Schedule K-1 (Form 720s) - State Form 41a720s(K-1) - Shareholder'S Share Of Income, Credits, Deductions, Etc. - 2015 Page 3
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4Form 720S (2015)
Page 3
KENTUCKY SCHEDULE K-1
SHAREHOLDER’S INSTRUCTIONS FOR SCHEDULE K-1 (FORM 720S)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE
PURPOSE—Schedule K-1 (Form 41A720S (K-1)) is used to
SPECIFIC INSTRUCTIONS—Kentucky Resident Shareholders
report to each shareholder the shareholder’s pro rata share
(Form 740 Filers)—You, as the shareholder, will need to determine
of income, credits, deductions, etc. A shareholder is liable for
the net difference between your federal Schedule K-1 amounts
Kentucky individual income tax as provided by KRS 141.020 on
and your Kentucky Schedule K-1 amounts. This will adjust the
the shareholder’s pro rata share of the S corporation’s income,
items of income, loss and deductions used to compute your
whether distributed or undistributed.
federal adjusted gross income to the Kentucky amounts shown in
Column (b), Schedule K-1. To determine this difference, complete
GENERAL INSTRUCTIONS—Schedule K-1 (Form 720S) will help
Lines 57 through 59.
when preparing your Kentucky income tax return. Where “(attach
schedule)” appears next to a line on Schedule K-1, it means the
Line 57—Include on this line the Kentucky Schedule K-1 amounts
S corporation will have attached a statement to Schedule K-1 to
from Lines 1 through 5 and 8. Also include the amounts from
show information for the line item, if applicable. If you believe
Lines 6 and 10 that do not pass through to Form 740 or 740-NP,
the S corporation has made an error on your Schedule K-1 (Form
Schedule A as itemized deductions.
720S), notify the S corporation and ask for a corrected schedule.
Do not change any item on your copy.
Line 58—Include on this line the federal Schedule K-1 amounts
Schedule K-1 (Form 720S) does not show the amount of actual
from Lines 1 through 9 and 11. Also include the amounts from
dividend distributions the S corporation paid to you. The S
Lines 10 and 12 that do not pass through to Form 740 or 740-NP,
corporation must report such amounts to you on Form 1099-DIV.
Schedule A as itemized deductions.
You report actual dividend distributions on federal Schedule B
(Form 1040). Refer to the shareholder instructions you received for
NOTE: If Form 8582-K is required, adjust the amounts entered
federal Schedule K-1 (Form 1120S) for information concerning your
on Lines 57, 58 and 59 to exclude any income, loss, deduction or
basis in corporate stock, elections to be made by you separately
expense related to a passive activity. Complete the passive activi-
on your income tax return and not by the S corporation, etc.
ties adjustment worksheet (Form 8582-K, page 2) to determine
additions to or subtractions from federal adjusted gross income.
Every individual, including estates and trusts, who is a resident
See Form 740 instructions for Schedule M, Line 7 and/or Line 19.
of Kentucky and is a shareholder in an S corporation is required
to report 100 percent of his or her share of income (loss), credits,
deductions, etc. for Kentucky individual income tax purposes. A
If amounts on Lines 4(d) and 4(e) are subject to the capital loss
nonresident shareholder must report the portion of his or her
limitations, do not include on Lines 57 and 58. Complete federal
share of income attributable to the S corporation’s business in
Schedule D using Kentucky amounts to determine additions to
Kentucky. A resident is an individual domiciled within Kentucky
or subtractions from federal adjusted gross income.
or an individual who is not domiciled in Kentucky but maintains
a place of abode in Kentucky and spends in the aggregate more
Line 59—Enter difference of Lines 57 and 58. If Line 57 is greater
than 183 days of the taxable year in Kentucky. A nonresident is
than Line 58, enter the difference as an addition to federal adjusted
any individual not a resident of Kentucky.
gross income on Schedule M, Line 3. If Line 58 is greater than Line
57, enter the difference as a subtraction on Schedule M, Line 15.
At-Risk Limitations—Generally, if you have a loss from any activity
carried on as a trade or business or for the production of income
by the S corporation and you, the shareholder, have amounts
Caution: If the amount on Line 57 is a (loss) and Line 58 is a (loss),
invested in that activity for which you are not at risk, you will be
the smaller dollar amount of (loss) is the greater amount, and
required to complete federal Form 6198, At-Risk Limitations, to
to determine the difference, subtract the smaller dollar amount
figure the allowable loss to report on your Kentucky income tax
from the larger dollar amount. If the amount on Line 57 is a (loss)
return. Your deductible loss from each activity for the tax year
and Line 58 is an income amount, or the amount on Line 57 is an
generally is limited to the amount you are at risk or could actually
income amount and Line 58 is a (loss), the income amount is the
lose in the activity, whichever is less. To help you complete Form
greater amount; therefore, add the two amounts to determine
6198, if required, the S corporation will provide a schedule showing
the difference.
your share of income, expenses, etc., for each at-risk activity.
Nonresident Shareholders (Form 740-NP Filers)—A nonresident
Passive Activity Limitations—The passive activity limitations
individual who is required to file Form 740-NP, Kentucky Individual
in IRC Section 469 are figured at the shareholder level and may
Income Tax Return Nonresident or Part-Year Resident, or who
apply to any loss reported on Lines 1, 2 or 3 and any other related
elects to file Form 740-NP to take advantage of capital loss and
items of income, loss and deductions reported on Schedule K-1
net operating loss carryovers shall enter the amounts from
(Form 720S). Refer to the federal Shareholder’s Instructions for
Schedule K-1 as follows:
Schedule K-1 (Form 1120S) to determine if the passive activity
limitations apply to your share of loss(es) reported on Schedule
K-1 (Form 720S) and if you must file Form 8582-K, Kentucky
If the percentage in Item B(2) is “100%,” the amounts on Lines
Passive Activity Loss Limitations. When applicable, the passive
1 through 5 and 8, portions of Lines 6 and 10 and the portion of
activity limitations on losses are applied after the limitations on
Line 41(b) actually deducted for the current year must be entered
losses for a shareholder’s at-risk amount.
on the appropriate lines of Form 740-NP and related schedules.
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