Form 765 Schedule K 1 – Fill Out and Use This PDF

SCHEDULE Department of Revenue
K-1	*1800030267*
(Form 765)
Commonwealth of Kentucky

äSee instructions.

Partner’s identifying number	Partnership’s FEIN

PARTNER’S SHARE OF INCOME,	2018
CREDITS, DEDUCTIONS, ETC.

Kentucky Corporation/LLET

Account Number

CWhat type of entity is this partner?

Individual	Estate
General Partnership	Trust
Tax Exempt ________________

Corporation

Other Pass-through Entity

SCorporation

ESOP

DPartner’s taxable percentage of partnership’s distributive share items below (see instructions)

(1)	Resident partner		100%
(2)	Nonresident partner (see Schedule A instructions)	ä	%

ECheck box if nonresident partner’s income is reported on:

Kentucky Nonresident Income Tax Withholding on Distributive Share Income Report and Composite Income Tax Return

(Form 740NP-WH and Form PTE-WH)

Final K-1

Amended K-1

Schedule K-1

(Form 765)

(2018)

*1800030285*

Page 2 of 4

SECTION A—continued

Pro Rata Share Items

Total Amount

1Combination 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).........................................

2Combination 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).........................................

3Enter difference of lines 1 and 2 here and on appropriate line on Schedule M (see instructions)......................

1

2

3

00

00

00

Schedule K-1

(Form 765)

(2018)

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

Page 3 of 4

Who Must File—The partners or members are liable for tax on their share of the partnership income, whether or not distributed, and must include their share on the individual income tax return.

If you were a Kentucky resident for the entire year, your filing requirement depends upon your family size, modified gross income, Kentucky adjusted gross income, and income from self-employment.

Any person with gross receipts exceeding the threshold amount determined under KRS 141.066 from self-employment must file a Form 740, regardless of the amount of adjusted gross income or the number of tax credits claimed. Generally, all income of Kentucky residents, regardless of where it was earned, is subject to Kentucky income tax. See Form 740 Instructions.

Nonresidents with income from Kentucky sources and part-year residents receiving income while a Kentucky resident or from Kentucky sources while a nonresident must file a Kentucky return. Partnership income is not exempted by reciprocal agreements between Kentucky and any other state. Form 740-NP must be filed by an individual with income from Kentucky sources and a combined gross income from all sources exceeding the threshold amount determined under KRS 141.066. Full-year nonresidents must report all income from Kentucky sources and from property located in Kentucky. Persons moving into Kentucky must report income received from Kentucky sources prior to becoming residents and income received from all sources after becoming Kentucky residents. Residents moving out of Kentucky during the year must report income from all sources while a resident and from Kentucky sources while a nonresident.

When to Report—Include your share of the partnership’s income or (loss), credits, deductions, etc., as shown by your Schedule K-1 (Form

765)on your Kentucky income tax return for the year in which the tax year of the partnership ends. For example, if you, the partner, are on a calendar year, and the partnership’s tax year ends January 31, 2018, you must take the items listed on Schedule K-1 (Form 765) into account on your tax return for calendar year 2018.

At-Risk Limitations—Generally, if you have a loss from any activity 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 activity for which you are not at risk, you will be required to complete federal Form 6198, At-Risk Limitations, to figure the allowable loss to report on your Kentucky income tax return. Your deductible loss from 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 the amount of the loss, whichever is less. To help you complete Form 6198, if required, the partnership will provide a schedule showing your share of income, expenses, etc., for each at-risk activity.

NOTE: Form 740 filers see Form 740 instructions for Schedule M, Line 5 and/or Line 14.

Passive Activity Limitations—The passive activity limitations in IRC § 469 are figured at the partner level and may apply to any loss reported in Section A, Lines 1, 2, or 3 and any other related items of income, loss and deductions reported on Schedule K-1 (Form 765). Refer to the federal Partner’s Instructions for Schedule K-1 (Form 1065) to determine if the passive activity limitations apply to your share of loss(es) reported on Schedule K-1 (Form 765) and if you must file Form 8582-K, Kentucky Passive Activity Loss Limitations.

SPECIFIC INSTRUCTIONS

Kentucky Resident Partners (Form 740 Filers)

To determine the net difference between the federal Schedule K-1 amounts and the Kentucky Schedule K-1 amounts, complete Section E, Lines 1, 2, and 3. This will adjust the items of income, loss, and deductions used to compute your federal adjusted gross income to the Kentucky amounts shown on Form 765, Schedule K-1.

Line 1—Include on this line the Kentucky Schedule K-1 amounts from Lines 1 through 6 and 9. Also, include the amounts from Lines 7 and 11 that do not pass through to Form 740 or 740-NP, Schedule A as itemized deductions.

Line 2—Include on this line the federal Schedule K-1 amounts from Lines 1 through 10 and 12. Also, include the amounts from Lines 11 and 13 that do not pass through to Form 740 or 740-NP, Schedule A as itemized deductions.

NOTE: If Form 8582-K is required, adjust the amounts entered in Section A, Lines 1 and 2 to exclude any income, loss, deduction, or expense related to a passive activity. Complete the passive activities adjustment worksheet (Form 8582-K, page 2) to determine additions to or subtractions from federal adjusted gross income. See Form 740

instructions for Schedule M, Line 5 and/or Line 14.

If amounts in Section A, Lines 4(d) and 4(e) are subject to the capital loss limitations, do not include in Section A, Lines 1 and 2. Complete federal Schedule D using Kentucky amounts to determine additions to or subtractions from federal adjusted gross income.

Line 3—Enter difference of Section E, Lines 1 and 2. If Line 1 is greater than Line 2, enter the difference as an addition to federal adjusted gross income on Schedule M, Line 2. If Line 2 is greater than Line 1, enter the difference as a subtraction on Schedule M, Line 11.

Caution: If the amount in Section E, Line 1 is a (loss) and Line 2 is a (loss), the smaller amount of the (loss) is the greater amount, and to determine the difference, subtract the smaller dollar amount from the larger dollar amount. If the amount on either Line 1 or Line 2 is an income amount and the amount on the other line is a loss amount, the income amount is the greater amount; therefore, add the two amounts to determine the difference.

Nonresident Individual Partners (Form 740-NP Filers)

A nonresident individual who is required to file Form 740-NP, Kentucky Individual Income Tax Return Nonresident or Part-Year Resident, or who elects to file Form 740-NP to take advantage of capital loss and net operating loss carryovers must enter the amounts from Schedule K-1 as follows:

If the percentage in Item D(2) is “100%,” the amounts on Lines 1 through 6 and 9, portions of Lines 7 and 11, and the portion of Line 14(b) actually deducted for the current year must be entered on the appropriate lines of Form 740-NP and related schedules.

If the percentage in Item D(2) is less than 100 percent, the amounts on Lines 1 through 6 and 9, portions of Lines 7 and 11, and the portion of Line 14(b) actually deducted for the current year must be multiplied

Schedule K-1

(Form 765)

(2018)

Page 4 of 4

by this percentage and entered on the appropriate lines of Form 740- NP and related schedules. Amounts on Line 12(a) and the portions of Lines 7 and 11 which pass through to Schedule A (Form 740-NP) should not be multiplied by the percentage in Item D(2) since these amounts will be multiplied by the percentage on Form 740-NP, Page 3, Line 34 (Percentage of Kentucky Adjusted Gross Income to Federal Adjusted Gross Income).

Lines 1 through 3—Enter on federal Schedule E using Kentucky amounts or Form 8582-K, if applicable.

Line 4(a)—Enter on Form 740-NP, Page 3, Line 3.

Line 4(b)—Enter on Form 740-NP, Page 3, Line 4.

Line 4(c)—Enter on federal Schedule E using Kentucky amounts.

Lines 4(d) and (e)—Enter on federal Schedule D using Kentucky amounts or Form 8582-K, if applicable.

Line 4(f)—Enter on applicable lines of your return (see federal Partner’s Instructions for Schedule K-1 (Form 1065)).

Line 5—Enter on applicable line of your tax return (see federal Partner’s Instructions for Schedule K-1 (Form 1065)).

Line 6—Enter on federal Form 4797.

Line 7—Enter on applicable lines of your return (see federal Partner’s Instructions for Schedule K-1 (Form 1065)).

Line 8—Enter on Schedule A, Form 740-NP.

Line 9—Enter on federal Schedule E using Kentucky amounts.

Line 10—Enter on Schedule A, if applicable.

Line 11—Enter on applicable form or schedule (see federal Partner’s Instructions for Schedule K-1 (Form 1065)).

Estates and Trusts (Form 741 Filers)

Estates or trusts report the amounts shown on the Schedule K-1 on Form 741, Kentucky Fiduciary Income Tax Return, and related schedules. See federal Partner’s Instructions for Schedule K-1 (Form 1065).

Individual Partners and Members (LLET Credit)

Enter the net distributive share income from the Kentucky Schedule K-1 (Form 765), Lines 1 through 6, 9, and portions of Lines 7 and 11 (multiplied by the percentage in Item D(2) for nonresident partners or members) on Line 2 of the Kentucky Limited Liability Entity Tax Credit Worksheet located in the Instructions for Form 740, Form 740-NP, or Form 741 under Business Incentives and Other Tax Credits, to determine the LLET credit allowed. If net distributive share income includes losses subject to passive activity or capital loss limitations, net distributive share income must be adjusted to include only amounts allowed to be deducted on the applicable Kentucky tax return.

Enter the amount from Section B, Line 5 on Line 7 of the Kentucky Limited Liability Entity Tax Credit Worksheet.

Corporate Partners and Members (LLET Credit)

Enter the net distributive share income from the Kentucky Schedule K-1 (Form 765) that is included in the Corporation’s Kentucky taxable income (multiplied by the percentage on Item D(2) for nonresident partners or members) on Line 2 of the Corporation LLET Credit Worksheet located in the Form 720 Instructions under Part II, Income Tax Computation, to determine the LLET credit allowed. If the net distributive income includes losses subject to passive activity or capital loss limitations, net distributive share income must be adjusted to include only amounts allowed to be deducted on the applicable Kentucky tax return.

Enter the amount from Section B, Line 7 of the Corporation LLET Credit worksheet.

Sections C and D—See Schedule A, Apportionment and Allocation.