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

Page 3, D-403A, Web, 12-14

Part 2A - Apportionment Percentage For Partnerships Having

Line 8 - Nonapportionable Net Distributive Partnership Income –

One or More Nonresident Partners and Operating in North

When a partnership has income from sources within North Carolina

Carolina and in One or More Other States

as well as sources outside North Carolina a determination of

(See S Corporation Tax Return Instructions for more detailed

apportionable and nonapportionable income must be made. If the

information on the Apportionment Percentage.)

partnership’s business is both within and outside of North Carolina,

complete Part 5, Nonapportionable Net Distributive Partnership

Method to be Used in Apportioning Partnership Income:

Income on Page 4 and enter the total amount of nonapportionable

income on Line 8. If the amount on Line 8 is negative, enter the

A partnership with one or more nonresident partners whose

amount and fill in the circle located next to Line 8 to indicate the

business activities in North Carolina are unified and integrated

amount is negative.

with its business activities in other states is required to apportion

its partnership income to North Carolina by multiplying the income

Line 9 - Apportionable Net Distributive Partnership Income – All

by a fraction, the numerator of which is the property factor plus the

income apportionable under the U.S. Constitution is apportioned

payroll factor plus twice the sales factor, and the denominator of

to North Carolina and to other states based on the apportionment

which is four. If the sales factor does not exist, the denominator

factor. Subtract Line 8 from Line 7 and enter the amount on Line

is the number of existing factors. If the sales factor exists, but the

9. If the amount on Line 9 is negative, enter the amount and fill in

payroll or the property factor does not exist, the denominator is the

the circle located next to Line 9 to indicate the amount is negative.

number of existing factors plus one.

Line 10 - Nonapportionable Net Distributive Partnership Income

Property Factor: The property factor is the percentage determined

Allocated to North Carolina – Complete Part 5, Nonapportionable

by dividing the average value of the partnership’s real and tangible

Net Distributive Partnership Income on Page 4. Enter on Line 10 the

personal property owned or rented and used in this State during

amount of nonapportionable income allocated directly to this State.

the year by the average value of all of the partnership’s real and

If the amount on Line 10 is negative, enter the amount and fill in the

tangible personal property owned or rented and used during the

circle located next to Line 10 to indicate the amount is negative.

year. With respect to rentals, assign values for property rented by

the partnership at 8 times the net annual rental rate. The net annual

Line 11 - Complete Parts 2 and 3 to determine the tax for

rental rate is the annual rental rate paid less any annual rental rate

nonresident partners.

received by the partnership from subrentals.

Line 12 - Enter the total tax credits allocated to nonresident partners.

Payroll Factor: The payroll factor is the percentage determined by

dividing the total compensation paid by the partnership in this State

Line 13 - Enter the net tax due for nonresident partners.

during the income year by the total compensation paid everywhere

during the income year.

Line 14 - If Form D-410P was filed to request an extension of time to

file the partnership return, enter any tax paid with the extension form.

Sales Factor: The sales factor is determined by dividing the total

sales of the partnership in this State during the income year by the

Line 15 - Enter any other prepayments of tax that were made prior

total sales of the partnership everywhere during the income year.

to filing this partnership return. If filing an amended return, include

For purposes of the formula used for apportioning partnership

on Line 15 any amount paid with the original partnership return.

income to North Carolina, the sales factor is doubled.

Line 16 - If tax was paid by other partnerships or by S corporations,

Part 2B – Partnerships Apportioning Income to N.C. and to

enter the amount paid. Include with the return a copy of the

Other States Using Single Sales Factor

information furnished by the partnership(s) or S corporation(s) to

verify the amount claimed. North Carolina income tax is required to

Special apportionment provisions apply to partnerships that would

be withheld from the compensation paid to a nonresident partnership

meet the definition of “excluded corporation” or the definition

or limited liability company for services performed in North Carolina

of “capital intensive corporation” in G.S. 105-130.4 if they were

in connection with a performance, an entertainment or athletic event,

corporations and certain public utilities treated as partnerships.

a speech, or the creation of a film, radio, or television program. In

These partnerships must apportion North Carolina income tax using

addition to any tax paid by other partnerships or S corporations,

the sales factor alone. For any partnership engaged in business

include on Line 16 only the portion of tax withheld that is attributable

as a building or construction contractor, a securities dealer, a loan

to nonresident partners on whose behalf the managing partner is

company or for a partnership which receives more than 50 percent

required to pay the tax. Attach Form NC-1099PS to the front of the

of its ordinary gross income from investments in and/or dealing in

return to verify the North Carolina income tax withheld.

intangible property, the partnership’s income shall be apportioned

by the use of only the sales factor. The Department refers to the

Line 20 - Add Lines 18 and 19c to determine the total due for

North American Industry Classification System (NAICS) as a means

nonresident partners. The manager of the partnership must pay this

of determining whether a taxpayer’s business operations require

amount with the return. The tax may be paid by check or money

the corporation to utilize North Carolina’s special apportionment

order payable in U.S. dollars to the North Carolina Department of

provisions.

Revenue. Important: The Department will not accept a check,

money order, or cashier’s check unless it is drawn on a U.S.

Part 2C - Special Apportionment

(domestic) bank and the funds are payable in U.S. dollars.

Special apportionment provisions apply to certain types of

Line 21 - If total payments on Line 17 exceed the net tax due for

partnerships such as telephone companies, motor carriers, and

nonresident partners on Line 13, subtract and enter the amount to

railroad companies. G.S. 105-130.4 should be consulted for

be refunded.

definitions and specific allocation requirements.

Instructions For Partnership Income Tax Return (Form D-403a) - 2014 Page 4

Related Articles

Related forms

Related Categories