Form 65 - Partnership/limited Liability Company Return Of Income

Page 4

Form 65 — 1998

income of $1,500.00 or more to any person, partnership, or fiduciary during the tax-

SCHEDULE B — Allocation of Nonbusiness Income, Loss, and Expense

able year is required to make an information return on Forms 96 and 99 showing

Enter on Schedule B all items of nonbusiness income, nonbusiness loss, and

the amount of such payment and the name and address of each recipient. These

nonbusiness expense. These items are excluded from apportionable income and

forms may be obtained from the Alabama Department of Revenue, Income Tax

are allocated either to Alabama or to another state. See Regulation 810-3-31-.02

Forms, P.O. Box 327470, Montgomery, AL 36132-7470, and should be filed with

for a discussion of the classification of income and expense into business and non-

the Alabama Department of Revenue, Montgomery, Alabama, on or before March

business categories and the assignment of nonbusiness items to specific jurisdic-

15, 1999.

tions.

Beside a-h on Schedule B, enter the item description. In Column A enter the

Specific Instructions

total amount of nonbusiness gross income or (loss) to be excluded from apportion-

SCHEDULE A — Computation of Income and Adjustments

able income. In Column B enter the amount of nonbusiness gross income or (loss)

allocable to Alabama.

Line 1. Enter on this line the “Ordinary income (loss) from trade or business

activities” as shown on page 1 of Federal Form 1065.

Enter total nonbusiness expense in Column C and any allocable to Alabama in

Column D. Nonbusiness expense may exceed nonbusiness income and, in fact,

Line 2. All interest received or credited to the partnership during the taxable

may be present when there is no nonbusiness income. Expenses which are not

year on bank deposits, notes, mortgages, bonds, etc. is taxable except:

directly identifiable as business or nonbusiness must be prorated. See Regulation

(1) Interest upon obligations of the United States or its possessions;

810-27-1-4-.01(d)(2). The method for prorating interest expense is to multiply total

(2) interest on obligations of the State of Alabama and any county, municipali-

interest expense deducted on the federal return by a fraction, the numerator of

ty, or other political subdivision thereof.

which is the average amount invested in nonbusiness assets at cost and the

denominator of which is the average amount invested in total assets at cost. Invest-

Interest received on the bonds of all other states and their political subdivisions

ments originally acquired by means of stock for stock swaps may be eliminated

is taxable under Alabama Law.

from both the numerator and the denominator of the nonbusiness interest expense

Line 3. All interest taxable to the State of Alabama that is not included in

proration factor.

income on Federal Form 1065 should be entered on this line. Enter the total

Subtract Column C from Column A, and enter the remainder in Column E. Sub-

amount of interest that is taxable to Alabama, but is exempt for federal purposes.

tract Column D from Column B, and enter the remainder in Column F.

This includes interest on municipal bonds of states other than Alabama.

Add lines a through h in Columns E and F, and enter the totals on line 2. Carry

Line 4. All dividends, including liquidating dividends received, are taxable. Gain

the total of Column E to page 3, Schedule D, line 2. Carry the total of Column F to

or (loss) on liquidating dividends should be reported on line 9.

page 3, Schedule D, line 6.

All dividends which are taxable to the State of Alabama and are not included as

SCHEDULE C — Apportionment Factor Schedule

income on Federal Form 1065 should be entered on this line.

The partnership/limited liability company business activity in Alabama is repre-

Line 5. The additional depreciation on I.R.C. § 179 property placed in service

sented by the apportionment percentage. Except for special cases provided for in

prior to 1990 should be entered on this line.

Regulation 810-27-1-4-.18, the apportionment factor consists of the average of

Line 6. The jobs credit adjustment allowed on Federal Form 1065 should be

three other factors: property, payroll, and sales. See Regulation 810-27-1-4-.10 for

entered on this line. This is computed on Federal Form 5884 and shown as a

detailed instructions regarding the items to be included in the numerator and the

reduction to salaries/wages on Federal Form 1065, if applicable.

denominator of each of these factors.

Line 7. Net income or (loss) from rental activities should be entered on this line.

PROPERTY FACTOR

Line 8. Net gain or (loss) under I.R.C. § 1231 should be entered here. Do not

In the appropriate columns, enter the amounts (at cost, unless stated other-

include casualty losses.

wise) of property available for use in the production of business (apportionable)

Line 9. Net short term or long term capital gain or (loss) should be entered

income.

here.

Line 1. Inventories

Line 10. Net portfolio income should be entered here. Do not include invest-

Line 2. Land

ment interest expense which is reported on line 16.

Line 3. Furniture and fixtures

Line 11. Any income not previously reported should be entered here. A sched-

Line 4. Machinery and equipment

ule should be attached to explain this income.

Line 5. Buildings and leasehold improvements

Line 12. Total income (lines 1-11) should be entered here.

Line 6. Property financed through industrial development boards or by industri-

DEDUCTIONS

al revenue bonds issued by municipalities. All Industrial Development Board

Line 13. Charitable contributions should be reported here.

property utilized by the taxpayer will be included at its original cost basis.

Line 14. Section 179 expense should be reported here.

Line 7. Government Property. All government property (whether local,

Line 15. Deductions not previously reported should be reported here.

state, or federal), when such property is made available for use by the tax-

payer, will be reported at its current fair market value.

INVESTMENT INTEREST

Line 8. Any other real or tangible personal property used in production of busi-

Line 16. Interest expense on investment debts should be reported here.

ness income.

Line 17. Interest income from investments not included on lines 9 and 10

Line 9. Any other real or tangible personal property used in production of busi-

above should be reported here.

ness income.

Line 18. Investment interest expenses from lines 9 and 10 above should be

Line 10. Less Construction in progress (if included in the amounts on lines 1

reported here.

through 9).

Line 19. Section 40-18-190 establishes a 20 year capital credit for certain new

Line 11. Enter in each column the totals of lines 1 through 10.

capital investments. Prior registration and approval of the Alabama Department of

Revenue is required. The capital credit is limited to the recipient’s tax liability and is

Line 12. Enter in the appropriate column the average value of property in Ala-

applied after all other deductions, losses, or credits have been taken. Form K-

bama and Everywhere. See Reg. 810-27-1-4-.12 for rules regarding computations

RCC must be attached to receive the credit. If the partnership is involved in a quali-

other than beginning and end of year values.

fied project, enter the amount of credit available in 1998.

Line 13. In the Beginning of Year columns, enter the amount of expense for the

COMPLETE SCHEDULES B, C, AND D ONLY IF THIS IS A MULTISTATE

rental of real or tangible personal property used in the production of business

OPERATION.

income in Alabama and Everywhere. Annualize for short-period returns. Multiply

Form 65 - Partnership/limited Liability Company Return Of Income - 1998 Page 2

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