Form 765-Gp - Kentucky General Partnership Income Return

IMPORTANT

General Partnerships must create a Kentucky Form 4562, Schedule D

and Form 4797 by converting federal forms.

the year exceeds $200,000. In determining the Section

Depreciation, Section 179 Deduction and Gains/Losses From

179 deduction for Kentucky, the income limitation on Line

Disposition of Assets—For taxable years beginning after

December 31, 2001, Kentucky depreciation and Section 179

11 should be determined by using Kentucky net income

deduction are determined in accordance with the Internal

before the Section 179 deduction instead of federal taxable

Revenue Code in effect on December 31, 2001. For calendar

income.

year 2012 returns and fiscal year returns that begin in 2012,

3. The partnership must attach the Kentucky Form 4562 to

a general partnership that for federal purposes elects in the

current taxable year or has elected in past taxable years any

Form 765–GP, and the amount from Kentucky Form 4562,

of the following will have a different depreciation and Section

Line 22 less the Section 179 deduction on Line 12 must be

179 expense deduction for Kentucky:

included on Form 765–GP, Page I, Line 8. The Section 179

deduction from the Kentucky Form 4562, Line 12 must be

included on Form 765–GP, Schedule K, Section I, Line 9. A

•

MACRS bonus depreciation; or

•

Section 179 expense deduction in excess of $25,000.

Kentucky Form 4562 must be filed for each year even if a

federal Form 4562 is not required.

If a general partnership has taken MACRS bonus depreciation

or Section 179 expense deduction in excess of $25,000 for

Determining and Reporting Differences in Gain or Loss

any year, federal and Kentucky differences will exist, and the

From Disposition of Assets—If during the year the general

differences will continue through the life of the assets.

partnership disposes of assets on which it has taken the

special depreciation allowance or the additional Section

Important: If a general partnership has not taken MACRS

179 deduction for federal income tax purposes, the general

bonus depreciation or the Section 179 expense deduction in

partnership will need to determine and report the difference

excess of $25,000 for any taxable year, then no adjustment will

in the amount of gain or loss on such assets as follows:

be needed for Kentucky income tax purposes. If federal Form

4562 is required to be filed for federal income tax purposes,

1. Conver t federal Schedule D (Form 1065) and other

a copy must be submitted with Form 765-GP to substantiate

applicable federal forms to Kentucky forms by entering

that no adjustment is required.

Kentucky at the top center of the form, and compute the

Kentucky capital gain or (loss) from the disposal of assets

using Kentucky basis. Enter the amount from Kentucky

Determining and Reporting Depreciation and Section 179

Deduction Differences—Federal/Kentucky depreciation

Schedule D, Line 7 on Form 765–GP, Schedule K, Section

or Section 179 deduction differences shall be reported as

I, Line 4(d) or 7. Enter the amount from Kentucky Schedule

follows:

D, Line 15 on Form 765–GP, Schedule K, Section I, Line 4(e)

or 7. Federal Schedule D (Form 1065) filed with the federal

1. The depreciation from federal Form 1065, Line 16(a) must

return and the Kentucky Schedule D (Form 1065) must be

be included on Form 765–GP, Page I, Line 3. If federal Form

attached to Form 765–GP.

4562 is required to be filed for federal income tax purposes,

a copy must be attached to Form 765–GP.

2. If the amount reported on federal Form 1065, Line 6 (from

Form 4797, Line 17) is a gain; enter this amount on Schedule

O–PTE, Part II, Line 1. If the amount reported on federal

2. Convert federal Form 4562 to a Kentucky form by entering

Kentucky at the top center of the form above Depreciation

Form 1065, Line 6 (from Form 4797, Line 17) is a loss; enter

and Amortization. Compute Kentucky depreciation and

this amount on Schedule O–PTE, Part I, Line 1. Convert

Section 179 deduction in accordance with IRC in effect on

federal Form 4797 and other applicable federal forms to

December 31, 2001, by ignoring the lines and instructions

Kentucky forms by entering Kentucky at the top center of

the form, and compute the Kentucky gain or (loss) from

regarding the special depreciation allowance and the

additional Section 179 deduction. NOTE: For Kentucky

the sale of business property using Kentucky basis. If the

purposes, the maximum Section 179 deduction amount

amount on Kentucky Form 4797, Line 17 is a gain; enter this

on Line 1 is $25,000 and the threshold cost of Section 179

amount on Schedule O–PTE, Part I, Line 2. If the amount

property on Line 3 is $200,000. The $25,000 maximum

on Kentucky Form 4797, Line 17 is a loss; enter this amount

allowable Section 179 deduction for Kentucky purposes is

on Schedule O–PTE, Part II, Line 2. Federal Form 4797 filed

reduced dollar–for–dollar by the amount by which the cost

with the federal return and the Kentucky Form 4797 must

of qualifying Section 179 property placed in service during

be attached to Form 765-GP.

Form 765-Gp - Kentucky General Partnership Income Return - 2012 Page 3

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