Form 65 - Partnership/limited Liability Company Return Of Income

Page 4

Form 65 — 1999

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

If you want the department to contact your tax preparer instead, please give

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

permission to do so by checking the box above the signature line.

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

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

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

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

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

nonbusiness expense. These items are excluded from apportionable income and

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

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

15, 2000.

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

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

Specific Instructions

tions.

SCHEDULE A — Computation of Income and Adjustments

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

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

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

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

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

allocable to Alabama.

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

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

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

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

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

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

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

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

ty, or other political subdivision thereof.

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

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

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

is taxable under Alabama Law.

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-

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

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

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

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

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

proration factor.

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

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

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

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

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

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

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

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

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

page 3, Schedule D, line 6.

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

SCHEDULE C — Apportionment Factor Schedule

prior to 1990 should be entered on this line.

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

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

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

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

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

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

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

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

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

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

denominator of each of these factors.

include casualty losses.

PROPERTY FACTOR

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

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

here.

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

income.

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

ment interest expense which is reported on line 16.

Line 1. Inventories

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

Line 2. Land

ule should be attached to explain this income.

Line 3. Furniture and fixtures

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

Line 4. Machinery and equipment

DEDUCTIONS

Line 5. Buildings and leasehold improvements

Line 13. Charitable contributions should be reported here.

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

Line 14. Section 179 expense should be reported here.

al revenue bonds issued by municipalities. All Industrial Development Board

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

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

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

INVESTMENT INTEREST

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

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

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

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

Line 8. 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 9. Any other real or tangible personal property used in production of busi-

reported here.

ness income.

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

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

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

through 9).

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

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

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

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

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

fied project, enter the amount of credit available in 1999.

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

other than beginning and end of year values.

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

OPERATION.

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

Form 65 - Partnership/limited Liability Company Return Of Income - 1999 Page 2

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