Georgia Form 700 - Partnership Tax Return - 2006 (Page 9 of 12) in pdf

ADDITIONAL INFORMATION

Note: This subsection does not apply to a family limited

CORPORATE PARTNERS OF PARTNERSHIPS

partnership or similar nontaxable entity, the majority interest

A corporation will be considered to own property in Georgia,

of which is owned by one or more natural or naturalized

do business in Georgia, or have income from Georgia

citizens related to each other within the fourth degree of

sources whenever the corporation is a partner, whether

reckoning according to the laws of descent and distribution.

limited or general, in a partnership which owns property or

Also, this subsection does not apply to a partner that

does business in Georgia, or has income from Georgia

participates in the management of the partnership or that is

sources.

engaged in a unitary business with another person (including

entities) that participates in the management of the

LIMITED LIABILITY COMPANY

partnership.

Each limited liability company and foreign limited liability

company shall be classified as a partnership for Georgia tax

GUARANTEED PAYMENT EXAMPLE

purposes unless classified otherwise for Federal income tax

The following example illustrates how guaranteed payments

purposes, in which case the limited liability company or foreign

should be treated when there is a nonresident partner: There

limited liability company shall be classified for Georgia tax

are two partners in the partnership. Partner One is a resident

purposes in the same manner as it is classified for federal

of Georgia and owns 25% of the partnership. Partner One

income tax purposes.

receives a guaranteed payment of $10. Partner Two is a

nonresident of Georgia and owns 75% of the partnership.

NET WORTH TAX

Partner Two receives a guaranteed payment of $40. The

The Partnership Return is for information only. Partnerships

profit and loss sharing ratio is the same as the ownership

are not subject to net worth tax.

percentage. The Georgia apportionment ratio on line 4, part

2, schedule 6, of Form 700 is 50%.

INSTRUCTIONS FOR PARTNERSHIPS

Ordinary income reported on

WITH NONRESIDENT PARTNERS

line 1, schedule 7, of Form 700 .................................. $100

Nonresident partners of partnerships doing business both

Guaranteed payment reported on

within and without Georgia shall compute their proportionate

line 5, schedule 7, of Form 700 ..................................... $50

part of the partnership’s allocated and apportioned income

Total income for Georgia purposes,

from the schedules on Form 700. Georgia net income

line 12, schedule 7, of Form 700 ................................. $150

computed on Line 7 of Schedule 1 should be multiplied by

Partner One (resident) is required to report $35 on the Georgia

the percentage of ownership. This amount is further adjusted

return. The entire $10 guaranteed payment plus the share of

by the partner’s share of the separately stated items

the ordinary income of the partnership, which is $25 ($100

mentioned in the Federal Tax Changes section on page 2

ordinary income placed on line 1, schedule 7, of Form 700

and the Adjustments to Federal Income section on page 3.

multiplied by the ownership percentage of 25%). Partner Two

A partnership that owns property or does business within this

(nonresident) is required to report $57.50 on the Georgia

State is required by O.C.G.A. § 48-7-129 to withhold on

return. The Georgia portion of the guaranteed payment is

distributions paid or credited to its nonresident partners. The

$20 ($40 guaranteed payment multiplied by the Georgia ratio

withholding tax rate is 4%. Withholding is not required if the

of 50%) plus the share of the Georgia portion of the ordinary

aggregate annual distributions paid or credited to each partner

income of the partnership, which is $37.50 ($100 ordinary

are less than $1,000. As an alternative to withholding, the

income placed on line 1, schedule 7, of Form 700 multiplied

partnership may file a composite return (Form IT CR) for its

by their ownership percentage of 75% multiplied by the

nonresident partners. Nonresident partners may only be

Georgia ratio of 50%).

included on the composite return if they have no other Georgia

source income. Permission is not required to file a composite

TELEPHONE ASSISTANCE

return. Please check the Composite Return Filed box on

Page 1 of Form 700.

Compliance Division ................................... (404) 417-6400

Subsection (c) of O.C.G.A. § 48-7-24 provides an exemption

Composite Returns .................................... (404) 417-2300

from Georgia income tax for a nonresident partner who

Employer Withholding Information ............. (404) 417-3210

receives income from a partnership which derives income

Income Tax Forms ...................................... (404) 417-6011

exclusively from buying, selling, dealing in, and holding

Registration & Licensing Unit ..................... (404) 417-4490

securities on its own behalf and not as a broker. Accordingly,

withholding under O.C.G.A. § 48-7-129 would not apply to

Taxpayer Services Division ........................ (404) 417-2400

distributions paid or credited in this situation.

Page 6

Georgia Form 700 - Partnership Tax Return - 2006 Page 9

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