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

Page 2, D-403A, Web, 12-13

G. Estimated income tax. - No estimated income tax

the partnership should include amounts paid with extension and by

payment is required of a partnership; however, if the partnership

other partnerships, if applicable.

makes any prepayments of tax, include the prepayment

Part 1 - Computation of Income Tax Due or Refund

on Line 14. A resident individual partner who meets the

statutory requirements must file estimated tax on Form NC-40.

(See Individual Income Tax Instructions for Form D-400 for

Line Instructions

information on the requirements for paying estimated income

tax.)

A nonresident individual partner is not required to pay

Important: If the partnership operated only in North Carolina and

estimated tax on his distributive share of partnership income.

had no nonresident partners, complete only Lines 4 and 6, Part

1 (and Lines 13 or 14 if any payments were made), Part 3A, and

H. Tax Credits. - All tax credits allowed to individuals are allowed

Part 4.

to partnerships with the following exceptions:

Line 1 - Enter on Line 1 the total income or loss from Schedule

(1) Credit for childcare and certain employment-related

K, Federal Form 1065. The total income or loss is the combined

expenses

total of lines 1 through 11 of Schedule K.

(2) Credit for the disabled

(3) Credit for children

Line 2 - Enter the amount of salaries, interest, or other “guaranteed

(4) Credit for contributions by nonitemizers

payments” made to a partner for services or for the use of capital.

(5) Credit for long-term care insurance

Salaries to partners and retirement payments to partners who are

(6) Credit for adoption expenses

not active are treated as part of a partner’s distributive share of

(7) Earned Income Tax Credit

ordinary income and must be apportioned to North Carolina on the

(8) Credit for children with disabilities who require special

same basis as other partnership distributive income.

education

Line 4 - The following additions to income are required in calculating

A partnership may pass through to each of its partners the partner’s

North Carolina partnership income to the extent the additions are not

distributive share of an income tax credit for which the partnership

included in income. Complete Part 4, Lines 1 through 5 and enter

qualifies. Any dollar limit on the amount of a tax credit applies to

the total additions on Part 1, Line 4. Allocate the total additions on

the partnership as a whole instead of to the individual partners.

Line 4 to the individual partners in Part 3, Line 6.

Maximum dollar limits and other limitations that apply in determining

the amount of tax credit available to a taxpayer apply to the same

Additions to income:

extent in determining the amount of tax credit for which a partnership

qualifies, with one exception. The exception is a limitation that the

(1) Interest on bonds and other obligations of states and political

tax credit cannot exceed the tax liability of the taxpayer.

subdivisions other than North Carolina, if not included in

income

If there are nonresident partners whose share of tax is being paid

by the manager of the partnership, and the partnership claims a tax

(2) Any state, local, or foreign income tax deducted on the federal

credit, complete Form D-403TC, Partnership Tax Credit Summary,

partnership return

and include the form with the partnership return. Attach a separate

schedule showing the computation of any tax credits and the

(3) On January 2, 2013, President Obama signed into law the

allocation of the credits among the partners. If claiming any credit

American Taxpayer Relief Act of 2012 (ATRA). This Act

that is limited to 50 percent of the partnership’s tax, less the sum

extended the 50% bonus depreciation through 2013. North

of all other credits claimed, complete Form NC-478 and attach it to

Carolina did not adopt the bonus depreciation provisions

the front of the partnership return. The partnership must provide

under IRC sections168 (k) and 168(n) of this Act. Therefore,

sufficient information about the tax credits to allow the partner to

if you deducted the bonus depreciation under IRC sections

complete the Form NC-478 series.

168(k) or 168(n) on your 2013 federal return, you must add to

federal adjusted gross income 85% of the amount deducted.

I. Attachments. - Attachments may be used in preparing the

This adjustment does not result in a difference in basis of the

partnership return. Attachments may not be used as a substitute

affected assets for State and federal income tax purposes.

for completing the partnership return. Do not enter “See Attached”

Note: Any amount of the bonus depreciation added to income

instead of completing the applicable spaces on the return. The

on your 2013 State return may be deducted in five equal

attachments must contain all required information, follow the

installments over your first five taxable years beginning with

format of the official schedules, and must be attached in the same

the tax return for taxable year 2014.

sequence as the schedules appear on the partnership return. List

the partnership’s federal identification number on each attachment.

Note: In the event of an actual or deemed transfer of an asset

occurring on or after January 1, 2013, wherein the tax basis

J. Specific instructions for Schedule NC K-1. - Schedule NC

of the asset carries over from the transferor to the transferee

K-1 is used by the partnership to report each partner’s share of

for federal income tax purposes, the transferee must add any

the partnership’s income, adjustments, tax credits, etc. The NC

remaining deductions allowed to the basis of the transferred

K-1 must reflect the net tax paid by the partnership. Prepare

asset and depreciate the adjusted basis over any remaining

and give a Schedule NC K-1 to each person who was a partner

life of the asset. The transferor is not allowed any future bonus

in the partnership at any time during the year. Schedule NC K-1

depreciation deductions. In addition, in the event of an actual

must be provided to each partner on or before the day on which

or deemed transfer occurring prior to January 1, 2013, the

the partnership return is required to be filed. When reporting the

law permits an election to adjust the basis of the asset on

distributive share of tax credits, provide a list of the amount and type

the transferee’s 2013 return. The election is only available

of tax credits. Any amount reported as tax paid by the manager of

if the transferor has not taken the bonus depreciation on a

Form D-403a - Instructions For Partnership Income Tax Return - 2013 Page 2

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