Partner'S And Shareholder'S Instructions For Schedule K-1-P(2)/instructions For Individuals Filing Form Il-1040
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8Illinois Department of Revenue
Schedule K-1-P(2) Partner’s and Shareholder’s Instructions
General Information
report the income or loss from your Schedule K-1-P on their tax
return, and provide them with a copy of the Schedule K-1-P and a
What is the purpose of Schedule K-1-P?
copy of this Schedule K-1-P(2).
The partnership or the S corporation listed on the front of Schedule
What if I received Schedule K-1-P from a
K-1-P has completed and provided you with the schedule that
Grantor Trust or Disregarded Entity?
reflects your specific share of the partnership’s or the S corporation’s
income, modifications, and credits. Use this completed schedule and
If the grantor trust or disregarded entity checkbox on Line 9b is
these instructions to help you report the items shown on Schedule
checked and your name and identification number are listed, report
K-1-P on your Illinois Income Tax return. Attach a copy of Schedule
the items from the Schedule K-1-P as if it were provided to you by the
K-1-P to your tax return and keep a copy for your records.
taxpayer in Step 1.
What must I attach?
What if I believe the partnership or the S corporation
You must attach a copy of any Schedule K-1-P you receive from
has made an error on my Schedule K-1-P?
partnerships and S corporations to your tax return. You should also
If you believe the partnership or the S corporation has made an error
keep a copy for your records.
on your Schedule K-1-P, notify the partnership or the S corporation
and ask for a corrected Schedule K-1-P. Do not change any items on
What if the partnership is an investment
your copy.
partnership?
What does Column A represent?
If the partnership that completed the Schedule K-1-P wrote
Column A represents your specific share of the partnership’s or the
“investment partnership” in Step 1, Line 4, all of the income you
S corporation’s income, modifications, and credits. The partnership
receive from the partnership is usually treated as nonbusiness
or the S corporation is required to complete this column if you were
income that is allocable to your state of residence (individuals) or
a partner or shareholder at any time during the partnership’s or the
state of commercial domicile (all other persons or entities). However,
S corporation’s tax year. If you were a resident of Illinois on the last
the income you receive from the partnership will be treated as
day of the partnership’s or S corporation’s taxable year, all amounts
business income if your investment in the partnership is related to
in Column A must be included as income, modifications, and credits
another business activity of yours or serves an operational function
allocated to Illinois. If you were a resident of Illinois on the last day
to another business activity of yours or where your contribution to
of the partnership’s or the S corporation’s tax year, and you are
the partnership was made out of working capital from your trade or
claiming a credit for taxes paid to another state, see “What does
business. If your income is treated as business income, you must
Column B Represent” below.
apportion it as if you had earned the income directly, rather than
through the partnership. The apportionment should be completed on
What does Column B represent?
the correct forms, as follows:
Column B represents the portion of Column A that is allocated or
Nonresident individuals - use Form IL-1040, Schedule NR.
apportioned to Illinois. If you were not a resident of Illinois on the last
day of the partnership’s or the S corporation’s tax year, be sure the
Nonresident trusts and estates - use Form IL-1041, Schedule NR.
amounts reported in Column B are included in the Illinois amounts
Illinois residents may not include any income from
reported on your
an investment partnership in Column B of their Form IL-1040 or
• Form IL-1040, Schedule NR, Nonresident and Part-Year Resident
IL-1041, Schedule CR.
Computation of Illinois Tax, Column B;
Corporations (excluding S corporations) - use Form IL-1120 and
• Form IL-1041, Schedule NR, Nonresident Computation of
complete Step 4, Figure your income allocable to Illinois.
Fiduciary Income, Column B;
• Form IL-1120, Step 4, Figure your base income allocable to
S corporations or partnerships - use Form IL-1120-ST or Form
Illinois; or
IL-1065 and complete Step 6, Figure your income allocable to Illinois.
• Form IL-1065 or Form IL-1120-ST, Step 6, Figure your base
What if I am engaged in a unitary business with this
income allocable to Illinois.
partnership?
If you were a resident of Illinois on the last day of the partnership’s or
If you are engaged in a unitary business with this partnership, the
the S corporation’s tax year, and you are claiming a credit for taxes
partnership should have attached a schedule showing your share
paid to another state, subtract the amount of each item in Column B
of the partnership’s apportionment factors and business income.
from the amount of that item in Column A, and include the difference
You must determine the portion of your business income taxed by
in Column B, Non-Illinois Portion, for that item on your
Illinois by adding your share of the partnership’s business income
• Form IL-1040, Schedule CR, Credit for Tax Paid to Other States,
and apportionment factors to your own business income and
or
apportionment factors.
• Form IL-1041, Schedule CR, Credit for Tax Paid to Other States.
What if I am a Grantor Trust or Disregarded Entity?
—
Steps 3 and 4 - Column B
Step 3, Column B represents your
If you are a grantor trust or other disregarded entity for federal and
share of the partnership’s or the S corporation’s nonbusiness income
allocated to Illinois. Step 4 represents your share of the partnership’s
Illinois income tax purposes, check the applicable box on Line 9b,
or the S corporation’s business income apportioned to Illinois.
write the name and identification number of the taxpayer that will
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Schedule K-1-P(2) (R-12/12)
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