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Line c

Line h

Line b

Gain from Business Like-

Other Taxable Income for

Income from Obligations of

Kind Exchanges

Pennsylvania Purposes the

the U.S. Government and

A "like-kind exchange" refers to

Entity Does Not Report for

Other Organizations that Is

property that has been exchanged

Federal Purposes. Submit

Not Taxable for PA Purposes

for similar property. For example: a

Statement.

Interest on obligations issued by or

taxpayer exchanged land in

on behalf of the U.S. government is

Include other kinds of income that

Pennsylvania for land in Florida.

not subject to Pennsylvania personal

are taxable for Pennsylvania

Under the Internal Revenue Code

income tax.

purposes but the entity does not

(IRC) a gain (loss) is not recognized

See REV-1643, Tax-Exempt

report for federal purposes. Include

and is deferred until the like-kind

Obligations for Pennsylvania Personal

passive or at-risk-loss carryover

property is sold.

Income Tax Purposes, for a complete

amounts deducted on federal Form

Pennsylvania tax law contains no

listing of obligations exempt from

8825. Pennsylvania does not allow

such provision, the difference

Pennsylvania personal income tax on

carryover of losses. Submit an

between the basis of the old property

the department’s website.

itemized statement describing each

and the current market value of the

income.

property received in exchange is the

Line c

taxable gain and reported on this

Section B

Decreases for Previously

line.

Total

Reported Income In Prior

Line d

Year Resulting from Spread

Total Lines a through h as follows:

Associated with IRC Section

Gain (Loss) on Involuntary

481(a)

Conversions – IRC Section

Pennsylvania Allocated

The amount reported on this line is

1033

Income (Loss) Column

the federal spread from the 481

Pennsylvania does not follow the

Add Boxes 1, 3, 5, 7, 9, 11, 13 and

adjustment. The entire amount

federal treatment for involuntary

15. Enter the result in Part B, Section

should be reported in the year of the

conversion allowed under IRC Section

B, Box 17.

change for Pennsylvania purposes. If

1033. Gain must be recognized in the

you did not report the entire

year of conversion.

Total Rental Income (Loss)

adjustment in the year of the change

or Total Business Income

for Pennsylvania purposes, DO NOT

Line e

(Loss) Before

decrease Pennsylvania reportable

Income from Cancellation of

Apportionment Column

income.

Debt that Pennsylvania

Add Boxes 2, 4, 6, 8, 10, 12, 14 and

Line d

Treats Differently from

16. Enter the result in Part B, Section

B, Box 18.

Federal Rules

Other Pennsylvania

The department published several

Nontaxable Income the

bulletins which discuss the taxability

Entity Reported for Federal

Section C

of cancellation of debt. To determine

Purposes. Submit

taxability, refer to PIT Bulletins

Itemize Income

Statement.

2009-04, 2009-05 and 2009-06 on

Adjustments that Decrease

Include other kinds of income that

the department’s website.

the Pennsylvania Reportable

are not taxable for Pennsylvania

Income. (Increase the Loss

purposes but the entity had to report

Line f

from the Federal Form)

for federal purposes.

Increases in Income in the

Income from a pass through

Year of Change Resulting

entity is included on this line to

Line a

from Spread in the Year of

determine net profits for personal

Difference in Gain (Loss) for

income tax purposes.

Change Associated with IRC

each Business Sale When

Pass through income should be

Section 481(a) Adjustment

Proceeds Were Reinvested

deducted from business income and

Accounting change must be taken in

reported on PA-20S/PA-65

in the Same Line of Business

the year it is adjusted.

Information Return, Part I, Line 1b. If

The amount reported on this line

an itemized statement is not

should have been reported on federal

Line g

submitted, describing each income

Schedule K as ordinary income on

Income from Obligations of

item, the income item may be

Line 1; however, the Pennsylvania

denied.

Other States and

gain is less than the federal gain or

If the entity reported an

Organizations that Is Not

the Pennsylvania loss is higher than

adjustment in Section B, Line a in the

the federal loss.

Exempt for PA Purposes

previous tax year, then an

Interest on obligations of other states

adjustment must be reported on Line

and territories, their political

d reversing that.

subdivisions and instrumentalities is

taxable for Pennsylvania personal

income tax purposes.

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

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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 Page 5

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