Form Pte-C Schedule Pte-Ck1 Instructions - Form Pte-C And Schedule Pte-Ck1 Nonresident Composite Payment Return - 2011

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FORM
I
F
T
P
NSTRUCTIONS
OR
HE
REPARATION OF
PTE-C
2011
A
D
R
LABAMA
EPARTMENT OF
EVENUE
Form PTE-C and Schedule PTE-CK1
SCHEDULE
PTE-CK1
Nonresident Composite Payment Return
INSTRUCTIONS
Issues Concerning the Preparation of
Every nonresident owner or shareholder whose income is reported on a compos-
ite return must file an Alabama income tax return and report the Alabama source in-
the 2011 Alabama Form PTE-C
come – even if the income earned in Alabama is included on a composite return,
Composite Payment and Return Requirements for Partnerships. The Enter-
unless the nonresident owner or shareholder is a nonresident individual who has no
tainment Industry Incentive Act of 2009, Alabama Act Number 2009-144 passed dur-
other Alabama source income. In order for a nonresident individual to have the ben-
ing the 2009 legislative session, created new composite payment and return
efit of any net operating losses generated by a partnership or S corporation, the non-
requirements for Subchapter K entities, effective for tax years beginning on or after
resident individual must establish those losses by filing an Alabama individual income
January 1, 2009.
tax return.
Under the law, a partnership, or other entity classified as a Subchapter K entity,
Should you have any additional questions, please call the Pass-through Entity
is required to file a composite return and make composite payments on behalf of its
Section at (334) 242-1033.
nonresident owners or members if there are one or more nonresident owners or mem-
Nonresident Agreements (Schedule NRA)
bers at any time during the taxable year.
An Alabama S corporation may file the agreement of each nonresident share-
The law specifically exempts estates, trusts, and business trusts from the require-
holder of the entity (1) to file a return and make timely payments of all taxes imposed
ment to make a composite payment and file a composite return. The law generally
on the shareholder with respect to the income of the Alabama S corporation, and (2)
exempts Alabama Qualified Investment Partnerships from the composite payment
to be subject to personal jurisdiction in this State for the purpose of the collection of
and return requirement.
unpaid income tax, together with related interest and penalties, from the nonresident
An annual composite return is due for a publicly-traded partnership that is treated
shareholder. An S corporation is not required to make a composite payment for any
as a partnership in accordance with 26 U.S.C. §7704(c). If a composite return is not
nonresident shareholder that certifies in writing, under penalty of perjury, to the entity
timely and properly filed by the publicly-traded partnership for a taxable year, then a
prior to the original due date of the entity’s income tax return that the nonresident
composite payment is due for the tax year from the partnership in accordance with
shareholder has fully paid its Alabama income tax attributable to its distributive share
§40-18-24.2, Code of Alabama 1975.
of the entity’s net taxable income allocated and apportioned to Alabama with respect
Special considerations such as short years and changes of ownership will
to its taxable year.
be addressed on a case-by-case basis. Requests for relief should be submit-
Failure of Nonresident Owner in
ted to the Department describing the circumstances and type of relief sought.
S Corporation to Timely File
The law made no changes to the composite payment and composite return re-
If the nonresident shareholder that has filed a NRA does not pay the tax due at the
quirements for S corporations. Regulations to implement the law are available on the
required time, the S corporation shall make the required payment of income tax due
Department’s Web site,
within 60 days after notice and demand from the Department. The tax due is the total
Composite Payment and Return Requirements
of each owner’s distributive share of the entity’s net taxable income allocated and ap-
for Subchapter K Entities and S Corporations
portioned to Alabama multiplied by 5% for all nonresident owners.
The Alabama composite return must not be filed as an attachment to the Alabama
General Instructions
income tax return for the entity.
Period Covered
Every Subchapter K entity and every S corporation that is credited with a compos-
ite payment on a composite return must also file a composite return to properly report
File the 2011 return for calendar year 2011 and fiscal years that begin in 2011 and
the composite payment.
end in 2012.
The allocation and apportionment requirements established by the Multistate Tax
Original Due Date
Compact, codified in Chapter 27, Title 40, Code of Alabama 1975, and all rules per-
taining to the Multistate Tax Compact are applicable to composite returns required to
The calendar year return is due on or before April 17, 2012 for Subchapter K en-
be filed by Subchapter K entities and S corporations.
tities. The calendar year return is due on or before March 15, 2012 for S corpora-
In computing the amount of the composite payment, the entity shall apply the
tions. For fiscal year or short year taxpayers, the return is due on or before the 15th
maximum tax rate provided in §40-18-5 (5%) to each nonresident owner’s distributive
day of the 4th month following the close of the tax period for Subchapter K entities.
share of income, to include both separately stated income and nonseparately stated
For fiscal year or short year taxpayers, the return is due on or before the 15th day of
income.
the 3rd month following the close of the tax period for S corporations. If the 15th falls
The nonresident owner’s distributive share of income shall be computed in ac-
on Saturday, Sunday, or a state holiday then the due date will be considered the fol-
cordance with §40-18-24, Code of Alabama 1975, for Subchapter K entities. The
lowing business day.
nonresident shareholder’s distributive share of income shall be computed in accor-
Any changes must be made on an amended Form PTE-C no later than the ex-
dance with §40-18-162, Code of Alabama 1975, for S corporations.
tended due date of the Subchapter K entity’s/S corporation’s return. If an amended
In computing the amount of the composite payment, an entity may not offset the
Form PTE-C results in overpayment of tax, the overpayment may be refunded or
income or gain of a nonresident owner/shareholder with the loss of another
credited to the next year’s filing. Any changes in income affecting the owner’s/
owner/shareholder.
shareholder’s tax after the extended due date, must be made on the owner’s/
In computing the amount of the composite payment, a net operating loss carryfor-
shareholder’s applicable tax return. (Individual – Form 40NR, C corporation – Form
ward may not be used to offset income or gain.
20C, S corporation – Form 20S, or Fiduciary – Form 41.)
1

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