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Form 765-GP (2011)

Page 3

*1100020049*

Kentucky Schedule K-1

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

PARTNER’S SHARE OF INCOME, CREDITS, DEDUCTIONS, ETC.

(a) Distributive Share Items - continued

(b) Amount

Resident Partner Adjustment

59.

Combination of Kentucky Schedule K-1, lines 1 through 6, 9 and portions of lines 7 and 11.

Add income amounts and subtract (loss) and deduction amounts (see instructions) .........................................

60.

Combination of federal Schedule K-1, lines 1 through 10, 12 and portions of lines 11 and 13.

Add income amounts and subtract (loss) and deduction amounts (see instructions) .........................................

61.

Enter difference of lines 59 and 60 here and on appropriate line on Schedule M (see instructions)..................

PARTNER’S INSTRUCTIONS FOR SCHEDULE K-1 (FORM 765-GP)

Who Must File—Although the partnership is not subject to income

NOTE: Form 740 filers see Form 740 instructions for Schedule M,

tax, the partners are liable for tax on their share of the partnership

Line 7 and/or Line 19.

income, whether or not distributed, and must include their share on

the individual income tax return.

Passive Activity Limitations—The passive activity limitations in IRC

Section 469 are figured at the partner level and may apply to any loss

If you were a Kentucky resident for the entire year, your filing

reported on Lines 1, 2 or 3 and any other related items of income, loss

requirement depends upon your family size, modified gross income,

and deductions reported on Schedule K-1 (Form 765-GP). Refer to the

Kentucky adjusted gross income and income from self-employment.

federal Partner’s Instructions for Schedule K-1 (Form 1065) to determine if

the passive activity limitations apply to your share of loss(es) reported on

Any person with gross receipts exceeding the threshold amount

Schedule K-1 (Form 765-GP) and if you must file Form 8582-K, Kentucky

determined under KRS 141.066 from self-employment must file a Form

Passive Activity Loss Limitations.

740 regardless of the amount of adjusted gross income or the number

of tax credits claimed. Generally, all income of Kentucky residents,

SPECIFIC INSTRUCTIONS

regardless of where it was earned, is subject to Kentucky income tax.

See Form 740 Instructions.

Kentucky Resident Partners (Form 740 Filers)—To determine the net

difference between the federal Schedule K-1 amounts and the Kentucky

Nonresidents with income from Kentucky sources and part-year

Schedule K-1 amounts, complete Lines 59, 60 and 61. This will adjust

residents receiving income while a Kentucky resident or from Kentucky

the items of income, loss and deductions used to compute your federal

sources while a nonresident must file a Kentucky return. Partnership

adjusted gross income to the Kentucky amounts shown in Column (b),

income is not exempted by reciprocal agreements between Kentucky

Schedule K-1.

and any other state. Form 740-NP must be filed by an individual with

income from Kentucky sources and a combined gross income from

Line 59—Include on this line the Kentucky Schedule K-1 amounts from

all sources exceeding the threshold amount determined under KRS

Lines 1 through 6 and 9. Also include the amounts from Lines 7 and 11

141.066. Full-year nonresidents must report all income from Kentucky

that do not pass through to Schedule A as itemized deductions.

sources and from property located in Kentucky. Persons moving into

Kentucky must report income received from Kentucky sources prior

Line 60—Include on this line the federal Schedule K-1 amounts from

to becoming residents and income received from all sources after

Lines 1 through 10 and 12. Also include the amounts from Lines 11 and

becoming Kentucky residents. Residents moving out of Kentucky

13 that do not pass through to Schedule A as itemized deductions.

during the year must report income from all sources while a resident

and from Kentucky sources while a nonresident.

NOTE: If Form 8582-K is required, adjust the amounts entered on Lines

59 and 60 to exclude any income, loss, deduction or expense related to

When to Report—Include your share of the partnership’s income or

a passive activity. Complete the passive activities adjustment worksheet

(loss), credits, deductions, etc., as shown by your Schedule K-1 (Form

(Form 8582-K, page 2) to determine additions to or subtractions from

765-GP) on your Kentucky income tax return for the year in which the tax

federal adjusted gross income. See Form 740 instructions for Schedule

year of the partnership ends. For example, if you, the partner, are on a

M, Line 7 and/or Line 19.

calendar year, and the partnership’s tax year ends January 31, 2011, you

must take the items listed on Schedule K-1 (Form 765-GP) into account

If amounts on Lines 4(d) and 4(e) are subject to the capital loss

on your tax return for calendar year 2011.

limitations, do not include on Lines 59 and 60. Complete federal Schedule

D using Kentucky amounts to determine additions to or subtractions

At-Risk Limitations—Generally, if you have a loss from any activity

from federal adjusted gross income.

carried on as a trade or business or for the production of income by the

partnership and you, the partner, have amounts invested in that activity

Line 61—Enter difference of Lines 59 and 60. If Line 59 is greater

for which you are not at risk, you will be required to complete federal

than Line 60, enter the difference as an addition to federal adjusted

Form 6198, At-Risk Limitations, to figure the allowable loss to report on

gross income on Schedule M, Line 3. If Line 60 is greater than Line 59,

your Kentucky income tax return. Your deductible loss from each activity

enter the difference as a subtraction on Schedule M, Line 15.

for the tax year generally is limited to the amount you are at risk for

the activity at the end of the partnership’s tax year or the amount of the

Caution: If the amounts on both Lines 59 and 60 are loss amounts,

loss, whichever is less. To help you complete Form 6198, if required, the

the smaller dollar amount of loss is the greater amount and to determine

partnership has provided a schedule showing your share of income,

the difference subtract the smaller dollar amount from the larger dollar

expenses, etc., for each at-risk activity.

amount. If the amount on either Line 59 or 60 is an income amount and

Kentucky Schedule K-1 (Form 765-Gp) - Partner'S Share Of Income, Credits, Deductions, Etc. - 2011 Page 3

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