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FORM

nstructIons

reParatIon oF

PTE-C

2014

labama

ePartment oF

evenue

Form Pte-c and schedule Pte-cK1

SCHEDULE

PTE-CK1

nonresident composite Payment return

INSTRUCTIONS

ident individual must establish those losses by filing an Alabama individual income

Issues Concerning the Preparation of

tax return.

Should you have any additional questions, please call the Pass-through Entity

the 2014 Alabama Form PTE-C

Composite Payment and Return Requirements for Partnerships. The Enter-

Section at (334) 242-1033.

Nonresident Agreements (Schedule NRA)

tainment Industry Incentive Act of 2009, Alabama Act Number 2009-144 passed dur-

ing the 2009 legislative session, created composite payment and return requirements

An Alabama S corporation may file the agreement of each nonresident share-

for Subchapter K entities, effective for tax years beginning on or after January 1, 2009.

holder of the entity (1) to file a return and make timely payments of all taxes imposed

Under the law, a partnership, or other entity classified as a Subchapter K entity,

on the shareholder with respect to the income of the Alabama S corporation, and (2)

is required to file a composite return and make composite payments on behalf of its

to be subject to personal jurisdiction in this State for the purpose of the collection of

nonresident owners or members if there are one or more nonresident owners or mem-

unpaid income tax, together with related interest and penalties, from the nonresident

bers at any time during the taxable year.

shareholder. An S corporation is not required to make a composite payment for any

The law specifically exempts estates, trusts, and business trusts from the require-

nonresident shareholder that certifies in writing, under penalty of perjury, to the entity

ment to make a composite payment and file a composite return. The law generally

prior to the original due date of the entity’s income tax return that the nonresident

exempts Alabama Qualified Investment Partnerships from the composite payment

shareholder has fully paid its Alabama income tax attributable to its distributive share

and return requirement.

of the entity’s net taxable income allocated and apportioned to Alabama with respect

to its taxable year.

Special considerations such as short years and changes of ownership will

be addressed on a case-by-case basis. Requests for relief should be submitted

Failure of Nonresident Owner in

to the Department describing the circumstances and type of relief sought.

The law made no changes to the composite payment and composite return re-

S Corporation to Timely File

If the nonresident shareholder that has filed a NRA does not pay the tax due at

quirements for S corporations. Regulations to implement the law are available on

the required time, the S corporation shall make the required payment of income tax

the Department’s Web site, alabama.gov.

due within 60 days after notice and demand from the Department. The tax due is the

total of each owner’s distributive share of the entity’s net taxable income allocated

Composite Payment and Return Requirements

and apportioned to Alabama multiplied by 5% for all nonresident owners.

for Subchapter K Entities and S Corporations

The Alabama composite return is not filed as an attachment to the Alabama in-

come tax return for the entity.

General Instructions

Every Subchapter K entity and every S corporation that is credited with a com-

posite payment on a composite return must also file a composite return to properly

Period Covered

File the 2014 return for calendar year 2014 and fiscal years that begin in 2014

allocate the composite payment made on its behalf.

and end in 2015.

The allocation and apportionment requirements established by the Multistate Tax

Compact, codified in Chapter 27, Title 40, Code of Alabama 1975, and all rules per-

Original Due Date

taining to the Multistate Tax Compact are applicable to composite returns required to

The calendar year return is due on or before April 15, 2015 for Subchapter K en-

be filed by Subchapter K entities and S corporations.

tities. The calendar year return is due on or before March 16, 2015 for S corporations.

In computing the amount of the composite payment, the entity shall apply the

For fiscal year or short year taxpayers, the return is due on or before the 15th day of

maximum tax rate provided in §40-18-5 (5%) to each nonresident owner’s distributive

the 4th month following the close of the tax period for Subchapter K entities. For

share of income, to include both separately stated income and nonseparately stated

fiscal year or short year taxpayers, the return is due on or before the 15th day of the

income.

3rd month following the close of the tax period for S corporations. If the 15th falls on

The nonresident owner’s distributive share of income shall be computed in ac-

Saturday, Sunday, or a state holiday then the due date will be considered the following

cordance with §40-18-24, Code of Alabama 1975, for Subchapter K entities. The

business day.

nonresident shareholder’s distributive share of income shall be computed in accor-

Any changes must be made on an amended Form PTE-C no later than the ex-

dance with §40-18-162, Code of Alabama 1975, for S corporations.

tended due date of the Subchapter K entity’s/S corporation’s return. If an amended

In computing the amount of the composite payment, an entity may not offset the

Form PTE-C results in overpayment of tax, the overpayment may be refunded or

income or gain of a nonresident owner/shareholder with the loss of another

credited to the next year’s filing. Any changes in income affecting the owner’s/

owner/shareholder.

shareholder’s tax after the extended due date, must be made on the owner’s/

In computing the amount of the composite payment, a net operating loss carry-

shareholder’s applicable tax return. (Individual – Form 40NR, C corporation – Form

forward may not be used to offset income or gain.

20C, S corporation – Form 20S, or Fiduciary – Form 41.)

Every nonresident owner or shareholder whose income is reported on a composite

return must file an Alabama income tax return and report the Alabama source in-

Extension

come – even if the income earned in Alabama is included on a composite return, un-

An extension of time for filing Form PTE-C is granted automatically. However, the

less the nonresident owner or shareholder is a nonresident individual who has no

extension of time for filing the return is not an extension of time for payment of tax.

other Alabama source income. In order for a nonresident individual to have the benefit

The amount of tax due must be paid on or before the due date of the return without

of any net operating losses generated by a partnership or S corporation, the nonres-

regards to the extension of time to file the return. All calendar year PTE-C returns

Form Pte-C And Schedule Pte-Ck1 Preparation Instructions - Nonresident Composite Paytment Return - 2014

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