).
Column 3: Enter any amount which is attributable to an accumulated passive loss used to
calculate the gain or loss reported in Column 2.
Column 4: Enter the total of Column 2 plus Column 3.
Column 5: Enter the amount shown in Column 4 which is attributable to you.
Column 6: Enter the amount shown in Column 4 which is attributable to your spouse.
Line 5(c)
Enter the total of lines 5(a) and 5(b) on line 5(c).
Line 6:
Combine lines 1, 2(c), 3, 4(c) and 5(c) separately for Column A and Column B.
Line 7:
COMPENSATION FOR PERSONAL SERVICES
Enter on line 7 the dollar value of the services performed by the proprietor during the taxable period. Enter your
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 tax period even if such services are
valued at less than $6,000. RSA 77-A:4 limits the MAXIMUM compensation deduction to the sum of the follow-
ing amounts included in your federal income tax schedules:
(1)
Net profit or loss from Federal Form 1040, Schedule C;
(2)
Income or loss from rental properties from Federal Form 1040, Schedule E;
(3)
Net farm profit or loss from Federal Form 1040, Schedule F;
(4)
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 15 percent of the actual sales price and the amounts paid to
other brokers or agents.
To determine the reasonableness of the compensation deduction, use comparative compensation data from
business organizations of similar size, volume and complexity from industry statistics or from publications such
as, but not limited to, The American Almanac of Jobs and Salaries or the New Hampshire Wages and Benefits
Survey. 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
Enter the amount of line 6 less 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 for you or your
spouse available for future deduction. A future NOL deduction is still subject to the carryback and carryforward
provisions and apportionment provisions pursuant to RSA 77-A:3, RSA 77-A:4, and Rev 303.03(d).
Line 9:
NH NET OPERATING LOSS DEDUCTION
Enter the amount of carryover loss available as shown on line 6 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
Enter the total of line 8 less line 9 adjusted by line 10.
If negative, show in parenthesis e.g. ($50).
Line12: NEW HAMPSHIRE APPORTIONMENT
Proprietorships which have business activity, including rental activity, both within and without this state AND
which are subject to income taxes (or a franchise tax measured by net income) in another state, 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 within
and without 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 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.
NH-1040
Instructions
Rev. 12/99
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