Form Mo-1065 Draft - Partnership Return Of Income

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The principal expense item in this formula is interest expense;

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however, the Direc tor of Revenue may include other expense items

because of the direct re la tionship to the production of exempt income.

The taxpayer may propose an al ter na tive method provided that it

Americans With Disabilities Act (ADA)

properly reflects the amount of related expenses.

The state of Missouri offers a Dual Party Relay Service (DPRS) for

Part 2 — Allocation of Missouri Partnership

speech orhearing impaired individuals in accordance with the

Americans with Disabilities Act (ADA). An individual with a speech or

Adjustment to Partners

hearing impairment may call a voice user at TDD (800) 735-2966 or

Part 2 indicates the portion of the Missouri adjustment from

fax (573) 526-1881.

Part 1 that is allocated to each partner.

Column 4 and the

Form MO-1065, Partnership

instructions for Column 5 are based upon the usual situation

that a single general profit and loss sharing percentage

Return of Income Instructions

applies to all partnership items and related modifications.

Part 1 — Missouri Partnership Adjustment

Attach a detailed explanation (including extracts from the

partnership agreement) if the Column 5 amounts are not based

The

addition

and

subtraction

items

listed

Part

upon the same single percentage allocation indicated on Federal

are necessary Missouri modifications. Completion of Part 1 will result

Form 1065, Schedule K-1. The explanation must include the non tax

in the net Missouri partnership adjustment that will be allocated to the

purposes and effects of the special allocation method.

partners in Part 2. The partner’s adjustment can only be made from

information available from the partnership. It is necessary for each

partnership having modifications to complete Form MO-1065, Parts 1

and 2, and notify each partner of the adjustment to which he or she is

entitled.

Interest on Exempt Federal Obligations — Interest from direct

obligations of the U.S. Government, such as U.S. savings bonds,

U.S. treasury bills, bonds, and notes is exempt from state taxation

under the laws of the United States. Attach a detailed list or all

Federal Form 1099(s). Partnerships that claim an exclusion for

interest from U.S. obligations must identify the specific securities

owned, (e.g., U.S. savings bond).

A general description,

such as “interest on U.S. obligation” or “U.S. Government

securities” is not acceptable.

(See

12 CSR 10-2.150

for the

taxability of various U.S. Government-related obligations.)

list of exempt U.S. obligations must be provided to each partner

by the partnership. This list will allow the partner to report the

modification on his or her Form MO-1040, Individual Income Tax

Return.

A federally taxed distribution received from a mutual fund investing

exclusively in direct U.S. Government obligations is exempt. If

the mutual fund invests in both exempt (direct) and nonexempt

(indirect) federal obligations, the deduction allowed will be the

distribution received from the mutual fund attributable to the

direct U.S. Government obligations, as determined by the mutual

fund. A copy of the year-end statement received from the mutual

fund showing the amount of monies received or the percentage

of funds received from direct U.S. Government obligations or a

summary statement received from the mutual fund which clearly

identifies the exempt and nonexempt por tions of the U.S.

Government obligations interest, must be pro vided to each partner

by the partnership. Note: Failure to attach a copy of the notification

furnished to you that specifically details the amount of the subtraction

being claimed as the distributive share will result in the disallowance

of the deduction.

In arriving at the amount of related expenses, the taxpayer may use

actual expenses or a reasonable estimate. In general, the taxpayer

should use the same or similar method to that used to compute related

expenses for federal income tax purposes, provided that the method

reasonably reflects related expenses for Missouri-exempt income.

If a taxpayer fails to compute reasonable related expenses, the Director

of Revenue will make an adjustment based on the best information

made available. If sufficient information is not made available or if the

taxpayer’s records do not provide sufficient information, the Director of

Revenue will use the fol low ing formula to compute related expenses:

Exempt income x Expense items = Reduction to exempt income

Total income

Form Mo-1065 Draft - Partnership Return Of Income - 2014 Page 3

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