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

Page 4, D-403A, Web, 11-12

which is four. If the sales factor does not exist, the denominator

Line 8 - Enter each partner’s share of allowable tax credits. See

is the number of existing factors. If the sales factor exists, but the

the individual income tax instructions for a detailed explanation of

payroll or the property factor does not exist, the denominator is the

available tax credits and attach a separate schedule showing the

number of existing factors plus one.

computation of any tax credits claimed.

Property Factor: The property factor is the percentage determined

Part 3B - Computation of North Carolina Taxable Income for

by dividing the average value of the partnership’s real and tangible

Nonresident Partners

personal property owned or rented and used in this State during

the year by the average value of all of the partnership’s real and

Line 9 - Enter each nonresident partner’s distributive share of the

tangible personal property owned or rented and used during the

guaranteed payments that are applicable to the income reported

year. With respect to rentals, assign values for property rented by

on Part 1, Line 8.

the partnership at 8 times the net annual rental rate. The net annual

Line 14 - Enter each nonresident partner’s distributive share of the

rental rate is the annual rental rate paid less any annual rental rate

received by the partnership from subrentals.

guaranteed payments that are applicable to the income reported

on Part 1, Line 9.

Payroll Factor: The payroll factor is the percentage determined by

dividing the total compensation paid by the partnership in this State

Line 16 - Special rules apply for gain from the sale, exchange,

during the income year by the total compensation paid everywhere

or disposition of Internal Revenue Code Section 1231 property

during the income year.

on which a Code Section 179 expense deduction was previously

claimed. For federal purposes, the gain is no longer included at the

Sales Factor: The sales factor is determined by dividing the total

entity level but instead is passed through separately to the individual

sales of the partnership in this State during the income year by the

partners. As a result, the gain is included in income on the partner’s

total sales of the partnership everywhere during the income year.

income tax return but is not included as part of the partner’s share

For purposes of the formula used for apportioning partnership

of the partnership’s income.

income to North Carolina, the sales factor is doubled. For any

partnership engaged in business as a building or construction

Partnerships must identify each nonresident partner’s share of

contractor, a securities dealer, a loan company or for a partnership

separately stated income items and enter that amount on Form

which receives more than 50 percent of its ordinary gross income

D-403, Page 3, Part 3, Line 16.

from investments in and/or dealing in intangible property, the

Part 3C - Computation of Tax Due for Nonresident Partners on

partnership’s income shall be apportioned by the use of only the

sales factor.

Whose Behalf the Partnership Pays the Tax

Part 3A - Partners’ Shares Of Income, Adjustments, Tax Credits

Line 18 - Compute the tax due for each nonresident partner and

and Other Items

enter the amounts for each partner on Line 18. See the Tax Rate

Schedule on Page 4.

Line-by-Line Instructions:

Line 20 - If the total amount of tax for each nonresident partner

Line 4 - Enter the same percentage used for federal income tax

shown on Line 18 is more than each nonresident partner’s tax credits

purposes.

shown on Line 19, subtract and enter the result on Line 20, Net Tax

Due. Enter the net tax due for nonresident partners on Line 12,

Line 6 - Enter each partner’s share of the additions to income from

Page 1. The manager of the partnership is responsible for payment

Part 1, Line 4.

of the total tax, penalties, and interest due for each nonresident

partner and must furnish each nonresident partner information to be

Line 7 - Enter each partner’s share of the deductions from income

included with his individual income tax return verifying the tax paid

from Part 1, Line 6.

on his share of the partnership earnings in North Carolina.

Instructions For Form D-403a - Partnership Income Tax Return - 2012 Page 4

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