Instructions For Partnership Income Tax Return (Form D-403a)

Page 2, D-403A, Web, 12-14

G. Estimated income tax - A partnership is not required to

Line 1 - Enter on Line 1 the total income or loss from Schedule

make estimated income tax payments; however, if the partnership

K, Federal Form 1065. The total income or loss is the combined

makes any prepayments of tax, include the prepayment

total of lines 1 through 11 of Schedule K.

on Line 15. A resident individual partner who meets the

statutory requirements must file estimated tax on Form NC-40.

Line 2 - Enter the amount of salaries, interest, or other “guaranteed

(See Individual Income Tax Instructions for Form D-400 for

payments” made to a partner for services or for the use of capital.

information on the requirements for paying estimated income

Salaries to partners and retirement payments to partners who are

tax.)

A nonresident individual partner is not required to pay

not active are treated as part of a partner’s distributive share of

estimated tax on his distributive share of partnership income.

ordinary income and must be apportioned or allocated to North

Carolina on the same basis as other partnership distributive

H. Tax Credits - All tax credits allowed to individuals are allowed

income.

to partnerships except the tax credit for income taxes paid to other

states and the tax credit for children.

Line 4 - The following additions to income are required in calculating

North Carolina partnership income to the extent the additions are not

A partnership may pass through to each of its partners the partner’s

included in income. Complete Part 4, Lines 1 through 3 and enter

distributive share of an income tax credit for which the partnership

the total additions on Part 1, Line 4. Allocate the total additions on

qualifies. Any dollar limit on the amount of a tax credit applies to

Line 4 to the individual partners in Part 3, Line 6.

the partnership as a whole instead of to the individual partners.

Maximum dollar limits and other limitations that apply in determining

Additions to income:

the amount of tax credit available to a taxpayer apply to the same

extent in determining the amount of tax credit for which a partnership

(1) Interest on bonds and other obligations of states and political

qualifies, with one exception. The exception is a limitation that the

subdivisions other than North Carolina, if not included in income

tax credit cannot exceed the tax liability of the taxpayer.

(2) Other additions to income

If there are nonresident partners whose share of tax is being paid

by the manager of the partnership, and the partnership claims a tax

Line 6 - The following deductions from income are required in

credit, complete Form D-403TC, Partnership Tax Credit Summary,

calculating North Carolina partnership income to the extent the

and include the form with the partnership return. Attach a separate

deductions are included in income. The total deductions from Part

schedule showing the computation of any tax credits and the

4, Line 8 should be entered on Part 1, Line 6 and allocated to the

allocation of the credits among the partners. If claiming any credit

individual partners in Part 3, Line 7.

that is limited to 50 percent of the partnership’s tax, less the sum

of all other credits claimed, complete Form NC-478 and attach it to

Deductions from income:

the front of the partnership return. The partnership must provide

sufficient information about the tax credits to allow the partner to

(1) Interest from obligations of the United States or United States’

complete the Form NC-478 series.

possessions

I. Attachments - Attachments may be used in preparing the

(2) State, local, or foreign income tax refunds included on the

partnership return. Attachments may not be used as a substitute

federal return

for completing the partnership return. Do not enter “See Attached”

instead of completing the applicable spaces on the return. The

(3) North Carolina law did not adopt the 50 percent bonus

attachments must contain all required information, follow the

depreciation provisions in IRC section 168(k) for the tax year

format of the official schedules, and must be attached in the same

2008 or in IRC sections 168(k) or 168(n) for tax years 2009 and

sequence as the schedules appear on the partnership return. List

2010. Similarly, North Carolina did not adopt the provisions of

the partnership’s federal identification number on each attachment.

the Small Business Jobs Act of 2010 which extended the 50

percent bonus depreciation through 2011 or the Tax Relief Act

J. Specific instructions for Schedule NC K-1 - Schedule NC

of 2010 which doubled and extended bonus depreciation from

K-1 is used by the partnership to report each partner’s share of

50 percent to 100 percent for qualified property acquired and

the partnership’s income, adjustments, tax credits, etc. The NC

placed in service after September 8, 2010 and before January

K-1 must reflect the net tax paid by the partnership. Prepare

1, 2012. The Tax Relief Act of 2010 also provides 50 percent

and give a Schedule NC K-1 to each person who was a partner

bonus depreciation for qualified property placed in service after

in the partnership at any time during the year. Schedule NC K-1

December 31, 2011 and before January 1, 2013. Certain long-

must be provided to each partner on or before the day on which

lived property and transportation property is eligible for 100

the partnership return is required to be filed. When reporting the

percent expensing if placed in service before January 1, 2013.

distributive share of tax credits, provide a list of the amount and type

Because North Carolina did not adopt the bonus depreciation

of tax credits. Any amount reported as tax paid by the manager of

provisions under IRC sections 168(k) and 168(n) of these Acts,

the partnership should include amounts paid with extension and by

an adjustment was required to add to income 85 percent of

other partnerships, if applicable.

the amount deducted. Any amount added to income on the

2009, 2010, 2011, 2012, and 2013 State partnership returns

Part 1 - Computation of Income Tax Due or Refund

may be deducted in five equal installments beginning with the

2010, 2011, 2012, 2013, and 2014 State partnership returns,

Line Instructions

respectively. Enter 20 percent of the bonus depreciation

added back on the 2009, 2010, 2011, 2012, and 2013 State

Important: If the partnership operated only in North Carolina and

partnership returns.

had no nonresident partners, complete only Lines 4 and 6 of Part

1, Part 3A, and Part 4.

(4) Other deductions from income

Instructions For Partnership Income Tax Return (Form D-403a) - 2014 Page 3

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