Instructions For Arizona Form 140 - Resident Personal Income Tax Return

Form 140

C. Partnership Income

Your Arizona return may include these previously deducted

items because of the difference between the federal and

Use this adjustment if your Arizona Form 165, Schedule K-1,

former Arizona treatment. If your Arizona taxable income

shows a difference between federal and state distributable income.

includes items previously deducted for Arizona purposes,

If the difference reported on your Arizona Form 165,

you must add such amounts to your Arizona gross income.

Schedule K-1, is a positive number, enter that difference as

G. Claim of Right Adjustment for Amounts Repaid

an addition. Enter the addition on line B11.

in 2011

If the difference reported on your Arizona Form 165,

You must make an entry here if all of the following apply.

Schedule K-1, is a negative number, enter that difference as

a subtraction. Enter the subtraction on line C29.

1. During 2011, you were required to repay amounts held

under a claim of right.

D. Fiduciary Adjustment

2. The amount required to be repaid during 2011 was more

A fiduciary uses Form 141AZ, Schedule K-1, to report to you

than $3,000.

your share of the fiduciary adjustment from the trust or estate

3. You took a deduction for the amount repaid on your 2011

Line 3 of Form 141AZ, Schedule K-1, shows your share of

federal income tax return.

the fiduciary adjustment from the estate or trust. If the

If the above apply, enter the amount deducted on your federal

amount reported on line 3 of your Arizona Form 141AZ,

income tax return here.

Schedule K-1, is a positive number, enter that amount as an

addition. Enter the addition on line B11.

For more information on the Arizona claim of right provisions,

see Arizona Department of Revenue Individual Income Tax

If the amount reported on line 3 of your Arizona Form 141AZ,

Procedure ITP 95-1.

Schedule K-1, is a negative number, enter that amount as a

subtraction. Enter the subtraction on line C29.

H. Claim of Right Adjustment for Amounts Repaid

in Prior Taxable Years

E. Net Operating Losses

You must make an entry here if all of the following apply.

Arizona does not have specific provisions for calculating the

net operating loss of an individual. Generally, the amount of

1. During a year prior to 2011 you were required to repay

net operating loss deduction included in your federal

amounts held under a claim of right.

adjusted gross income is the amount allowable for Arizona

2. You computed your tax for that prior year under

purposes. However, there are instances when the amount

Arizona's claim of right provisions.

allowable for Arizona purposes may be different.

3. A net operating loss or capital loss was established due

to the repayment made in the prior year.

You must adjust the amount of net operating loss deduction

4. You are entitled to take that net operating loss or capital

included in your federal adjusted gross income if you have

loss carryover into account when computing your 2011

already deducted any amount of the net operating loss

Arizona taxable income.

included in your federal adjusted gross income for Arizona

5. The amount of the loss carryover included in your

purposes. In this case, enter on line B11, the amount of net

federal income is more than the amount allowed to be

operating loss included in your federal adjusted gross income

taken into account for Arizona purposes.

which you previously deducted for Arizona purposes.

Enter the amount by which the loss carryover included in

Usually, Arizona conforms to the federal net operating loss

your federal adjusted gross income is more than the amount

provisions, including the carryback provisions.

However,

allowed for the taxable year under Arizona law.

Arizona did not conform to the special federal net operating

loss rules for 2008 and 2009. Under the special rules for

I. Addition to S Corporation Income Due to Credits

2008 and 2009, you could have elected to carry the net

Claimed

operating loss back for 3, 4 or 5 years, instead of the normal

Shareholders of an S corporation who claim a credit passed

2 years.

This election would have been allowed under

through from an S corporation must make an addition to

I.R.C. § 172(b)(1)(h) as amended by the American Recovery

income for the amount of expenses disallowed by reason of

and

Reinvestment

Act

2009

the

Worker,

claiming the credit.

Homeownership, and Business Assistance Act of 2009. If

you deducted a federal net operating loss carryback under

An S corporation that passes the following credits through to

the federal American Recovery and Reinvestment Act of

its shareholders must notify each shareholder of his or her pro

2009 or the federal Worker, Homeownership, and Business

rata share of the adjustment. You must enter an amount on this

Assistance Act of 2009, see the instructions for line C28.

line when claiming any of the following credits.



For information on deducting a net operating loss carryback in

Agricultural water conservation system credit



cases where you did not make an election under I.R.C. §

Environmental technology facility credit

172(b)(1)(h), see Arizona Department of Revenue Income Tax



Pollution control credit

Procedure ITP 99-1.



Credit for solar hot water heater plumbing stub outs and

F. Items Previously Deducted for Arizona Purposes

electric vehicle recharge outlets



Arizona statutes prohibit a taxpayer from deducting items more

Credit for employment of TANF recipients



than once. However, under the operation of former Arizona

Agricultural pollution control equipment credit



law (1989 and prior), you could deduct certain items in greater

Motion picture credits

amounts for Arizona purposes than for federal purposes.

J. Solar Hot Water Heater Plumbing Stub Outs and

Investment interest and passive activity losses were such

Electric Vehicle Recharge Outlet Expenses

items. In some cases, you could have deducted such amounts

If you take a credit for installing solar hot water heater plumbing

in their entirety on the Arizona return. For federal purposes,

stub outs or electric vehicle recharge outlets in a dwelling you

the deduction for these items was limited, with the unused

constructed (Form 319), you cannot deduct any expenses for

portions being carried forward and deducted in future years.

Instructions For Arizona Form 140 - Resident Personal Income Tax Return - 2011 Page 8

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