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Illinois Department of Revenue

Schedule K-1-P(2) Partner’s and Shareholder’s Instructions

General Information

apportionment factors and business income. You must determine

the portion of your business income taxed by Illinois by adding your

What is the purpose of Schedule K-1-P?

share of the partnership’s business income and apportionment

The partnership or the S corporation listed on the front of Schedule

factors to your own business income and apportionment factors. If

K-1-P has completed and provided you with the schedule to reflect

the partnership is included in your Schedule UB, report the items

your specific share of the partnership’s or the S corporation’s income,

on the Schedule K-1-P in the same manner as you would report the

modifications, and credits. Use the completed schedule and these

items from a non-unitary partner.

instructions to help you report the items shown on Schedule K-1-P on

What if I am a Grantor Trust or Disregarded Entity?

your Illinois Income Tax return. Attach a copy of Schedule K-1-P to

your tax return and keep a copy for your records.

If you are a grantor trust or other disregarded entity for federal and

Illinois income tax purposes, check the applicable box on Line 9b,

What must I attach?

enter the name and identification number of the taxpayer that will

You must attach a copy of any Schedule K-1-P you receive from

report the income or loss from your Schedule K-1-P on their tax

partnerships and S corporations to your tax return. You should also

return, and provide them with a copy of the Schedule K-1-P and a

keep a copy for your records.

copy of these instructions.

If you receive a Schedule K-1-P that has “the following

What if I received Schedule K-1-P from a Grantor

information is included in the Schedule K-1-P from _______” (the

Trust or Disregarded Entity?

name of the partnership or S corporation) written at the top, it is a

If the grantor trust or disregarded entity checkbox on Line 9b is

pro forma Schedule K-1-P. The pro forma Schedule K-1-P has been

checked and your name and identification number are listed, report

included to aid you in the completion of your return and should not

the items from the Schedule K-1-P as if it were provided to you by the

be submitted with your tax return.

taxpayer in Step 1.

What if the partnership is an investment

What if I believe the partnership or the S corporation

partnership?

has made an error on my Schedule K-1-P?

If the partnership that completed the Schedule K-1-P entered

If you believe the partnership or the S corporation has made an error on

“investment partnership” in Step 1, Line 4, all of the income you

your Schedule K-1-P, notify the partnership or the S corporation and ask

receive from the partnership is usually treated as nonbusiness

for a corrected Schedule K-1-P. Do not change any items on your copy.

income that is allocable to your state of residence (individuals) or

What does Column A represent?

state of commercial domicile (all other persons or entities). However,

Column A represents your specific share of the partnership’s or the

the income you receive from the partnership will be treated as

S corporation’s income, modifications, and credits. The partnership

business income if your investment in the partnership is related to

or the S corporation is required to complete this column if you were

another business activity of yours or serves an operational function

a partner or shareholder at any time during the partnership’s or the

to another business activity of yours or where your contribution to

S corporation’s tax year. If you were a resident of Illinois on the last

the partnership was made out of working capital from your trade or

day of the partnership’s or S corporation’s taxable year, all amounts

business. If your income is treated as business income, you must

in Column A must be included as income, modifications, and credits

apportion it as if you had earned the income directly, rather than

allocated to Illinois. If you were a resident of Illinois on the last day

through the partnership. The apportionment should be completed on

of the partnership’s or the S corporation’s tax year, and you are

the correct forms, as follows:

claiming a credit for taxes paid to another state, see “What does

Nonresident individuals - use Form IL-1040, Schedule NR.

Column B represent?” below.

Nonresident trusts and estates - use Form IL-1041, Schedule NR.

What does Column B represent?

Illinois residents may not include any income from an

Column B represents the portion of Column A that is allocated or

investment partnership in Column B of their Schedule CR.

apportioned to Illinois. If you were not a resident of Illinois on the last

Corporations (excluding S corporations) - use Form IL-1120 and

day of the partnership’s or the S corporation’s tax year, be sure the

complete Step 4, Figure your income allocable to Illinois.

amounts reported in Column B are included in the Illinois amounts

Partnerships or S corporations - use Form IL-1065 or

reported on your

Form IL-1120-ST and complete Step 6, Figure your income allocable

• Form IL-1040, Schedule NR, Nonresident and Part-Year Resident

to Illinois.

Computation of Illinois Tax, Column B;

• Form IL-1041, Schedule NR, Nonresident Computation of

Exempt organizations - use Form IL-990-T and complete Step 3,

Fiduciary Income, Column B;

Figure your income allocable to Illinois.

• Form IL-1120, Step 4, Figure your income allocable to Illinois;

What if I am engaged in a unitary business with this

• Form IL-1065 or Form IL-1120-ST, Step 6, Figure your income

partnership?

allocable to Illinois; or

• Form IL-990-T, Step 3, Figure your income allocable to Illinois.

If you are engaged in a unitary business with this partnership but

If you were a resident of Illinois on the last day of the partnership’s or

the partnership is not included in your Schedule UB, Combined

the S corporation’s tax year, and you are claiming a credit for taxes

Apportionment for Unitary Business Group, the partnership should

have attached a schedule showing your share of the partnership’s

paid to another state, subtract the amount of each item in Column B

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Schedule K-1-P(2) (R-12/17)

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Instructions For Schedule K-1-P(2) - Partner'S And Shareholder'S - Illinois Department Of Revenue

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