Form 510 - Maryland Pass-Through Entity Income Tax Return - 2012 Page 7

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separate entity and the income (loss) will
exempt member is subject to the federal
be included on the member(s) annual
income tax on its federal return on that
Maryland returns.
share of PTE income. See Administrative
Release 6 for other members and certain
When and Where to File
File Form
Purpose of Form Form 510 is used by
PTEs that are considered exempt.
510 by the 15th day of the 4th month
a pass-through entity (PTE) to file an
following the close of the tax year or
Nonresident members must report their
information income tax return for a
period if a partnership or by the 15th day
distributive or pro rata shares of income
specific tax year or period and to remit
of the 3rd month if an S corporation. The
or loss allowable to Maryland on their
PTE nonresident tax. The term “pass-
return must be filed with the Comptroller
Maryland income tax return. Such income
through entity” includes partnerships as
of Maryland, Revenue Administration
must be reported in the member’s tax
defined in IRC Section 761, S corporations
Division, 110 Carroll Street, Annapolis,
year in which the PTE’s tax year ends.
as defined in IRC Sections 1361 and
Maryland 21411-0001.
Credit for taxes paid by the PTE must be
1362, limited liability companies (LLC) as
claimed on the same return on which the
Signatures Required Form 510 must
defined in Maryland Corporations and
nonresident member reports the income
be signed by a duly authorized official of
Associations Article, Section 4A-101 and
subject to that tax.
the PTE. Preparers, other than PTE
business trusts as defined in Maryland
employees, must also sign the return.
The distributive share of income for
Corporations and Associations Article,
partnerships is the net amount of lines 1
Section 12-101.
An LLC is treated as a partnership for
1065-Schedule K. The distributive share
Maryland income tax purposes, unless it
Accounting Periods
The tax year or
of income for a large partnership electing
is treated as a corporation at the federal
period used for the federal return must
to file federal Form 1065-B is the net
be used for the Maryland return.
amount derived from adding lines 1a, 2
Accordingly, calendar tax years, fiscal tax
A business trust shall be classified as a
through 4b, 7, and 8 of the federal Form
years, and short tax periods may be
corporation, a partnership, a trust or
1065-B-Schedule K. The pro rata share
necessary for Maryland filing purposes.
otherwise, as shall be determined at the
of income for S corporations is the net
federal level.
If a federal return is filed or required, a
amount of lines 1 through 10 of the
corresponding Maryland return must be
federal Form 1120S-Schedule K.
Unincorporated pass-through entities
filed. The form used for filing must reflect
The amount of tax payable by the PTE
should follow the rules for partnerships
the preprinted tax year in which the
may be limited based on the distributable
t h r o u g h o u t
t h e s e
i n s t r u c t i o n s .
PTE’s tax year begins.
cash flow. For additional information see
Incorporated pass-through entities
Use of Federal Figures In preparing
the instructions for distributable cash
should follow the rules for S corporations.
Form 510, all items that are reported for
flow limitation.
The term member is used in these
federal purposes must be reported on
A PTE may elect to file a composite
instructions to include partners of
the Maryland return in the same manner.
Maryland income tax return Form 510C
p a r t n e r s h i p s ,
s h a r e h o l d e r s
o f
The character of an item cannot be
on behalf of qualified nonresident
corporations, members of LLCs, and
changed from that required or elected for
individual members. Fiduciary and
beneficiaries of business trusts.
federal purposes.
nonresident entity members may not
Entities Required to File
Form 510 is generally an
participate in composite returns. All
Maryland PTE must file Form 510, even if
infor mation return. The items of income
members who qualify and elect to be
it has no income or the entity is inactive.
or loss of the PTE are passed through to
included on the composite return must
Every other PTE that is subject to
the members and subject to tax on the
agree that the PTE is their agent for the
Maryland income tax law must also file
members’ Maryland income tax return.
receipt of any refund or for payment of
Form 510. This includes any PTE that has
any tax due. See Administrative Release
If there are nonresident members, the
credits in Maryland and a PTE that is a
pass-through entity nonresident tax
member of a PTE that is required to file
applies and must be paid by the PTE on
Publicly-traded pass-through entities
in Maryland.
behalf of these members.
as defined in IRC Section 7704
are exempt from the requirement to pay
PTEs must pay a tax consisting of 5.75%,
a nonresident tax on behalf of their
A multistate PTE that operates in
in addition to a special nonresident tax of
nonresident members if they file Maryland
Maryland but is not subject to the
1.25%, of the nonresident individual
Form 510 annually, and report the name,
Maryland income tax law is not required
and nonresident fiduciary members’
address, taxpayer identification number
to file, although a return reflecting no
distributive or pro rata shares of income
(SSN or FEIN) and other information
income allocable to Maryland may be
allocable to Maryland.
requested for each nonresident member
filed for record purposes. Letters in lieu
PTEs are also required to pay a tax at the
whose share of the PTP’s nonresident
of filing will not be accepted.
rate of 8.25% of income allocable to
taxable income exceeds $500 for the tax
Maryland on behalf of all members who
Qualified Sub-S Subsidiaries are treated
are nonresident entities. A nonresident
as divisions under the Internal Revenue
information are also excluded from the
entity is an entity that is not formed
Code and are not considered as separate
definition of nonresident entities.
under the laws of Maryland; and is not
entities for Maryland purposes. These
These PTPs should enter 704 in one of
qualified by, or registered with, the
divisions will be included on the parent
the code number boxes.
Department of Assessments and Taxation
company’s annual Maryland return.
to do business in Maryland. See
S corporations subject to federal
Maryland will follow the IRS rules for
Administrative Release 6.
corporation income tax, such as for
certain partnerships that do not actively
excess net passive income or built-in
The PTE nonresident tax does not apply
conduct a business that have elected not
gains, are also subject to Maryland
t o
m e m b e r
t h a t
i s
R e a l
to be treated as partnerships. Maryland
corporation income tax. Use Form 500 –
Estate Investment Trust (REIT) or to a
will also follow the IRS rules for a single
Maryland Corporation Income Tax Return
member that is tax-exempt under IRC
member LLC that is disregarded as a
to calculate the amount of Maryland
Sections 408(e) or 501, unless the tax-


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