Instructions For Form D-403a - Partnership Income Tax Return

Page 3, D-403A, Web, 11-12

Deductions from income:

from business activities in North Carolina that are segregated from

its other business activities. Income derived from a partnership’s

(1) Interest from obligations of the United States or United States’

business activities outside of North Carolina that are segregated

from its other business activities are not includable in determining

possessions

the tax due for nonresident partners. If the partnership’s business

(2) State, local, or foreign income tax refunds included on the

activities in North Carolina are segregated from its business activities

in other states, enter on Line 9 the income on Line 7 that is solely

federal return

from the partnership’s business activities in North Carolina. If all

(3) North Carolina law did not adopt the 50 percent bonus

of the partnership’s business activities are solely in North Carolina,

depreciation provisions in IRC section 168(k) for the tax

enter on Line 9 the amount from Line 7.

year 2008 or in IRC sections 168(k) or 168(n) for tax years

2009 and 2010. Similarly, North Carolina did not adopt the

Line 10 - Complete Parts 2 and 3 to determine the tax for

provisions of the Small Business Jobs Act of 2010 which

nonresident partners.

extended the 50 percent bonus depreciation through 2011

and the Tax Relief Act of 2010 which doubled and extended

Line 11 - Enter the total tax credits allocated to nonresident

bonus depreciation from 50 percent to 100 percent for qualified

partners.

property acquired and placed in service after September 8,

2010 and before January 1, 2012. The Tax Relief Act of 2010

Line 12 - Enter the net tax due for nonresident partners.

also provides 50% bonus depreciation for qualified property

placed in service after December 31, 2011 and before January

Line 13 - If Form D-410P was filed to request an extension of time

1, 2013. Certain long-lived property and transportation

to file the partnership return, enter any tax paid with the extension

property is eligible for 100% expensing if placed in service

form.

before January 1, 2013. Because North Carolina did not adopt

the bonus depreciation provisions under IRC sections 168(k)

Line 14 - Enter any other prepayments of tax that were made prior

and 168(n) of these Acts, an adjustment is required to add to

to filing this partnership return. If filing an amended return, include

income 85% of the amount deducted. Any amount added to

on Line 14 any amount paid with the original partnership return.

income on the 2008, 2009, 2010, and 2011 State partnership

returns may be deducted in five equal installments beginning

Line 15 - If tax was paid by other partnerships or by S corporations,

with the 2009, 2010, 2011, and 2012 State partnership returns,

enter the amount paid. Include with the return a copy of the

respectively. Enter 20 percent of the bonus depreciation

information furnished by the partnership(s) or S corporation(s) to

added back on the 2008 State partnership return on Part 4,

verify the amount claimed. North Carolina income tax is required to

Line 8a, 20 percent of the amount added back on the 2009

be withheld from the compensation paid to a nonresident partnership

State partnership return on Part 4, Line 8b, 20 percent of the

or limited liability company for services performed in North Carolina

amount added back on the 2010 State partnership return on

in connection with a performance, an entertainment or athletic event,

Part 4, Line 8c, and 20 percent of the amount added back on

a speech, or the creation of a film, radio, or television program. In

the 2011 State partnership return on Part 4, Line 8d. Note:

addition to any tax paid by other partnerships or S corporations,

When there is a change in ownership at the partner level in

include on Line 15 only the portion of tax withheld that is attributable

tax years subsequent to 2008, a new partner is not entitled to

to nonresident partners on whose behalf the managing partner is

share in the depreciation deduction claimed on the partnership

required to pay the tax. Attach Form NC-1099PS to the front of the

return because the new partner would not have added back

return to verify the North Carolina income tax withheld.

the depreciation in 2009, 2010, or 2011. Therefore, the total

deductions attributable to the special bonus depreciation for

Line 19 - Total due for nonresident partners. (Add Lines 17 and

each individual partner included on Line 7, Part 3 of Form

18c - The manager of the partnership must pay this amount with the

D-403 and on Line 3 of Form NC K-1 will not equal the total

return. The tax may be paid by check or money order payable in U.S.

deduction attributable to the special depreciation claimed on

dollars to the North Carolina Department of Revenue. Important:

Line 8, Part 4 of Form D-403.

The Department will not accept a check, money order, or cashier’s

check unless it is drawn on a U.S. (domestic) bank and the funds

(4) Other deductions from income

are payable in U.S. dollars.

Line 8 - In determining the tax due for nonresident partners, a

Line 20 - If total payments on Line 16 exceed the net tax due for

partnership must apportion to North Carolina the income derived

nonresident partners on Line 12, subtract and enter the amount to

from activities carried on within and outside North Carolina that are

be refunded.

not segregated from its other business activities. A partnership’s

Part 2 - Apportionment Percentage For Partnerships Having

business activities are not segregated if it does not employ a method

of accounting that clearly reflects the income or loss of its separate

One or More Nonresident Partners and Operating in North

activities. If the partnership’s business activities in North Carolina

Carolina and in One or More Other States

are not segregated from its business activities in other states, enter

on Line 8 the income on Line 7 that is to be apportioned to North

Method to be Used in Apportioning Partnership Income:

Carolina. If all of the partnership’s business activities are integrated,

enter on Line 8 the amount from Line 7. Income derived as a partner

A partnership with one or more nonresident partners whose

in another partnership or as a shareholder in an S corporation must

business activities in North Carolina are unified and integrated

be allocated instead of apportioned to North Carolina.

with its business activities in other states is required to apportion

its partnership income to North Carolina by multiplying the income

Line 9 - In determining the tax due for nonresident partners, a

by a fraction, the numerator of which is the property factor plus the

partnership must allocate to North Carolina the income derived

payroll factor plus twice the sales factor, and the denominator of

Instructions For Form D-403a - Partnership Income Tax Return - 2012 Page 3

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