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2011

Pennsylvania Department of Revenue

Instructions for PA-20S/PA 65 Schedule M

Reconciliation of Federal-Taxable Income (Loss)

to PA-Taxable Income (Loss)

completed. If the entity is

components of the federal amounts.

General Information

apportioning its income, complete

Then classify the federal amounts to

only the “Total Rental Income (Loss)

the applicable Pennsylvania income

or Total Business Income (Loss)

class in its entirety or the appropriate

Purpose of Schedule

Before Apportionment” Column; and

portion of each amount, without

The purpose of PA-20S/PA-65

●

adjustment for Pennsylvania

Rental income must be allocated

Schedule M is to determine

personal income tax rules. If the

between inside Pennsylvania and

Pennsylvania business net income

entity does not have to allocate an

outside Pennsylvania. Apportionment

(loss) or rental/royalty income

income (loss) amount, place that

is not allowed.

(loss). The PA-20S/PA-65 Schedule

amount in the appropriate column for

M includes specific lines to reconcile

the Pennsylvania income class. The

Completing the

federal income to Pennsylvania

PA S corporation or partnership will

income. All entities file PA-20S/PA-

reflect federal and state differences

PA Schedule M

65 Schedule M whether there are

from Column (c) through (e) on the

adjustments to federal income (loss)

corresponding PA schedules.

Part A

amounts or not.

Columns (b) and (f) are reported on

The entity should complete the

PA-20S/PA-65 Schedule M, Part B for

appropriate PA-20S/PA-65 Schedules

Business Name

further adjustment as required.

A, B and D for these classes. Using

Enter the complete name of the

PA-20S/PA-65 Schedule M for the

Line 1

entity or business as shown on the

other income classes results in the

PA-20S/PA-65 Information Return.

Ordinary Income (Loss)

improper classification of income and

from Trade or Business

reporting errors.

FEIN

Activities

Enter the 9-digit federal employer

PA-20S/PA-65 Schedule M,

identification number (FEIN) of the

Part A

Column a

entity or business as shown on the

Part A must be used to classify

PA-20S/PA-65 Information Return.

Federal Income (Loss)

taxable income (loss) as shown on

Enter the amount of ordinary

federal Form 1120S or federal Form

business income (loss) from the

Line Instructions

1065 for Pennsylvania personal

federal Schedule K, Line 1 without

income tax purposes. The entity

any adjustment for Pennsylvania

PART A

must classify federal amounts using

personal income

tax

purposes.

Pennsylvania personal income tax

Classifying Federal Income

rules. Refer to Table 16-8, Classifying

Column b

(Loss) for Pennsylvania

Federal Schedule K Lines for

Pennsylvania Business Income

Personal Income Tax

Pennsylvania Personal Income Tax

(Loss)

Purposes, in the PA PIT Guide,

Purposes

Enter the amount of ordinary

Chapter 16.

Classify, without adjustment for

business income (loss) from Line 1,

Pennsylvania personal income tax

Column (a) received from the

PA-20S/PA-65 Schedule

rules, the federal income (loss) from

operation of the entity’s business,

M, Part B

federal Form 1120S, Schedule K or

profession or farm.

federal Form 1065 Schedule K. The

Part B must be used:

entity must allocate or apportion the

●

to reconcile the entity’s federal

Important.

For federal

amounts from the federal categories

business income (loss) and

purposes, the entity includes

to the reportable Pennsylvania

rental/royalty income (loss) to

estate/trust income and

personal income tax classes of

Pennsylvania income (loss). If the

gambling/lottery winnings in ordinary

income. The total of the specific

entity is separately allocating

income. The entity must classify such

federal line items should equal the

income, keeps separate books and

income and subtract it from ordinary

total of the federal schedule.

records for financial statement

income on PA-20S/PA-65 Schedule

Refer to Table 16-8, Classifying

purposes, and there are no business

Federal Schedule K Lines for

transactions between multiple

M, Part B, Section C, Line d. The

Pennsylvania Personal Income Tax

businesses, the “Pennsylvania-

entity also is required to include

Purposes, in the PA PIT Guide,

Allocated Income (Loss)” Column and

estate/trust income on PA 20S/PA-65

Chapter 16.

the “Total Rental Income (Loss) or

Schedule J and gambling/lottery

For each line in Column (a),

Total Business Income (Loss) Before

winnings on PA 20S/PA-65 Schedule

federal income (loss), analyze the

Apportionment” Column will be

T. The entity then reports the income

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Instructions For Form Pa-20s/pa 65 - Schedule M - Reconciliation Of Federal-Taxable Income (Loss) To Pa-Taxable Income (Loss) - 2011

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