Form 41a765(I) - Kentucky Partnership Income And Llet Return Instructions

If the partner or member is a corporation or pass-through entity,

SCHEDULE K–1 (FORM 765)—KENTUCKY PARTNER’S

and the partnership filing Form 765 or Form 765–GP was eligible

SHARE OF INCOME, CREDITS, DEDUCTIONS, ETC.

and chose to figure Qualified Production Activities Income

General Instructions

(QPAI) at the entity level, attach the following (i) QPAI, adjusted

to reflect differences in Kentucky and federal income tax laws;

Schedule K–1 (Form 765) shows each partner’s pro rata share

and (ii) Kentucky W–2 wages allocable to DPGR.

of the partnership’s income, deductions, credits, etc. On

each Schedule K–1 (Form 765) enter the names, addresses

If the partner or member is a corporation or pass–through

and identifying numbers of the partner and partnership and

entity, and the partnership filing Form 765 or Form 765–GP

complete items A, B, C, D, E and F. All partners’ names, Social

was not eligible or chose not to figure QPAI at the entity level,

Security or identifying numbers and other partner information

attach the following (i) DPGR (ii) Cost of goods sold allocable

must be complete and legible. Schedule K–1 (Form 765) must

to DPGR, adjusted to reflect differences in Kentucky and federal

be completed and given to each partner with instructions on or

income tax laws; (iii) Expenses allocable to DPGR, adjusted to

before the day on which Form 765 is filed with the Department

reflect differences in Kentucky and federal income tax laws;

of Revenue.

and (iv) Kentucky W–2 wages allocable to DPGR.

A copy of each partner’s K–1 (Form 765) must be attached to

Form 765 filed with the Department of Revenue, and a copy

See the instructions to Form 8903-K for definitions of: (i)

kept as part of the partnership’s records.

Domestic Production Gross Receipts (DPGR); (ii) Kentucky

Domestic Production Gross Receipts (KDPGR); and (iii)

Photocopies of Schedule K–1 (Form 765) may be used in lieu

Qualified Production Activities Income (QPAI).

of the official schedule printed by the Department of Revenue,

provided the photocopies are on bond paper of at least 16

Section II—LLET Pass–through Items

pounds and are of good quality.

Lines 1 through 8 of this section do not need to be completed if

Specific Instructions

all the partners or members are individuals, estates or trusts.

Federal instructions for Schedule K–1 (Form 1065) explain the

In order to enter the correct amounts on lines 1 through 8 of

rules for allocating items of income (loss), deductions, credits,

this section, Schedule A (Form 41A720A) must be completed

etc., to each partner. The distributive share items reported on

and attached to the tax return.

all Schedules K-1, Column (b), Lines 1 through 46 must equal

the amounts reported on Schedule K, Lines 1 through 46. The

Line 1—Enter the partnership’s Kentucky sales from Schedule

distributive share items reported on all Schedules K–1, Column

A, Section I, Line 1.

(b), Lines 47 through 55 must equal the amounts reported on

comparable lines of Schedule K, Section II, Lines 1 through

Line 2—Enter the partnership’s total sales from Schedule A,

9. Schedule K–1, Column (b), Lines 56 through 58 do not

Section I, Line 2.

correspond with Schedule K.

Line 3—Enter the partnership’s Kentucky property from

Multiple Activities—If items of income, loss or deduction

Schedule A, Section I, Line 5.

from more than one activity are reported on Lines 1, 2 or 3

of Schedule K–1 (Form 765), the partnership must provide

Line 4—Enter the partnership’s total property from Schedule

information for each activity to its partners. See Passive Activity

A, Section I, Line 6.

Reporting Requirements in the instructions for Schedule K–1

(Form 1065) for details on the information to be provided on an

Line 5—Enter the partnership’s Kentucky payroll from Schedule

attachment to Schedule K–1 (Form 765) for each activity.

A, Section I, Line 8.

At–Risk Activities—If the partnership is involved in one or

Line 6—Enter the partnership’s total payroll from Schedule A,

more at–risk activities for which a loss is reported on Schedule

Section I, Line 9.

K–1 (Form 765), the partnership must report information

separately for each at–risk activity. See Special Reporting

Line 7—Enter the partnership’s Kentucky gross profits from

Requirements for At–Risk Activities in the federal instructions

Schedule LLET, Section A, Column A, Line 5.

for Schedule K–1 (Form 1065) for details on the information to

be provided on an attachment to Schedule K–1 (Form 765) for

Line 8—Enter the partnership’s total gross profits from Schedule

each at-risk activity.

LLET, Section A, Column B, Line 5.

Lines 1 through 55—Enter the partner’s total pro rata share

of each item listed on Schedule K, Form 765. Do not multiply

Line 9—Enter the limited liability entity tax (LLET) nonrefundable

these amounts by the percentage entered on Item D(2). Attach

credit from page 1, Part II, the total of Lines 4 and 6, less

schedules showing separately the required information for each

$175.

IRC Section 469 passive activity and each Section 465 at-risk

activity. Other schedules are to be attached for line items where

Tax Payment Summary

requested on Schedule K–1 (Form 765).

The payment due with Form 765 must be itemized. Enter the

Enter on attached schedules the supplemental information

LLET payment due from page 1, Part II, Line 12 on the applicable

required to be reported separately to each partner for Lines 1

tax payment line in addition to the respective amount of penalty

through 55 and any other information or items and amounts

and interest. Enter the total payment due on the Total Payment

not included on Schedule K–1 (Form 765) for which the partner

line.

needs to prepare a Kentucky income tax return including, but

not limited to, any recapture of Section 179 deduction, gross

✍

Signature—Form 765 must be signed by a partner or

income and other information relating to oil and gas well

member. Failure by a partner or member to sign the

properties enabling the partner to figure the allowable depletion

return, to complete all applicable lines on any required

deduction, etc. See instructions for federal Schedule K–1 (Form

Kentucky form, to attach all applicable schedules including

1065), Line 20.

copies of federal forms or to complete all information on the

questionnaire will delay the processing of tax returns and may

Lines 56 through 58—The amounts in Column (b) are to be

entered by the partner, not the partnership.

result in the assessment of penalties.

Form 41a765(I) - Kentucky Partnership Income And Llet Return Instructions - 2011 Page 11

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