Instructions For Form Pa 40nrc - Consolidation Return For Qualified Electing Nonresident S Corporation/partnership Information Return Instructions
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3The partnership must provide supplemental statements to the PA Schedules RK-1 and NRK-1 as to straight-line depreciation,
associated accelerated depreciation, and the partners’ losses without depreciation. See Chapter 16, Pass Through Entities,
of the PA PIT Guide.
Partnership Losses
For PA purposes, a partner must reduce basis in the partnership by losses, but only to the extent that the losses reduce
either the income subject to PA tax or the income tax of another state or country. Therefore, a partner’s distributive share
of losses does not reduce his or her ownership unless the partner realized a tax benefit in a taxable year.
A resident partner will reduce basis by the associated straight-line depreciation for unused losses. The partner receives a
tax benefit since basis is not reduced by the full extent of the unused loss.
IMPORTANT: See the PA PIT Guide for a complete analysis of the Tax Benefit Rule, and the associated calculations.
PA-40NRC
CONSOLIDATION RETURN FOR QUALIFIED ELECTING NONRESIDENT
PA S CORPORATION SHAREHOLDERS AND PARTNERS
A partnership or PA S corporation may file a PA-40NRC on behalf of its qualifying electing nonresident members. The non-
residents must meet these requirements:
1. The member must be an individual whose tax year is the calendar year.
2. The member and the member’s spouse must each be a domiciliary of a state or country other than PA at the close
of the entity's taxable year.
3. The member and the member’s spouse must not maintain a permanent place of abode in PA at the end of the
calendar year.
4. The member must have no PA taxable income derived from, or connected with, PA sources other than his or her
distributive share of income for the calendar year.
5. The member must elect to join in the filing of the PA-40NRC.
The partnership or PA S corporation must complete the PA Schedule NRC-I listing each of its nonresident individual members
or partners that received a PA Schedule NRK-1, and/or a PA NRC-O listing every nonresident or foreign member that is
not an individual that received a PA Schedule NRK-1. The partnership or PA S corporation must maintain for inspection at
its principal office the following:
1. The list of all nonresident members with all pertinent information for the members’ including the names (list by last
name or entity in alphabetical order), address, Social Security Number or Federal Identification Number, ownership
interest, distributive share of total taxable income, tax due before application of payments and credit, share of tax
withheld or payments, and share of overpayment, if any.
2. One of the following:
a. A certification that each of the qualified nonresident individuals listed on the PA Schedules NRC-I and/or O as
electing to join in filing a PA consolidated group return for the taxable year did agree to file the PA-40NRC; or
b. A certified copy of the agreement that evidences that each of the qualified nonresident individuals listed on the PA
Schedules NRC- I and/or O, as electing to join in filing a PA consolidated group return for the taxable year did agree
to file the PA-40NRC.
Effect of a Consolidated Group Return
Unless rejected, the Department considers the PA-40NRC a return filed on behalf of a group of electing non-resident
individuals that meet the individual filing requirements of PA PIT law. The Department’s acceptance of a PA-40NRC is
conditional upon review to determine that it is a complete return, and that all documentation is attached. This return is subject
to revocation upon audit or review. The Department retains the right at any time to require the filing of a PA-40 from any
of the individual partners or shareholders. The Department also retains the right to withdraw and modify the authority to
file a PA-40NRC. A participating shareholder or partner may not change his or her election to file from PA-40NRC to a PA-40
or from a PA-40 to a PA-40NRC after filing the PA tax returns.
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PA-20S/PA-65
For forms & additional information, visit the Department’s Web site at
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