Georgia Form 700 - Partnership Tax Return - 2006 (Page 4 of 12) in pdf

GENERAL INFORMATION

(continued)

shall be allocated to Georgia if the property sold is real or tangible

percentage for the Gross Receipts factor will be 88.89% (8/9).

personal property situated in this State, or intangible property

If the denominator for the gross receipts factor is zero, the

having an actual situs or a business situs within this State.

weighted percentage for both property and payroll will be 50%

Otherwise the gains shall not be allocated to this State.

each. If the denominators for any two factors are zero, the

weighted percentage for the remaining factor will be 100%.

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

allocated and deducted, the remainder of net business income

For tax years beginning on or after January 1, 2007,

shall be apportioned as follows:

different apportionment factors will apply. See Rules and

THREE FACTOR FORMULA

Regulations 560-7-7-.03(4)(d) for specific details.

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

For tax years beginning on or after January 1, 2006, a

average value of real and tangible personal property owned

company whose net income is derived from the manufacture,

or rented and used during the taxable year. Property owned

production, or sale of tangible personal property, and from

is valued at its original cost. Property rented is valued at

business other than the manufacture, production, or sale of

eight times the net annual rental rate. The net annual rental

tangible personal property, must include gross receipts from

rate is the annual rental rate paid less any annual rental rate

both activities in their receipts factor.

received from any subrentals. Averaging for rented property

For tax years beginning on or after January 1, 2006, a

is achieved automatically by the method of determining the

company whose net income is derived from business other

net annual rental rate of such property.

than the manufacture, production, or sale of tangible personal

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

property, only includes in their receipts factor gross receipts

wages, commissions, and other compensation paid by the

from activities which constitute the taxpayer’s regular trade

taxpayer in this State for personal services performed by

or business.

employees in connection with the trade or business of the

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

taxpayer during the taxable year to the total salaries, wages,

include the extraction and recovery of natural resources and

commissions, and other compensation paid by the taxpayer

all processes of fabricating and curing.

for personal services performed by employees in connection

(f) Apportionment of Income; Business Joint Venture and

with its entire trade or business, wherever those services were

Business Partnerships. A corporation which is involved in a

conducted during the taxable year. Payments made to an

business joint venture, or is a partner in a business

independent contractor or any other person not properly

partnership, must include its pro rata share of the joint venture

classified as an employee are excluded. Compensation is

or partnership property, payroll, and gross receipts values in

paid in this State if the employee’s service is performed entirely

its own apportionment formula.

within this state or the employee’s service outside Georgia is

COMPUTATION OF TOTAL INCOME FOR GEORGIA

incidental to the service performed in this State or some of

PURPOSES (Schedule 7)

the service is performed in Georgia and the base of operations

Schedule 7 reflects flow-through income from the federal

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

return which is taxable to the individual partners. A resident

the service is performed in Georgia and the base of operations

partner is required to report his full share of partnership income

from which it is directed is not in any state where part of the

or loss. A nonresident partner is required to report only his

service is performed but the employee’s residence is in Georgia.

share of Georgia-apportioned and Georgia-allocated income.

Payments made to a partner for services rendered or interest

ratio of gross receipts from business done within this State

on capital contributions are not deductible when computing

to total gross receipts from business done everywhere.

the partnership’s net income.

Receipts derived from the sale of tangible personal property

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

shall be deemed to have been derived from business done

amounts from each category on Schedule 7 where applicable.

in Georgia if they were received from products shipped to

INCOME TO PARTNERS (Schedule 3)

customers in this State or products delivered within this State

This schedule provides space to show identifying information

to customers.

and income distributable to the individual partners.

When receipts are derived from business other than the sale

Enter for each partner: 1. Name; 2. Street and Number; 3.

of tangible personal property, receipts shall be deemed to

City, State and Zip Code; 4. Social Security or Federal

have been derived in Georgia if received from customers

Identification Number; 5. Profit (Loss) sharing ratio; 6.

within this state, or if the receipts are otherwise attributable

Georgia Source Income. If the partnership has more than 5

to this State’s marketplace.

partners, attach a separate schedule for the additional

(d) The apportionment factors shall be weighted as follows:

partners in the same format.

For tax years beginning on or after January 1, 2006, and

Total Georgia source income may differ from total net income

before January 1, 2007, the apportionment factors are 80%

because some of the partnership income (e.g., guaranteed

sales, 10% property, and 10% payroll. If the denominator for

payments) may not be based on the profit sharing ratio, or

either the Property or Payroll factor is zero, the weighted

the partner is a Georgia resident. See example on page 6.

percentage for the other will be 11.11% (1/9) and the weighted

Page 4

Georgia Form 700 - Partnership Tax Return - 2006 Page 4

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