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

For taxable years beginning on or after January 1, 2012, a

Kentucky Nonresident Income Tax Withholding on Distributive

pass-through entity required to withhold Kentucky income

Share Income Report and Composite Income Tax Return. The

tax as provided by KRS 141.206(5) shall make estimated tax

composite return box on the front of the Form 740NP–WH form

payments if required by KRS 141.206(6). If the pass-through

must be checked to indicate that this is a composite return, and

entity is required to make estimated tax payments for taxable

a Form PTE–WH must be completed for each of the electing

years beginning on or after January 1, 2012, use Form 740NP-

nonresident individual partners, members or shareholders.

WH-ES (Kentucky Estimated Tax Vouchers).

The composite return box on each Form PTE–WH must be

checked to indicate that it is part of a composite return. The

The reporting of a nonresident individual’s, estate’s or trust’s

tax due for the electing partners, members or shareholders

net distributive share income and withholding on Form

shall be remitted with the composite return.

740NP–WH at the maximum rate of six (6) percent shall satisfy

the filing requirements of KRS 141.180 for a nonresident

For taxable years beginning on or after January 1, 2012, a

individual, estate, or trust partner, member or shareholder

pass-through entity filing a composite return shall make

whose only Kentucky source income is net distributive share

estimated tax payments if required by KRS 141.206(6). If

income. The nonresident individual, estate or trust partner,

the pass-through entity is required to make estimated tax

member or shareholder may file a Kentucky Individual

payments for taxable years beginning on or after January

Income Tax Return Nonresident or Part–Year Resident (Form

1, 2012, use Form 740NP-WH-ES (Kentucky Estimated Tax

740–NP) or a Kentucky Fiduciary Income Tax Return (Form

Vouchers).

741) to take advantage of the graduated tax rates, credits and

Substitute Forms—Any form to be used in lieu of an official

deductions.

Department of Revenue form must be submitted to the

department for prior approval.

A pass–through entity shall complete Form 740NP–WH and

Form PTE–WH for each nonresident individual, estate or

Required Forms and Information—A partnership must enter all

applicable information on Form 765, attach a schedule for each

trust partner, member or shareholder and each corporate

line item or line item instruction which states “attach schedule, ”

partner or member and mail Form 740NP–WH and Copy A of

and attach the following forms or schedules, if applicable.

Form PTE–WH to the Kentucky Department of Revenue with

payment by the 15

day of the fourth month following the close

Kentucky Forms and Schedules

of the pass-through entity’s taxable year. Also, Copy B and C

1. Kentucky Partnership Income and LLET Return (Form 765)

of Form PTE–WH shall be provided to the partners, members

or shareholders. Form 740NP–WH and Form PTE–WH are

2. Kentucky Partner’s Share of Income, Credits, Deductions,

Etc.—Schedule K–1 (Form 765)

available at

3. Apportionment and Allocation (Schedule A)

Composite Return —Nonresidents Only

4. Apportionment and Allocation—Continuation Sheet

(Schedule A–C)

Do not include a nonresident individual (includes an estate

5. Limited Liability Entity Tax (Schedule LLET)

or trust partner, member or shareholder) partner, member or

6. Limited Liability Entity Tax—Continuation Sheet (Schedule

shareholder in a composite return if the partner’s, member’s

LLET–C)

or shareholder’s distributive share income was subject to

7. Application for Filing Extension (Form 41A720SL)

withholding and reported on Form 740NP–WH and PTE–WH.

8. Tax Credit Summary Schedule (Schedule TCS)

9. Other Additions And Subtractions To/From Federal Ordinary

The composite return applies only to nonresident individual

Income (Schedule O–PTE)

(includes an estate or trust partner, member or shareholder)

partners, members or shareholders: (i) whose distributive share

Required Federal Forms and Schedules

income was not subject to withholding as provided by KRS

All partnerships must provide a copy of the following federal

141.206(5); (ii) whose only source of income within this state

forms submitted to the Internal Revenue Service:

is distributive share income from one or more pass–through

entities; and (iii) that elect to be included in a composite return

1. Form 1065, all pages.

as provided by KRS 141.206(16).

2. Form 1125-A—Cost of Goods Sold

3. Form 4797—Sales of Business Property

For taxable years beginning on or after January 1, 2007, the

4. Schedule D—Capital Gains and Losses

Department of Revenue will permit the filing of a “composite

5. Form 5884—Work Opportunity Credit

return” as provided by KRS 141.206(16) on behalf of electing

nonresident individual partners, members or shareholders of

6. Schedules for items on Form 1065, Schedule L, which state,

a pass–through entity as defined in KRS 141.010(26). Income

“attach schedule. ”

tax will be computed at the highest marginal rate provided in

7. Form 4562—Depreciation and Amortization

KRS 141.020 on the partner’s, member’s or shareholder’s pro

8. Form 8825—Rental Real Estate Income and Expenses of a

rata share of the distributive share income from a pass–through

Partnership or an S Corporation

entity doing business in, or deriving income from sources within

Kentucky. The partners’, members’ or shareholders’ distributive

Electronic Funds Transfer (EFT)

share of income shall include all items of income or deduction

EFT is not available for a partnership’s LLET payments, estimated

used to compute adjusted gross income on the Kentucky return

tax payments, return payment or extension payment.

that is passed through to the partner, member or shareholder

Accounting Procedures—Kentucky income tax law requires a

by the pass–through entity, including but not limited to interest,

partnership to report income on the same calendar or fiscal

dividend, capital gains or losses, guaranteed payments and

year and to use the same methods of accounting required for

rents (KRS 141.206(16)).

federal income tax purposes. Any federally approved change

in accounting periods or methods must be reported to the

The composite return of a pass–through entity shall be

Department of Revenue. Attach a copy of the federal approval

filed with the Department of Revenue on Form 740NP–WH,

to the return when filed. KRS 141.140

Form 41a765(I) - Kentucky Partnership Income And Llet Return Instructions - 2011 Page 5

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