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Line 12

deducted by the partnership and

Part V

included in the partner’s income. In

All Other Guaranteed

Distributions from PA S

both situations, the partnership can

Payments for Services

Corporations

deduct the contribution made to the

Rendered

partner’s HSA.

Contributions to a nonresident

Enter the partner’s share of such

Line 14

partner’s HSA for services must be

payments. Typically, guaranteed

Distributions from the

apportioned.

payments to partners are paid to the

Pennsylvania Accumulated

Contributions by an S corporation

extent the services are rendered

Adjustments Account

to a 2 percent shareholder-

directly in the production of income

employee’s HSA for services

from a business, profession or farm,

Enter the shareholder’s share of such

rendered are treated the same as

and/or from rental or royalty income.

distributions. If a liquidating

guaranteed payments to partners for

distribution, fill in the oval. If the

Note.

services rendered and are deducted

amount is in excess of basis it must

The partner must know

by the S corporation as wage or

be reported on the shareholder’s

the class of income from

salary expense and included in the

return as taxable gain on PA-20S/PA-

which the partnership made the

shareholder-employee’s gross

65 Schedule D.

guaranteed payments. The partner

compensation. The shareholder-

must then properly classify the

employee can deduct the contribution

Line 15

payments on his/her PA-40

made to the shareholder-employee’s

Individual Income Tax Return.

Distributions of Cash,

HSA.

Marketable Securities and

Important.

If the total

Property

Line 13

guarantee payment includes

Enter the shareholder’s share of such

more than one of the income classes

Guaranteed Payments to a

distributions. This line will include the

described below, the partnership

Retired Partner

total of cash and the fair market

must provide a statement to the

Guaranteed payments to a retired

value of all marketable securities and

partners showing the amounts for

partner must meet the exception

property distributed to the

each line.

described in IRC § 1402(a)(10).

shareholder.

For Pennsylvania personal income

Generally, retirement payments

tax purposes guaranteed payments

received by a retired partner from a

The PA S corporation includes

are classified as follows:

partnership (of which he or she is a

distributions to Pennsylvania

●

If services are rendered directly in

member or former member) are

resident shareholders from

the production of income from a

counted as net earnings from self-

its PA C corporation earnings and

business, profession, or farm, the

employment. Certain periodic

profits as taxable dividend income on

guaranteed payments are gross

payments by a partnership to a

the PA-20S/PA-65 Schedule RK-1,

income from that income class.

retired partner made on account of

Part II, Line 3.

●

If services are rendered directly in

retirement under a written plan of

the production of rental or royalty

partnership are excluded from the

income, the guaranteed payments

Part VI

tax. To be effective, the plan must

are gross income from that income

meet such requirements as are

Nontaxable Income

class.

prescribed by Reg §1.1402(a)-17.

A guaranteed payment is

(Loss) In Owner’s Basis

It must apply to partners generally or

allocable to Pennsylvania to the

to a class or classes of partners, and

extent it is deductible from net

provide such payments at least until

Line 16

profits or rental and royalty income

the retired partner's death.

Nontaxable Income or

that is allocable to Pennsylvania.

The exclusion applies to

Income allocable to Pennsylvania is

Nondeductible Expenses

retirement payments received by a

income derived from Pennsylvania

retired partner only if he or she

Required to Calculate

sources.

renders no services in any business

Owner’s Basis. Submit a

conducted by the partnership during

Statement

Health Savings Accounts

the taxable year of such partnership,

The difference between federal and

(HSA)

ending within or with his or her

Pennsylvania depreciation should not

Contributions by a partnership to a

taxable year in which amounts were

be included on this line. Line 16 is

bona fide partner’s HSA are not

received. At the end of such

based on permanent nontaxable

contributions by an employer. The

partnership's taxable year, (1) there

income or nondeductible expenses in

contributions are treated as a

must be no obligation from other

calculating Pennsylvania-taxable

distribution of money and are not

partners to the retired partner, other

income. This amount is generally not

included in the partner’s income.

than to make retirement payments

the same amount reported on the

Contributions by a partnership to

under the plan, and (2) the retired

PA-20S/PA-65 Information Return,

a partner’s HSA for services

partner's share in the capital of the

Part IV, Line 12 because Line 12

rendered, however, are treated as

partnership had been paid to him or

should include non-permanent items.

guaranteed payments that are

her in full. Code Sec. 1402(a)(10)

Reg §1.1402(a)-17.

Instructions for PA-20S/PA-65 Schedule RK-1

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Instructions For Form Pa-20s/pa-65 - Schedule Rk-1 - Resident Schedule Of Shareholder/partner/beneficiary Pass Through Income, Loss And Credits - 2012 Page 5

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