Form 765 - Partner'S Share Of Income, Credits, Deductions, Etc.

Form 765 (2012)

Page 3

KENTUCKY SCHEDULE K-1

*1200020331*

Commonwealth of Kentucky

DEPARTMENT OF REvENUE

PARTNER’S SHARE OF INCOME, CREDITS, DEDUCTIONS, ETC.

(a) Distributive Share Items—continued

(b) Amount

Resident Partner Adjustment

57.

Combination of Kentucky Schedule K-1, lines 1 through 6, 9 and portions of lines 7 and 11.

Add income amounts and subtract (loss) and deduction amounts (see instructions) .........................................

58.

Combination of federal Schedule K-1, lines 1 through 10, 12 and portions of lines 11 and 13.

Add income amounts and subtract (loss) and deduction amounts (see instructions) .........................................

59.

Enter difference of lines 57 and 58 here and on appropriate line on Schedule M (see instructions) .................

PARTNER’S INSTRUCTIONS FOR SCHEDULE K-1 (FORM 765)

Who Must File—The partners or members are liable for tax on their

NOTE: Form 740 filers see Form 740 instructions for Schedule M,

share of the partnership income, whether or not distributed, and must

Line 7 and/or Line 19.

include their share on the individual income tax return.

Passive Activity Limitations—The passive activity limitations in

If you were a Kentucky resident for the entire year, your filing

IRC Section 469 are figured at the partner level and may apply to any

requirement depends upon your family size, modified gross income,

loss reported on Lines 1, 2 or 3 and any other related items of income,

Kentucky adjusted gross income and income from self-employment.

loss and deductions reported on Schedule K-1 (Form 765). Refer to

the federal Partner’s Instructions for Schedule K-1 (Form 1065) to

Any person with gross receipts from self-employment exceeding

determine if the passive activity limitations apply to your share of

the threshold amount determined under KRS 141.066 must file a Form

loss(es) reported on Schedule K-1 (Form 765) and if you must file Form

740 regardless of the amount of adjusted gross income or the number

8582-K, Kentucky Passive Activity Loss Limitations.

of tax credits claimed. Generally, all income of Kentucky residents,

regardless of where it was earned, is subject to Kentucky income tax.

SPECIFIC INSTRUCTIONS

See Form 740 Instructions.

Kentucky Resident Partners (Form 740 Filers)—To determine the

Nonresidents with income from Kentucky sources and part-year

net difference between the federal Schedule K-1 amounts and the

residents receiving income while a Kentucky resident or from Kentucky

Kentucky Schedule K-1 amounts, complete Lines 57, 58 and 59. This

sources while a nonresident must file a Kentucky return. Partnership

will adjust the items of income, loss and deductions used to compute

your federal adjusted gross income to the Kentucky amounts shown

income is not exempted by reciprocal agreements between Kentucky

and any other state. Form 740-NP must be filed by an individual with

in Column (b), Schedule K-1.

income from Kentucky sources and a combined gross income from

Line 57—Include on this line the Kentucky Schedule K-1 amounts

all sources exceeding the threshold amount determined under KRS

from Lines 1 through 6 and 9. Also include the amounts from Lines 7 and

141.066. Full-year nonresidents must report all income from Kentucky

11 that do not pass through to Schedule A as itemized deductions.

sources and from property located in Kentucky. Persons moving into

Kentucky must report income received from Kentucky sources prior

Line 58—Include on this line the federal Schedule K-1 amounts from

to becoming residents and income received from all sources after

Lines 1 through 10 and 12. Also include the amounts from Lines 11 and

becoming Kentucky residents. Residents moving out of Kentucky

13 that do not pass through to Schedule A as itemized deductions.

during the year must report income from all sources while a resident

and from Kentucky sources while a nonresident.

NOTE: If Form 8582-K is required, adjust the amounts entered

on Lines 57 and 58 to exclude any income, loss, deduction or

When to Report—Include your share of the partnership’s income

expense related to a passive activity. Complete the passive activities

or (loss), credits, deductions, etc., as shown by your Schedule K-1

adjustment worksheet (Form 8582-K, page 2) to determine additions

(Form 765) on your Kentucky income tax return for the year in which

to or subtractions from federal adjusted gross income. See Form 740

the tax year of the partnership ends. For example, if you, the partner,

instructions for Schedule M, Line 7 and/or Line 19.

are on a calendar year, and the partnership’s tax year ends January

31, 2012, you must take the items listed on Schedule K-1 (Form 765)

If amounts on Lines 4(d) and 4(e) are subject to the capital loss

into account on your tax return for calendar year 2012.

limitations, do not include on Lines 57 and 58. Complete federal

Schedule D using Kentucky amounts to determine additions to or

At-Risk Limitations—Generally, if you have a loss from any activity

subtractions from federal adjusted gross income.

carried on as a trade or business or for the production of income by

the partnership and you, the partner, have amounts invested in that

Line 59—Enter difference of Lines 57 and 58. If Line 57 is greater

activity for which you are not at risk, you will be required to complete

than Line 58, enter the difference as an addition to federal adjusted

federal Form 6198, At-Risk Limitations, to figure the allowable loss to

gross income on Schedule M, Line 3. If Line 58 is greater than Line 57,

report on your Kentucky income tax return. Your deductible loss from

enter the difference as a subtraction on Schedule M, Line 15.

each activity for the tax year generally is limited to the amount you

are at risk for the activity at the end of the partnership’s tax year or

Caution: If the amount on Line 57 is a (loss) and Line 58 is a (loss),

the amount of the loss, whichever is less. To help you complete Form

the smaller amount of the (loss) is the greater amount, and to determine

6198, if required, the partnership has provided a schedule showing

the difference, subtract the smaller dollar amount from the larger dollar

your share of income, expenses, etc., for each at-risk activity.

amount. If the amount on Line 57 is an income amount and Line 58 is

Form 765 - Partner'S Share Of Income, Credits, Deductions, Etc. - 2012 Page 3

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