Fillable Form It-565 - Partnership Return Of Income (Page 4 of 12) in pdf

Deductions

exhaustion, wear and tear, and obsolescence of property used

Line 13 Salaries and Wages — Print all salaries and wages not included

in the trade or business or of property held by the taxpayer for

as a deduction on Line 3 of Schedule A, except salaries to

the production of income shall be allowed as a depreciation

partners.

deduction. The allowance does not apply to inventories or

stock-in-trade, or to land apart from the improvements or

Line 14 Payments to Partners — Salaries and Interest (Guaranteed

physical development added to it.

Payments) — Print the deduction taken for payments

to a partner for services or the use of capital where such

The useful life of an asset can be measured in units of

payments are determined without regard to the income

production, but the ordinary practice is to measure useful

of the partnership. Do not include distributive share of

life in years. Business experience, engineering information,

partnership profits. Allocate these profits to the appropriate

and other relevant factors provide a reasonable basis for

partners in Column 4, Partners’ Allocations, Page 1.

estimating the useful life of property. The cost (or other

basis) to be recovered should be charged off over the expected

Line 15 Rent — Print the amount of rent paid on business property

useful life of the property.

used in a trade or business activity. Do not deduct rent for a

dwelling occupied by any partner for personal use.

The Department of Revenue will permit the use of estimated

lives allowable for federal income tax purposes. The deduction

Line 16 Interest — Print the amount of interest paid for business

of “bonus” or “first-year” depreciation is allowable.

indebtedness. Amounts paid by a partnership to a partner

for the use of capital should be printed on Line 14. Amounts

There are special rules for new assets acquired after

paid as interest by a partnership to a partner as a result of a

December 31, 1953. The cost or other basis of an asset

transaction wherein the partner acts in a capacity other than

acquired after December 31, 1953, may be depreciated

as a partner should be printed on this line. Do not include

under methods proper in the past; or it may be depreciated

interest incurred to purchase or carry obligations producing

under any of the following methods, provided (1) that the

tax exempt interest. The limitations on deductions for unpaid

asset is tangible; (2) that it has an estimated useful life of

interest are set forth in R.S. 47:75. Show details on Schedule

three years or more; and, (3) that the original use of the

asset commenced with the taxpayer and commenced after

December 31, 1953.

Line 17 Taxes — Print the amount of taxes paid or accrued during

the taxable year. Do not include Louisiana income taxes, taxes

If an asset is constructed, reconstructed, or erected by the

assessed against local benefits that increase the value of the

taxpayer so that much of the basis of the asset is computed

property assessed, or taxes not imposed upon the taxpayer

in accordance with 47:65(F)(2), and is attributable to

(R.S. 47:55). Show details on Schedule C.

construction, reconstruction, or erection after December 31,

1953, the asset may be depreciated under any of the following

Line 18 Losses by Fire, Storm, Shipwreck, or Other Casualty, or

methods, provided that the asset is tangible and has an estimated

Theft — Print the amount of losses sustained during the

useful life of three years or more:

year, if arising by fire, storm, shipwreck, or other casualty,

or from theft, and not compensated for by insurance or

(1) Declining balance method — This method may be used

otherwise, nor reflected in cost of goods sold. [See R.S.

with a rate not in excess of twice the applicable straight-

47:60(3).] Theft losses can be deducted only in the year in

line rate.

which the partnership discovers the loss. Attach a statement

(2) Sum of the years-digit method — Under this method,

setting forth a description of the property, date acquired,

annual allowances for depreciation are computed by

cost, subsequent improvements, depreciation allowed or

applying changing fractions to the taxpayer’s cost or

allowable since acquisition, insurance, salvage value, and

other basis of property (reduced by estimated salvage

deductible loss claimed.

value). The deduction for each year is computed by

Line 19 Bad Debts — Print the amount of debts that became bad

multiplying the cost or other basis of the asset (reduced

during the year. Bad debts may be deducted either (1) when they

by estimated salvage value) by the number of years of

become wholly or partially worthless; or, (2) by a reasonable

useful life remaining (including the year for which the

addition to a reserve for bad debts. No change of method is

deduction is computed) and dividing the product by

allowed without permission of the Secretary of Revenue.

the sum of all the digits corresponding to the years of

the estimated useful life of the assets.

Line 20 Repairs — Print the cost of incidental repairs, including

labor, supplies, and other items, that do not add to the value

(3) Other methods — A taxpayer may use any consistent

or appreciably prolong the life of the property repaired.

method that does not result in accumulated allowances

Expenditures for new buildings, machinery, equipment, or

at the end of the year greater than the total of the ac-

for permanent improvements or betterments that increase

cumulated allowances that would have resulted from

the value of the property are chargeable to capital accounts.

the use of the declining method. This limitation applies

Expenditures for restoring or replacing property are not

only during the first two-thirds of the useful life of the

deductible, since such expenditures are chargeable to capital

property.

accounts or to depreciation reserves.

If a deduction is claimed for depreciation, Schedule G must

Line 21 Depreciation Deduction — Print the amount of depreciation

be completed. When obsolescence is included, state separately

computed on Schedule G. A reasonable allowance for the

the amount claimed and the basis upon which it is computed.

Form It-565 - Partnership Return Of Income Page 4

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