2022 PA Schedule RK-1 - PA Department of Revenue

Amended Schedule

Limited Partner

or Other LLC

Member

General Partner

or LLC Member

- Manager

14 Distributions from PA Accumulated Adjustments Account . . . .

15 Distributions of Cash, Marketable Securities and Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

If liquidating, fill in the oval.

FEIN

SSN

Revenue ID

1 PA-Taxable Business Income (Loss) from Operations . . . . . . . . . . .

2 Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Net Gain (Loss) from the Sale, Exchange or Disposition of Property . . . . . .

5 Net Income (Loss) from Rents, Royalties, Patents and Copyrights . . . . . . . .

6 Income of/from Estates or Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 Gambling and Lottery Winnings (Loss)

8 Resident Credit. Submit statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9 Total Other Credits. Submit statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 Distributions of Cash, Marketable Securities and Property - not including guaranteed payments . . . .

11 Guaranteed Payments for Capital or Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 All Other Guaranteed Payments for Services Rendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 Guaranteed Payments to the Retired Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 Nontaxable income (loss) or nondeductible expenses required to . . . .

calculate owner’s basis. Submit statement.

If a loss, fill in the oval.

Spouse’s SSN

If jointly held

Last Name

Name of Entity Issuing RK-1

First Line of Address

Second Line of Address

City or Post Office

State

ZIP Code

State

ZIP Code

Suffix

First Name

M I

City or Post Office

17 Owner’s Share of IRC Section 179 allowed according to PA rules . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 Owner’s Share of Straight-Line Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19 Partner’s Share of Nonrecourse Liabilities at year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20 Partner’s Share of Recourse Liabilities at year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Partnership

LLC

Estate/Trust

Entity: (Fill in one oval only)

Final Owner:

PA S Corp.

All Other Corp.

Estate/Trust

Partnership

LLC

Exempt

Fiscal Year

Short Year

Individual

Shareholder’s stock ownership: ________%

Beneficiary’s year-end distribution: ________%

Partner’s percentage of:

Profit sharing: ________%

Loss sharing: ________%

Ownership of capital: ________%

SECTION

Phone Number

Name of Owner Receiving RK-1 (if other than an individual)

SECTION

III

SECTION

VII

PA S Corp

Partner:

Enter whole dollars only

If a loss, fill in the oval.

NOTE: Amounts from this schedule must be reported on the appropriate PA Tax Return.

EndBegin

PA SCHEDULE RK-1

Resident Schedule of Shareholder/

Partner/Beneficiary Pass Through

Income, Loss and Credits

PA-20S/PA-65 RK-1 (DR) MOD 05-22

PA Department of Revenue

2022

2207210051

(FI)

START

➜

9 DIGIT - NO DASH

Street Address - If Address has Apartment Number, Suite, RR No.

Place on this Line.

Use ALL CAPITAL LETTERS

for address information.

Do not exceed six decimal places

9 DIGIT - NO DASH

MM/DD/YY

If a loss, enter "0"

TOP OF PAGE

RESET FORM

IMPORTANT: FILL IN FORM MUST BE DOWNLOADED ONTO YOUR COMPUTER PRIOR TO COMPLETING

THIS PAGE DOES NOT PRINT

1PA-20S/PA-65 RK-1 www.revenue.pa.gov

PURPOSE OF SCHEDULE

Partnerships and S corporations use PA Schedule RK-1

to report income and losses by class of income to each

of its resident owners. A PA Schedule RK-1 is prepared

for each individual partner or shareholder showing the

share of income (losses) by class and other items

required to be reported.

Pennsylvania partners/members/shareholders (owners) who

are individuals are subject to Pennsylvania personal income

tax on their share of the entity’s income, whether or not the

income is actually distributed.

Owners who are individuals who reside in Pennsylvania are

taxed on their share of the entity’s income, regardless of the

income source.

The PA-20S/PA-65 Schedule RK-1 provides each partner/

member/shareholder (owner) and entity owner their share

of income, losses and credits from the partnership, PA S

corporation, estate, trust and/or entity formed as a limited

liability company classified as a partnership or S corporation

for federal income tax purposes.

A PA-20S/PA-65 Schedule RK-1 must be completed for every

Pennsylvania resident owner that has an ownership interest

in a partnership, S corporation, estate, trust and/or entity

formed as a limited liability company classified as a

partnership or S corporation for federal income tax purposes.

A copy of the PA-20S/PA-65 Schedules RK-1 for each

partner/member/shareholder (owner) must accompany the

entity’s PA-20S/PA-65 Information Return. Owners must

receive a copy or copies to prepare Pennsylvania tax or

information returns. The PA S corporation or partnership

must also retain a copy of all PA-20S/PA-65 Schedules RK-1

as part of the entity’s records.

In addition, a PA-20S/PA-65 Schedule RK-1 must be

completed for all resident owners that are estates, trusts,

other PA S corporations, other partnerships, and other pass

through entities. The Pennsylvania taxable income passes

through to the final taxpayer. Therefore, the immediate

partners and shareholders must know the total

Pennsylvania taxable income in the event the final owner is

a Pennsylvania resident. In the event that the final owner

is a nonresident of Pennsylvania, the owner must know

Pennsylvania source taxable income.

A partnership, S corporation or limited liability company

classified as a partnership or S corporation for federal tax

purposes (entity) that fails to file a PA-20S/PA-65, S

Corporation/Partnership Information Return may be subject

to a $250 non-filer penalty. The $250 penalty also applies

to each missing Schedule RK-1 or NRK-1.

NOTE: An entity that is the owner of another entity

receives both the PA-20S/PA-65 Schedules RK-1

and NRK-1.

PAPER RETURNS AND ELECTRONIC FILED RETURNS

The PA-20S/PA-65 Schedule RK-1 submitted with the

PA-20S/PA-65 Information Return does not need to be

issued to C corporation taxpayers unless a credit from the

PA-20S/PA-65 Schedule OC has been allocated.

Partnerships, PA S corporations, estates, trusts and/or

limited liability companies must submit PA-20S/PA-65

Schedule RK-1 with the applicable Pennsylvania tax returns.

If a C corporation taxpayer receives a PA-20S/PA-65

Schedule RK-1, the amount from Line 9, Total Other

Credits, must be reported on the appropriate Pennsylvania

tax return.

The requirements are different for PA S corporations and

partnerships to issue PA-20S/PA-65 Schedules RK-1 and/or

NRK-1 to its owners as described below.

PA S CORPORATIONS ONLY

SHAREHOLDER RESIDENCY PERIOD

A PA S corporation must submit a separate PA-20S/PA-65

Schedule RK-1 for that portion of the tax year during which

a part-year resident shareholder was a resident of

Pennsylvania. Part-year shareholders have business

income and losses prorated based upon the number of days

in the tax year these individuals are located within and

outside the state. Each shareholder’s pro rata distributive

share of total income, losses and credits reported on the

PA-20S/PA-65 Information Return determines the income

amounts for the lines that are included on the PA-20S/PA-65

Schedule RK-1. Income is allocated based on days residing

or not residing in Pennsylvania. Pennsylvania considers any

day or partial day an owner has a residence or domicile

within the commonwealth to be a Pennsylvania residency

day. The owner will receive a PA-20S/PA-65 Schedule RK-1

and NRK-1 reflecting the proportionate share of income

earned while a resident and a nonresident.

In order to calculate the PA Schedule RK-1 income and losses

by class for the residency period, first determine the

proportional number of days a shareholder resided in the state.

Using the number of days a shareholder was located in the

state as the numerator, divide this figure by the total number

GENERAL INFORMATION

WHO SHOULD RECEIVE

PA SCHEDULE RK-1

PA SCHEDULE RK-1 FOR

C CORPORATION PARTNERS

PART-YEAR RESIDENT OWNERS

2022

Instructions for PA-20S/PA-65 Schedule RK-1

Resident Schedule of Shareholder/Partner/Beneficiary

Pass Through Income, Loss and Credits

PA-20S/PA-65 RK-1 IN (DR) MOD 05-22

2 PA-20S/PA-65 RK-1 www.revenue.pa.gov

of days in the tax year representing the denominator. The

resulting ratio should be multiplied by the PA and non-PA

income and losses by class shown on page one of the

PA-20S/PA-65 Information Return. This figure is then

multiplied by the shareholder’s stock ownership percentage

to determine the PA Schedule RK-1 income and losses by

class.

PARTNERSHIPS ONLY

RESIDENCY PERIOD

A resident partner reports income based upon residency

status at year-end and does not prorate the income. The

partnership must submit a separate PA-20S/PA-65 Schedule

RK-1 for each individual partner if during the partnership’s

taxable year the partner was:

● A Pennsylvania resident at the close of the taxable year;

● Deceased and a Pennsylvania resident at the time of

death during the taxable year; and/or

● A Pennsylvania resident at the close of business on the

day during the taxable year that the partner sold,

exchanged, disposed of, liquidated, or redeemed their

entire interest in the partnership.

NOTE: Income is considered earned on the final day

of the tax year. If the partner is a resident on the last

day of the year, they will receive a PA-20S/PA-65 Schedule

RK-1. The Partner can claim out-of-state credit on income

taxed elsewhere.

The department will not accept PA Schedules RK-1 and

NRK-1 in CD rom format. Please reference Informational

Notice PIT 2013-02. Schedules RK-1 and NRK-1 submitted

in this format will not be processed and the entity may be

subject to the $250 non-filer penalty that applies for each

missing PA Schedule RK-1 and NRK-1.

An amended PA-20S/PA-65 Information Return and an

amended PA-20S/PA-65 Schedule RK-1 for each owner

must be filed to correct any error on or reflect any change to

the original PA-20S/PA-65 Information Return, whether or

not an amended federal Form 1120S or federal Form 1065

was filed for that year.

To amend an original PA-20S/PA-65 Schedule RK-1, use a

blank schedule for the tax year to be amended and fill in the

“Amended Schedule” oval at the top of the schedule. Do not

send a copy of the original schedule. Complete the schedule

by entering the corrected information and submit it with the

amended PA-20S/PA-65 Information Return. See Where To

File in the PA-20S/PA-65 Information Return instructions.

IMPORTANT: When submitting an amended RK-1, the

amended PA-20S/PA-65 Information Return must

accompany it.

FOREIGN ADDRESS STANDARDS

If the PA S corporation, partnership or entity formed as a

limited liability company that is classified as a partnership or

PA S corporation for federal income tax purposes is located

outside the U.S., it is important to write the foreign address

on the PA-20S/PA-65 Schedule RK-1 according to U.S.

Postal Service standards.

Failure to use these standards may delay processing or

correspondence necessary to complete the processing of

the return.

To comply with foreign address standards, use the following

rules when completing the address portion of the PA-20S/

PA-65 Schedule RK-1.

● Eliminate apostrophes, commas, periods and hyphens.

Write the address in all uppercase letters. Addresses

should have no more than four lines and must be written

in black ink or typewritten. Pencil is unacceptable.

● Write the name of the entity in the space provided. Mail

may not be addressed to a person in one country “in

care of” a person in another country. The address of

items sent to general delivery must indicate the

addressee’s full legal name.

● Write the address in the space provided, including street

and building name and number, apartment or suite

numbers, city name and city or provincial codes. All lines

of the delivery address should appear in all capital

letters. The house number and street address or box

number must appear when mail is addressed to towns

or cities.

● Write only the name of the country in the space provided

for the city or post office.

● Do not include any entries in the ZIP code space on the

PA-20S/PA-65 Schedule RK-1.

Providing the address in this format will better ensure that

the department is able to contact the entity if additional

information is required.

Below are examples of properly completed foreign

addresses.

FOREIGN ADDRESS EXAMPLES

Name: DIETRICH ENTERPRISES

Address 1: HARTMANNSTRASSE 7

Address 2: 5300 BONN 1

City: GERMANY

State: OC

ZIP Code: Leave Blank

HOW TO AMEND PA SCHEDULE RK-1

ENTITIES WITH A SIGNIFICANT

NUMBER OF OWNERS

COMPLETING PA SCHEDULE RK-1

3PA-20S/PA-65 RK-1 www.revenue.pa.gov

Name: DIETRICH ENTERPRISES

Address 1: 117 RUSSELL DR

Address 2: LONDON W1PGHQ

City: ENGLAND

State: OC

ZIP Code: Leave Blank

CANADA (ONLY) ADDRESS EXAMPLE

The following address format may be used when the postal

address delivery zone number is included in the address:

Name: NORTH BY NORTHWEST CO

Address 1: 1010 CLEAR ST

Address 2: OTTAWA ONT K1A 0B1

City: CANADA

State: OC

ZIP Code: Leave Blank

If the entity’s address does not fit in the available spaces on

the PA-20S/PA-65 Schedule RK-1 using this format, please

submit a separate statement that includes the entity’s name,

entity’s federal employer identification number, tax year and

complete address.

NOTE: For a Canadian address, two spaces must exist

between the province abbreviation and the postal code.

Please review previous example where “ONT” (province

abbreviation) and “K1A 0B1” (postal code) are shown with

the proper address format, separated by two spaces.

SSN

Enter the nine-digit Social Security number (SSN) of the

individual receiving the PA-20S/PA-65 Schedule RK-1.

LAST NAME, SUFFIX, FIRST NAME, MIDDLE INITIAL

Enter the last name; suffix such as Jr., Sr., etc.; first name

and middle initial of the individual receiving the

PA-20S/PA-65 Schedule RK-1.

SPOUSE’S SSN

Enter the nine-digit SSN of the spouse (if jointly held)

receiving the PA-20S/PA-65 Schedule RK-1.

FEIN

Enter the nine-digit federal employer identification number

(FEIN) of the owner (if other than an individual) receiving the

PA-20S/PA-65 Schedule RK-1.

NAME OF OWNER RECEIVING RK-1 (IF OTHER THAN

AN INDIVIDUAL)

If the owner of the entity is a partnership, PA S corporation,

estate, trust or entity formed as a limited liability company

classified as a partnership or PA S corporation for federal

income tax purposes, enter the name of the entity owner

receiving the PA-20S/PA-65 Schedule RK-1.

If the PA Schedule RK-1 is being issued to an individual,

leave this field blank.

FIRST LINE OF ADDRESS

Enter the street address of the owner receiving the PA-20S/

PA-65 Schedule RK-1. If the address has an apartment

number, suite or RR number, enter it after the street address.

NOTE: If the street address along with the apartment

number, suite or RR number does not fit on the first

line of address, then enter the street address on the second

line of address and the apartment number, suite or RR

number on the first line of address.

SECOND LINE OF ADDRESS

Enter the post office box, if appropriate, of the owner

receiving the PA-20S/PA-65 Schedule RK-1. If there is no

post office box, leave the second line of the address blank.

For a foreign address enter the city or municipal designation.

See Foreign Address Examples.

For a Canadian address, enter the city and postal delivery

zone number. See Canada Address Example.

IMPORTANT: If the address has only a post office box,

enter on the first line of address.

CITY, STATE AND ZIP CODE

Enter the appropriate information in each box. Eliminate all

punctuation such as apostrophes, commas, periods and

hyphens.

NAME OF ENTITY ISSUING RK-1

Enter the name of the entity issuing the PA-20S/PA-65

Schedule RK-1.

CITY, STATE AND ZIP CODE

Enter the appropriate information of the entity issuing the PA

Schedule RK-1 in each box. Eliminate all punctuation such

as apostrophes, commas, periods and hyphens.

FEIN

Enter the nine-digit FEIN of the entity issuing the PA-20S/

PA-65 Schedule RK-1.

REVENUE ID

Enter the 10-digit Revenue ID, if applicable.

AMENDED SCHEDULE

Fill in the oval if the PA-20S/PA-65 Schedule RK-1 is an

amended schedule.

FINAL

Fill in the oval if the PA-20S/PA-65 Schedule RK-1 is a final

schedule.

SHAREHOLDER’S STOCK OWNERSHIP

Enter the shareholder’s percentage of stock ownership in

the PA S corporation.

SECTION I

GENERAL INFORMATION

Valid values are: “00000” to “10000”, where 10000 = 100%

Decimal point is implied after 3rd character from the left

e.g. to indicate 33.33%, the value should be “03333”

e.g. to indicate 25%, the values should be “02500”

4 PA-20S/PA-65 RK-1 www.revenue.pa.gov

BENEFICIARY’S YEAR-END DISTRIBUTION

This line is for the PA-41 Schedule RK-1 and is not

applicable for the PA-20S/PA-65 Information Return. The

estate or trust submits this information on the PA-41

Schedule RK-1 with its PA-41 Fiduciary Income Tax Return.

PARTNERSHIP PERCENTAGE

Enter the partner’s percentage of each of the following at the

close of the taxable year:

● Profit sharing

● Loss sharing

● Ownership of capital

OWNER

Fill in the oval that designates what type of owner received

the PA-20S/PA-65 Schedule RK-1. Fill in one oval only.

PARTNER

Fill in the oval that designates what type of partner received

the PA-20S/PA-65 Schedule RK-1. Fill in one oval only.

ENTITY

Fill in the oval that designates what type of entity issued the

PA-20S/PA-65 Schedule RK-1. Fill in one oval only.

FISCAL YEAR

If the PA S corporation, partnership or limited liability

company filing as a partnership or PA S corporation for

federal income tax purposes does not file on a calendar-year

basis, fill in fiscal-year oval. Enter the month, day and year

(MMDDYY) when the fiscal year begins and ends.

SHORT YEAR

A short year is an accounting period shorter than one year

and not a 52/53 week taxable year.

A short-year return is required for the following reasons:

● Changes in the annual accounting period. For example,

the entity changes from a fiscal-year filer to a

calendar-year filer; or

● An entity is in existence during only part of the tax year.

For example, if the year is the initial year.

See the PA-20S/PA-65 Information Return instructions on

how to file a short-year return.

OWNER’S DISTRIBUTIVE SHARE OF PENNSYLVANIA

SOURCE INCOME (LOSS)

PENNSYLVANIA TAXABLE BUSINESS INCOME (LOSS)

FROM OPERATIONS

Enter the owner’s pro rata distributive share from the

PA-20S/PA-65 Information Return, Line 1e. The entity must

report the owner’s share of income (loss) whether distributed

or not. If reporting a loss, fill in the oval.

Guaranteed payments should not be included on Line

1 of the PA-20S/PA-65 Schedule RK-1.

Enter the owner’s pro rata distributive share of the

separately stated items of other Pennsylvania taxable

income (loss) from the PA-20S/PA-65 Information Return.

Pennsylvania taxable income includes total of Pennsylvania

source and outside Pennsylvania income (loss). If reporting

a loss on Lines 4, 5 and/or 7, fill in the oval.

OWNER’S SHARE OF PENNSYLVANIA CREDITS

Enter the owner’s pro rata distributive share of the

separately stated credits that the PA S corporation or

partnership passes through to the owners from the

PA-20S/PA-65 Information Return.

RESIDENT CREDIT - SUBMIT STATEMENT

Do not use Line 8 to report a resident credit for an Entity

Level Tax. Certain states have imposed an entity level tax

(ELT) on pass-through entities resulting from the Federal Tax

Cut and Jobs Act (P.L. No: 115-97). Please see Answer ID

3618 (https://revenue-pa.custhelp.com/app/answers/

detail/a_id/3618/kw/3618) on the Department’s website for

additional information and clarification.

Enter the Pennsylvania resident owner’s pro rata distributive

share of credit calculated from composite returns filed by the

PA S corporation or partnership on behalf of resident

owners. Submit a statement with the PA-20S/PA-65

Schedule RK-1 to notify the owner of the breakdown of

states, breakdown by Pennsylvania income class, taxes paid

to those states and the resident credit claimed, which is the

lessor of the actual tax paid or 3.07 percent of the total

income taxed in the other state.

The statement must include the entity’s name, entity’s

federal employer identification number, tax year, owner

name(s), and owner tax identification number(s).

NOTE: If a composite return is filed in other states,

the entity must submit a copy of the out-of-state

returns for all resident credits claimed.

TOTAL OTHER CREDITS - SUBMIT STATEMENT

Enter the owner’s pro rata share from the PA-20S/PA-65

Information Return, Section V, Line 13a. The entity must

LINES 2 THROUGH 7

LINE INSTRUCTIONS

SECTION II

LINE 1

SECTION III

Valid values are: “00000” to “10000”, where 10000 = 100%

Decimal point is implied after 3rd character from the left

e.g. to indicate 33.33%, the value should be “03333”

e.g. to indicate 25%, the values should be “02500”

LINE 8

LINE 9

5PA-20S/PA-65 RK-1 www.revenue.pa.gov

provide the owner with a statement listing which credit(s)

have been passed through to them. When applicable, Line

9 includes credits for PA S corporations treated as C

corporations in other states.

The statement must include the entity’s name, entity’s

federal employer identification number, tax year, owner

name(s), and owner tax identification number(s).

IMPORTANT: See PA-20S/PA-65 Schedule OC

instructions for which credits must be applied to

corporate tax liability prior to being passed through to the

entity’s owners. C corporation owners cannot claim credit for

taxes paid to other states.

DISTRIBUTIONS FROM PARTNERSHIPS

Noncorporate shareholders and partners should use

amounts from PA-20S/PA-65 Schedule RK-1, Section IV

through Section VII to determine or calculate owner’s basis.

Partners include Line 12 in net classified income on their

Pennsylvania tax returns.

DISTRIBUTION OF CASH, MARKETABLE SECURITIES

AND PROPERTY NOT INCLUDING GUARANTEED

PAYMENTS

Enter the partner’s share of distribution of cash, marketable

securities and property, other than guaranteed payments.

With respect to liquidating property distributions, this line will

include the total of cash and the fair market value of

marketable securities and property distributed to the

Pennsylvania resident partner.

The partner reduces his basis in the partnership by amount

of distributions. If the distribution amount is in excess of

basis, it must be reported on the resident partner’s return as

taxable gain on PA-20S/PA-65 Schedule D.

GUARANTEED PAYMENTS FOR CAPITAL

OR OTHER SERVICES

Enter the partner’s share of guaranteed payments for capital

or other services.

Pennsylvania does not follow federal treatment for

guaranteed payments for services. Under Pennsylvania tax

law, to the extent paid for other services or for the use of

capital, a guaranteed payment is:

● A withdrawal proportionately from the capital of all

partners;

● A gain from the disposition of the recipient’s partnership

interest and a loss from the disposition of the other

partners’ partnership interests, to the extent derived from

the capital of the other partners; and

● A return of capital by the recipients to the extent derived

from their own capital.

Pennsylvania allows the deduction.

ALL OTHER GUARANTEED PAYMENTS

FOR SERVICES RENDERED

Enter the partner’s share of such payments. Typically,

guaranteed payments to partners are paid to the extent the

services are rendered directly in the production of income

from a business, profession or farm, and/or from rental or

royalty income.

NOTE: The partner must know the class of income

from which the partnership made the guaranteed

payments. The partner must then properly classify the

payments on their PA-40 Individual Income Tax Return.

IMPORTANT: If the total guaranteed payment includes

more than one of the income classes described below,

the partnership must provide a statement to the partners

showing the amounts for each line.

For Pennsylvania personal income tax purposes,

guaranteed payments are classified as follows:

● If services are rendered directly in the production of

income from a business, profession, or farm, the

guaranteed payments are gross income from that

income class.

● If services are rendered directly in the production of

rental or royalty income, the guaranteed payments are

gross income from that income class.

HEALTH SAVINGS ACCOUNTS (HSA)

Contributions by a partnership to a bona fide partner’s HSA

are not contributions by an employer. The contributions are

treated as a distribution of money and are not included in

the partner’s income.

Contributions by a partnership to a partner’s HSA for

services rendered, however, are treated as guaranteed

payments that are deducted by the partnership and included

in the partner’s income. In both situations, the partnership

can deduct the contribution made to the partner’s HSA.

Contributions to a nonresident partner’s HSA for services

must be apportioned.

Contributions by an S corporation to a 2 percent

shareholder-employee’s HSA for services rendered are

deducted by the S corporation as wage or salary expense

and included in the shareholder-employee’s gross

compensation. The shareholder-employee can deduct the

contribution made to the shareholder-employee’s HSA.

GUARANTEED PAYMENTS TO RETIRED PARTNER

Guaranteed payments to a retired partner must meet the

exception described in IRC §1402(a)(10).

Generally, retirement payments received by a retired partner

from a partnership (of which he or she is a member or former

member) are counted as net earnings from self-employment.

Certain periodic payments by a partnership to a retired

partner made on account of retirement under a written plan

of partnership are excluded from the tax. To be effective, the

LINE 12

LINE 11

LINE 10

LINE 13

SECTION IV

6 PA-20S/PA-65 RK-1 www.revenue.pa.gov

plan must meet such requirements as are prescribed by Reg

§1.1402(a)-17. It must apply to partners generally or to a

class or classes of partners, and provide such payments at

least until the retired partner's death.

The exclusion applies to retirement payments received by a

retired partner only if he or she renders no services in any

business conducted by the partnership during the taxable

year of such partnership, ending within or with his or her

taxable year in which amounts were received. At the end of

such partnership's taxable year: (1) there must be no

obligation from other partners to the retired partner, other

than to make retirement payments under the plan; and (2)

the retired partner's share in the capital of the partnership

had been paid to him or her in full. Code Sec. 1402(a)(10)

Reg §1.1402(a)-17.

DISTRIBUTIONS FROM PA S CORPORATIONS

DISTRIBUTIONS FROM PA ACCUMULATED

ADJUSTMENTS ACCOUNT

Enter the shareholder’s share of such distributions. If a

liquidating distribution, fill in the oval. If the amount is in

excess of basis, it must be reported on the shareholder’s

return as taxable gain on PA-20S/PA-65 Schedule D-I,

Line 15.

DISTRIBUTIONS OF CASH, MARKETABLE

SECURITIES AND PROPERTY

Enter the shareholder’s share of such distributions. This

line will include the total of cash and the fair market

value of all marketable securities and property

distributed to the shareholder.

NONTAXABLE INCOME (LOSS) IN OWNER’S BASIS

NONTAXABLE INCOME (LOSS) OR

NONDEDUCTIBLE EXPENSES REQUIRED

TO CALCULATE OWNER’S BASIS

The difference between federal and Pennsylvania

depreciation should not be included on this line. Line 16 is

based on permanent nontaxable income or nondeductible

expenses in calculating Pennsylvania taxable income. This

amount is generally not the same amount reported on the

PA-20S/ PA-65 Information Return, Section IV, Line 12

because Line 12 should include non-permanent items.

Submit a statement that includes the entity’s name, entity’s

federal employer identification number and tax year. Provide

a breakdown of all nontaxable income earned and all

nondeductible expenses not taken. This amount should only

include permanent differences needed to calculate the

owner’s basis in the entity. If reporting a loss, fill in the oval.

The entity provides the owners with this information so the

owners can calculate their basis. Examples of nontaxable

income are tax-exempt interest, gifts, inheritance, loan

proceeds, insurance proceeds and federal tax refunds.

Examples of non-deductible expenses are partner's

retirement contributions, partner's life and health

insurance premiums.

These items may be listed on federal Form 1120S Schedule

K as “Items Affecting Shareholder Basis” and on federal

Form 1065 Schedule K as “Other Information.”

SUPPLEMENTAL INFORMATION

The owners will need certain information to determine their

outside Pennsylvania basis in the entity, taking into

consideration distributions that may exceed their

ownership interests.

OWNER’S SHARE OF IRC §179 ALLOWED

ACCORDING TO PENNSYLVANIA RULES

Enter the owner’s share of IRC §179 depreciation expense.

Each entity and individual taxpayer is limited to $25,000 of

IRC §179 depreciation expense. Do not deduct this

amount from any income class. This amount is used to

verify the owner has not exceeded the Pennsylvania limit.

OWNER’S SHARE OF STRAIGHT-LINE DEPRECIATION

Enter the owner’s share of the entity’s total expense.

Assets for which accelerated depreciation has been

calculated must be recalculated using straight-line

depreciation in order to calculate outside Pennsylvania basis

in the entity. The life of the asset must be the same life that

was used to calculate depreciation expense deducted in

determining Business Income (Loss) from Operations and/or

Rental Income (Loss).

PARTNER’S SHARE OF NONRECOURSE LIABILITIES

AT YEAR-END

Enter the partner’s share of nonrecourse liabilities at

year-end.

A nonrecourse liability is a secured liability, identified by the

partnership, for which the partners are not personally liable.

Nonrecourse liabilities apportion such debts to each

partner’s outside basis and validate deductions based on

such liabilities.

PARTNER’S SHARE OF RECOURSE LIABILITIES AT

YEAR-END

Enter the partner’s share of recourse liabilities at year-end. A

recourse liability is one for which a partner is personally liable.

LINE 16

SECTION VI

LINE 15

LINE 14

SECTION V

SECTION VII

LINE 17

LINE 18

LINE 19

LINE 20

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