pa s corporation/partnership information return · information return, pa-20s/pa-65. the department...

WHAT’S NEW

The 2013 tax year changes for thePA-20S/PA-65 Information Return,schedules and forms include:Mandatory e-filing is now required forthird party preparers with 11 or morepass-through entity filers. Please reviewthe Pennsylvania Bulletin on theDepartment of Revenue website. It canbe identified under Notice – Method ofFiling: PA S Corporation/Partnership;Information Return, PA-20S/PA-65.

The department will continue issuingRevenue ID’s this year. If you received aletter with your new 10-digit Revenue ID,please begin using it on all forms andschedules requiring this information.

PA-20S/PA-65 Information ReturnThe filing status label / oval for KOZ filershas been changed from PA-KOZ PS toP-S KOZ.

PA-20S/PA-65 Information ReturnPage 3, Part IXThe following question has been elimi-nated: “May the Department of Rev-enue discuss this return with thepreparer shown below?”

PA-20S/PA-65 Schedule D-IPart I, Line 1Changed statement from: “All PA-sourcegain (loss) included in ordinary businessincome (loss)” to “All PA-source gain(loss) included in federal ordinary busi-ness income (loss) and/or federal otherincome (loss)”

PA-20S/PA-65 Schedule D-IIIPart I, Line 1Changed statement from: “All outsidePA-source gain (loss) included in ordi-nary business income (loss)” to “All out-side PA-source gain (loss) included infederal ordinary business income (loss)and/or federal other income (loss)”

PA-20S/PA-65 Schedule MPart ALine 12 has revised language: “TotalFederal income (loss) by Pennsylvaniaclassification. Total the amounts in eachcolumn.”

PA-20S/PA-65 Schedule EPart B. Line 1 and Line 2Report Rental Income in a separatecolumn from Royalties.

PA-65 CorpLines 1 a, b & cAdded “RCT-101 Filed” label and fill inoval for each entity line to determinecompliant and non-compliant corporatepartners.

PA-20S/PA-65 Schedule NWLine CEliminated the 1st and 2nd bulletsunder “Pay any balance due with:”.

• “The PA-20S/PA-65 InformationReturn, or”

• “The PA-40 NRC, Nonresident Con-solidated Tax Return, if all the non-resident individual owners elect toparticipate in a group return.”

Also revised the statement to read: “Payany balance due with the PA20S/PA-65Information Return”.

PA Schedule H-CorpThe three factor apportionment used tocalculate corporate net income tax hasbeen replaced by the single sales factorapportionment for tax years beginningon or after 1/1/2013.

PA-20S/PA-65 Schedule OCThe Organ & Bone Marrow Tax Credit hasbeen removed from the Schedule OC.

PA-20S/PA-65 SchedulesRK-1/NRK-1Entities no longer have the option tosubmit PA Schedules RK-1/NRK-1 in a CDformat to the department. Please refer-ence Informational Notice PIT 2013-02.

HOW TO GET FORMSAND PUBLICATIONS

Internet. Visit the department’s web-site at www.revenue.state.pa.us to:

● Download forms, instructions andpublications;

● Research tax questions by using theOnline Customer Service Center; or

● Search publications online by topicor keyword.

If you do not have Internet access, visityour local public library or district office.

Email. Send email requests for forms to:[email protected]

Written Requests. Send writtenrequests for forms to:

PA DEPARTMENT OF REVENUETAX FORMS SERVICE UNIT711 GIBSON BLVDHARRISBURG PA 17104-3218

By phone and in person. You canorder forms and publications by callingthe department’s automated, 24-hour,toll-free forms ordering message serviceat 1-800-362-2050.

You can also get most forms and publi-cations at your nearest district office.Please call ahead to verify a districtoffice’s address and services or visitwww.revenue.state.pa.us for moreinformation. Taxpayer assistance hoursare 8:30 a.m. to 5:00 p.m.

PRIVACY NOTIFICATIONBy law (42 U.S.C. §405(c)(2)(C)(i); 61Pa. Code §117.16), the department hasthe authority to use the Social Securitynumber (SSN) to administer the Penn-sylvania personal income tax and otherCommonwealth of Pennsylvania tax laws.

The department uses the SSN to iden-tify individual taxpayers and verify theirincomes. The department also uses theSSN to administer a number of tax-off-set and child-support programs thatfederal and Pennsylvania laws require.

1www.revenue.state.pa.us

Pennsylvania Department of Revenue 2013Instructions for Form PA-20S/PA-65

PA S Corporation/Partnership Information Return

2 www.revenue.state.pa.us

The commonwealth may also use theSSN in exchange-of-tax informationagreements with governmental authori-ties. Except for official purposes, Penn-sylvania law prohibits the commonwealthfrom disclosing information that individ-uals provide on income tax returns,including the SSN(s).

GENERAL INFORMATIONPurpose of FormThe PA-20S/PA-65 PA S Corporation/Partnership Information Return is apersonal income tax filing requirement.

The PA-20S/PA-65 form is an informationreturn used to report the income(losses), deductions, credits, etc. fromthe operation of foreign or domestic PA Scorporations, partnerships or limitedliability companies classified as partner-ships or S corporations for federalincome tax purposes (further referredto as “entity” or “entities”).

These entities do not pay tax on theirincome but “pass through” any profitsor losses to their owners (shareholders,partners or members). When preparingthe PA-20S/PA-65 PA S Corporation/Partnership Information Return, it isbest to start with the completed federalForm 1120S or federal Form 1065 andthen proceed to the Pennsylvaniaschedules.

The information on the PA-20S/PA-65 Information Return

has no relevance to C corporationsexcept if a credit from PA-20S/PA-65Schedule OC has been allocated on thePA Schedule RK-1, Line 9 or PA ScheduleNRK-1, Line 7. Otherwise, the onlyinformation relevant to a corporate tax-payer is the PA-20S/PA-65 ScheduleH-Corp for calculating CNI tax.

WHO MUST FILEEvery domestic or foreign PA S corpo-ration (72 P.S. § 7330.1), partnership(72 P.S § 7335(c)) or entity formed asa limited liability company that is clas-sified as a partnership or S corporationfor federal income tax purposes mustfile the PA-20S/PA-65 InformationReturn if any of the following apply:

1. During the taxable year, the part-nership, PA S corporation or itsqualified subchapter S subsidiaryearned, received or acquired any

gross taxable income (loss) allocableor apportionable to Pennsylvania,regardless of the amount of itsincome (loss) and/or whether ornot the income was distributed; or

2. The PA S corporation had at leastone shareholder that was a Penn-sylvania resident individual, estate,trust or disregarded entity ownedby a resident individual.

3. The partnership, at year-end, hadat least one partner that was aPennsylvania resident individual,estate, trust or disregarded entityowned by a resident individual.

All PA S corporations and limited liabilitycompanies that conduct business inPennsylvania must also file the RCT-101,PA Corporate Tax Report, for the capitalstock/foreign franchise tax.

Note. A PA S corporation, incor-porated in another state with a

Pennsylvania resident shareholder anda limited liability company organizedin another state with a Pennsylvaniaresident member having no Pennsylva-nia-source income or Pennsylvaniaactivity, is not required to file an RCT-101, PA Corporate Tax Report.

Important. All income for an Scorporation must be proportion-

ally distributed and cannot be specifi-cally allocated.

Inactive S Corporations andPartnershipsEven if no business activity was con-ducted during the taxable year, the PA Scorporation or partnership is stillrequired to file the PA-20S/PA-65 Infor-mation Return and all schedules.

CLASSIFYING INCOMEIn many instances, Pennsylvania per-sonal income tax law and regulationsdiffer from federal tax laws. This isespecially true with regard to federalelections concerning the timing ofincome and expense items.

Taxpayers should not use federalelections to determine Pennsylvaniapersonal income tax income (loss).

PA S corporations, partnerships andlimited liability companies classified aspartnerships or S corporations for fed-eral income tax purposes report income(loss) using the Pennsylvania personalincome tax rules. Pennsylvania does not

adopt federal rules for purposes ofpersonal income taxation. Accordingly,the determination of reportable amountsin each personal income tax classifica-tion may vary significantly from theclassifications and amounts as deter-mined for federal income tax purposes.

For Pennsylvania personal income taxpurposes, read the rules for classifyingincome found in the Pennsylvania Per-sonal Income Tax Guide. The incomemust be reported on the owner’s taxreturn in the same classification ofincome as it is reported to them on theirPA Schedules RK-1 and/or NRK-1 fromthe entity.

The entity must maintain sufficientbooks and records to properly reportincome (losses), expenses, credits,deductions, and other amounts forPennsylvania personal income tax pur-poses. A PA S corporation or partner-ship that only operates a business,profession or farm must include allactivities and transactions to determinePart I or Part II of the PA-20S/PA-65Information Return, whichever is appli-cable, regardless of the name of thetransaction and regardless of how itreports for federal income tax purposes.Use PA-20S/PA-65 Schedule M to classifyfederal income (loss) for Pennsylvaniapersonal income tax purposes. Pleasereview the PA-20S/PA-65 Schedule Minstructions on the department’s websiteat www.revenue.state.pa.us.

Note. Pennsylvania personalincome tax law taxes resident

partners, shareholders and members(owners) on income from sources withinand outside Pennsylvania and taxesnonresident owners on Pennsylvania-source income only.

PENNSYLVANIA SCORPORATION S STATUS

(S ELECTIONS)

Starting with tax years beginning on orafter Jan. 1, 2006, all corporations,including those incorporated in a stateother than Pennsylvania, with a validfederal subchapter S election are con-sidered Pennsylvania S corporationsand are no longer required to file thePennsylvania S Corporation Election andShareholders’ Consent form (REV-1640)in order to be a Pennsylvania S corpo-ration. Under Act 67 of 2006, all federalsubchapter S corporations are Pennsyl-


vania S corporations. Act 67 also includesa provision for federal subchapter S cor-porations to make an election to not betaxed as a Pennsylvania S corporation.To make this election, the taxpayer isrequired to file a completed REV-976,Election Not to be Taxed as a Pennsyl-vania S Corporation on or before thedue date, or extended due date, of thereport for the first period in which theelection is to be in effect.

Example. A federal subchapter S cor-poration that does not want to be a PAS corporation for the tax year endingDec. 31, 2013, must file the REV-976 onor before April 15, 2014. If the taxpayerhas a valid extension to file the RCT-101,PA Corporate Tax Report, then theREV-976 would be due on or before Oct.15, 2014.

PENNSYLVANIA SCORPORATION S STATUS

REVOCATIONS

First, it is important to remember theelection to not be taxed as a PA S cor-poration may not be revoked for fiveyears from the date it went into effect.A revocation received within this fiveyear period will be effective for the firsttax period for which the taxpayer iseligible to revoke the election.

Elections which first went in effect in2007 may be revoked for 2013. Torevoke the election the corporation mustsend a letter signed by shareholdersholding more than one-half of theshares of stock of the corporation onthe day on which the revocation ismade. This letter must contain thename of the corporation, the federalemployer identification number (FEIN),the PA S corporation’s Revenue ID andthe effective date of the revocation. Ifno effective date is provided the revo-cation will be effective for the first taxperiod for which the revocation wastimely submitted. In the case of a cor-poration with qualified subchapter Ssubsidiaries, the letter must include thenames and Revenue ID of all qualifiedsubchapter S subsidiaries doing busi-ness in Pennsylvania.

Mail the letter to:PA DEPARTMENT OF REVENUEBUREAU OF CORPORATION TAXESPROCESSING DIVISIONPO BOX 280705HARRISBURG PA 17128-0705

The deadline for revocation of an electionnot to be taxed as a PA S corporationis the 15th day of the third month of theyear in which the revocation is to be ineffect. A revocation submitted after thedue date will be in effect for the nexttax period.

ELECTRONIC FILINGFed/State Electronic Filing for SCorporations and PartnershipsThe department will accept original, andbeginning with tax year 2011, amendedPA S Corporation/Partnership Informa-tion Returns (PA-20S/PA-65) includingcorresponding forms and schedules filedthrough the Modernized e-File (MeF)platform provided by the IRS (alsoknown as the Fed/State e-File).

Important. An amended PA-20S/PA-65 Information Return

filed through Fed/State e-File will onlybe accepted for 2011 tax year returnsand forward. You may not file anamended PA-20S/PA-65 InformationReturn through Fed/State e-File prior to2011 tax year return. See How To Amenda PA-20S/PA-65 Information Returnprior to 2011 tax year return.

Fed/State e-File allows you to filefederal and state returns together orseparately. It is available through taxpreparers or computer software. Whenyou file using Fed/State e-file, thedepartment sends an acknowledgementdirectly to you, your tax professional orElectronic Return Originator (ERO).Whoever submits the tax return willreceive the acknowledgement.

The PA-20S/PA-65 Information Returncan be filed through Fed/State e-Filethrough an approved vendor that hastested with and been approved by thedepartment to offer electronic filingin Pennsylvania. Even if a vendor isfederally approved they must also beapproved by Pennsylvania. As a result,every year vendors must go through atesting process for the department's ap-proval of their software. When the ven-dors complete the testing process, theywill be listed on Revenue’s e-ServicesCenter at www.doreservices.state.pa.us.

Note. Beginning with tax year2013 and going forward manda-

tory e-filing is required for third partypreparers with greater than or equal toeleven entity clients. The Departmentpublished a “Method of Filing” notice forelectronic filing requirements in a Penn-

sylvania Bulletin on the PA Departmentof Revenue website. Please referencethe following search key: Notice – Methodof Filing: PA S Corporation/ Partnership;Information Return, PA-20S/PA-65.

Tax-filers may direct third party preparersto file returns in a different method thanmandated. Pass through entities optingout of mandatory e-filing must submit astatement why they are unable to fileelectronically.

Electronically Filed Returns withAttachmentsWhen the PA-20S/PA-65 S Corpora-tion/Partnership Information Return isfiled through the Fed/State e-File allattachments other than the PA-20S/PA-65 schedules must be sent in PDF format.

Examples of other attachments to anelectronically filed PA-20S/PA-65 Infor-mation Return may include statementsrequired with the PA-20S/PA-65 Infor-mation Return; PA Schedules RK-1and NRK-1 that a pass through entityreceives from another pass throughentity; federal Form 8824, Like-KindExchanges; federal Form 3115, Applica-tion for Change in Accounting Method;and federal Form 7004, Application forAutomatic Extension of Time To File.

The department will consider the taxreturn incomplete if all required docu-ments are not submitted with an elec-tronically filed return.

Important. Do not include thePA-20S/PA-65 Schedules RK-1

and NRK-1 that the entity issues to itsowners as a PDF attachment. Theseschedules are part of the e-File packagefor the PA-20S/PA-65 InformationReturn.

HOW TO PAY ELECTRONICALLY

Fed/State Electronic Filing Optionfor Estimated Nonresident IndividualQuarterly Withholding PaymentsThe only acceptable electronic paymentmethod for quarterly nonresident with-holding through Fed/State Partnershipe-File is electronic funds withdrawalwhich is part of the current tax yearreturn submission and is automaticallyand electronically transferred from tax-payers’ bank accounts.

The following types of payments canbe electronically transferred with thePA-20S/PA-65 Information Return:

http://www.doreservices.state.pa.us/


● Final nonresident individual with-holding tax “catch-up” paymentsubmitted with the current tax yeare-filed PA-20S/PA-65 InformationReturn; and

● The next tax year’s (future) esti-mated payments for nonresidentindividual quarterly withholding taxsubmitted with the current tax yeare-filed PA-20S/PA-65 InformationReturn.

These future estimated nonresidentindividual withholding payments for thenext tax year will be stored in the sys-tem as separate electronic transactionpayments until the specified due date.

Important. The nonresident in-dividual quarterly withholding

payment may not be submitted throughElectronic Funds Transfer (EFT),credit/debit cards or e-TIDES.

Payment Not Submitted withElectronic ReturnYou cannot electronically submit non-resident individual quarterly withholdingtax payments separate from electroni-cally submitting the PA-20S/PA-65Information Return. If the PA-20S/PA-65Information Return has been electroni-cally submitted and the nonresidentwithholding was not sent at time ofelectronic submission of the return, youmust send a paper check for the non-resident withholding. See “Tip” below.

You may send in the PA-40 ESR(F/C) with a check if the entity

electronically files the PA-20S/PA-65Information Return and does not includethe withholding payment. Submit acheck or money order made payable tothe PA Dept. of Revenue along with thePA-40 ESR (F/C). Print the entity's federalemployer identification number (FEIN)and “2013 Final Nonresident Withhold-ing” on the check or money order.

Caution. Failure to include thePA-40 ESR (F/C) with your check

will result in a delay of processing.

Mail the payment to:PA DEPARTMENT OF REVENUE BUREAU OF INDIVIDUAL TAXESPO BOX 280502HARRISBURG PA 17128-0502

For payment by check with paper taxreturn, see How To Pay.

HOW TO AMEND THEPA-20S/PA-65

INFORMATION RETURN

Prior to 2011 Tax Year ReturnIf after filing the PA-20S/PA-65 Infor-mation Return, the entity discovers thatan incorrect PA-20S/PA-65 tax returnhas been submitted to the departmentand/or has amended federal Form 1065or 1120S or if the IRS changed orcorrected any items of income, gain orloss previously reported, the entitymust submit an amended PA-20S/PA-65Information Return to the PennsylvaniaDepartment of Revenue.Prior to the 2011 tax year return, anamended PA S Corporation/PartnershipInformation Return (PA-20S/PA-65)cannot be filed through Fed/State e-FileProgram.When amending a PA-20S/PA-65 Infor-mation Return that was originally filedthrough Fed/State e-File, the entitymust:

● Obtain the paper form PA-20S/PA-65Information Return for the year youwant to amend. Do not submit aphotocopy of your original PA-20S/PA-65 Information Return;

● Complete the return including allschedules by entering the correctedinformation and submit it with theamended PA-20S/PA-65 SchedulesRK-1 and/or NRK-1.

● Clearly mark the “Amended Informa-tion Return” oval on PA-20S/PA-65Information Return and the“Amended Schedule” oval on theSchedules RK-1 and/or NRK-1;

● Enter the amended amounts andenclose a statement explaining thereasons an amended return is beingfiled. Submit only the forms orschedules supporting the amendedamounts.

● Provide a copy of the amendedPA-20S/PA-65 Schedules RK-1and/or NRK-1 to the partners,shareholders or members; and

● Enclose a copy of the amendedfederal Form 1120S or federal Form1065.

Tax Year Return 2011 and ForwardFor tax years 2011 and forward, thedepartment will accept amendedPA-20S/PA-65 Information Returnsincluding corresponding forms andschedules filed through Fed/State e-File.

To file a 2011 or later amended returnthrough Fed/State E-File, visit Revenue’se-Services Center atwww.doreservices.state.pa.us.Follow all the steps listed above under“Prior to 2011 Tax Year Return” withexception to the first bullet referencinga paper return.

WHEN TO AMEND THEPA-20S/PA-65

INFORMATION RETURN

Over-Reported IncomeIf the entity over reported income,failed to claim allowable credits, failedto report allowable deductions, or eventstranspired that decreased its reportablePennsylvania-taxable income, includingan IRS Report of Change, the entitymust file an amended PA-20S/PA-65Information Return.

The amended return must be filedwithin three years of the original duedate or extended due date of thePA-20S/PA-65 Information Return. Theamended PA-20S/PA-65 SchedulesRK-1 and/or NRK-1 must show thecorrected Pennsylvania-taxable income,so the shareholders or partners canrequest refunds of Pennsylvania incometax they overpaid.

In order to obtain any refunds, ownersmust also file an amended Pennsylvaniatax return within three years of theoriginal due date of their return. SeeHow To Amend a PA-20S/PA-65 Infor-mation Return.

Under-Reported IncomeIf the entity under reported income, er-roneously claimed credits or deductionsto which it was not entitled, or eventstranspired that increased reportablePennsylvania-taxable income, includingan IRS Report of Change, the entitymust file an amended PA-20S/PA-65Information Return within 30 days fromthe determination of such increase. Theamended PA-20S/PA-65 Schedules RK-1and/or NRK-1 must show the correctedPennsylvania-taxable income so theshareholders or partners can pay thetax due.

The entity and owners must also file anamended Pennsylvania tax return within30 days of the discovery of the error toreport any increase in income for taxesdue. See How To Amend a PA-20S/PA-65Information Return.

http://www.doreservices.state.pa.us/


WHAT TO FILEPA S Corporations and PartnershipsEach entity submits with the PA-20S/PA-65 Information Return a complete copyof its federal income tax return includ-ing all schedules, statements, federalSchedules K-1, and PA-20S/PA-65Schedules RK-1 and NRK-1 receivedfrom other pass through entities.With the PA-20S/PA-65 InformationReturn, the entity must also submitcopies of the PA-20S/PA-65 SchedulesRK-1 that it provides to resident part-ners/shareholders (owners) and copiesof the PA-20S/PA-65 Schedules NRK-1that it provides to nonresident owners.

Note. If the PA S corporation orlimited liability company has

already forwarded a complete copy ofits federal return to the Bureau of Cor-poration Taxes with the RCT-101, PACorporate Tax Report, do not sendanother copy.PA S Corporations and Partnershipsas Owners of Another Pass ThroughEntityIf the shareholder, partner, member(owner), of a PA S corporation, partner-ship, limited liability company, or a ben-eficiary of a trust or estate is classified asa pass through entity, the issuing entitymust provide the entity owner with botha PA-20S/PA-65 Schedule RK-1 andNRK-1 showing the entity owner’s shareof the income (loss) passed throughfrom the issuing entity in the same classin which the issuing entity distributedthe income to its entity owner.When the entity owner receives a PA-20S/PA-65 Schedule RK-1 and NRK-1, ithas the classified income (loss) amountto complete the PA-20S/PA-65 Infor-mation Return, Parts I, II and III. Theentity owner is required to file both thePA-20S/PA-65 RK-1 and NRK-1 withtheir PA-20S/PA-65 Information Return.Example. When a PA S corporationreceives income from a partnership, thePA S corporation must file a copy of thePA Schedule RK-1 and NRK-1 it receivedfrom the partnership along with thePA-20S/PA-65 Information Return.Partnerships with C CorporationPartnersPartnerships or limited liability compa-nies classified as partnerships for federalincome tax purposes with operationswithin Pennsylvania that have corporatepartners that have not filed the RCT-

101, PA Corporate Tax Report for theprior or current tax year or whose part-ners are all C corporations must file thePA-65 Corp, Directory of CorporatePartners.

If the partners are all C Corporationsthe partnership:

● Must include a complete copy offederal Form 1065 with the PA-65Corp, Directory of Corporate Part-ners; and

● Does not file a PA-20S/PA-65 Infor-mation Return.

For additional information, please reviewthe instructions for the PA-65 Corp,Directory of Corporate Partners on thedepartment’s website.

Limited Partnership Filing as Disre-garded Entity for Federal IncomeTax PurposesIf an eligible entity has two membersunder local law but one of the membersof the eligible entity is, for federalincome tax purposes, disregarded as anentity separate from the other memberof the eligible entity, then the eligibleentity cannot be classified as a partner-ship. The eligible entity is either disre-garded as an entity separate from itsowner or an association taxable as acorporation.

Example. A limited partnership (LP A)is owned by a single-member limitedliability company (SMLLC) and a limitedpartnership (LP B). The LP B owns 100percent of the SMLLC which gives LP B100 percent control of LP A. The LP B isrequired to file the PA-20S/PA-65 Infor-mation Return and report the income ofboth LP A and the SMLLC. The SMLLC isrequired to file the RCT-101, PA Corpo-rate Tax Report.

PA S Corporations and PartnershipsFiling on Behalf of their QualifiedElecting Nonresident IndividualOwnersPA S corporations, partnerships andlimited liability companies classified aspartnerships and S corporations for fed-eral income tax purposes may file acomposite return (PA-40 NRC, Nonresi-dent Consolidated Income Tax Return)on behalf of their qualified nonresidentindividual owners who elect to beincluded in the composite filing.

For additional information, pleasereview the instructions for the PA-40NRC, Nonresident Consolidated IncomeTax Return on the department’s website.

Individual Owners in a PA S Cor-poration, Partnership or LimitedLiability Company Classified as aPartnership or S Corporation forFederal Income Tax PurposesIndividual owners of an entity mustreport on the PA-40, Individual IncomeTax Return, their share of the income(loss), passed through from the entityin the same class in which the partner-ship or PA S corporation reported theincome to its individual owners, asshown on their PA Schedules RK-1and/or NRK-1.

Limited Liability CompanyRegardless of how a limited liabilitycompany is classified for federal incometax purposes, the limited liability com-pany is subject to capital stock/foreignfranchise tax, reported on the RCT-101,PA Corporate Tax Report. A limited liabil-ity company that meets the de minimisstandards as outlined in Corporation TaxBulletin 2004-01 may file the RCT-101D,Declaration of de minimis PA Activity, inlieu of the RCT-101, affirming the Penn-sylvania activity during that period is deminimis.

Classified as a C CorporationA limited liability company that elects tofile as a C corporation for federal incometax purposes files as a C corporation forPennsylvania and is subject to Pennsyl-vania corporate net income tax, reportedon the RCT-101, PA Corporate TaxReport. A limited liability company thatfiles as a C corporation with the IRSdoes not file the PA-20S/PA-65 Infor-mation Return.

Classified as an S CorporationA limited liability company that elects tofile as an S corporation for federalincome tax purposes and has notelected out of PA Subchapter S statusfor Pennsylvania by filing form REV-976,Election Not To Be Taxed as A Pennsyl-vania S Corporation, must file as an Scorporation for Pennsylvania using thePA-20S/PA-65 Information Return. Themembers are subject to personal incometax.

Classified as a PartnershipA limited liability company that elects tofile as a partnership for federal incometax purposes files as a partnership forPennsylvania using the PA-20S/PA-65Information Return. The partners aresubject to personal income tax.


CLASSIFIED AS A SINGLE MEMBERLIMITED LIABILITY COMPANY

1. Income Reported on Federal TaxReturn of an Individual

A single-member limited liability com-pany (SMLLC) owned by an individual ora limited liability company jointly ownedby husband and wife that files as adisregarded entity for federal incometax purposes is an entity separate fromits owner for corporation tax purposesand is liable for capital stock/foreignfranchise tax but not for Pennsylvaniacorporate net income tax.

For personal income tax purposes, asingle-member limited liability companyowned by an individual or a limitedliability company jointly owned by hus-band and wife is a disregarded entity.The income of the limited liability com-pany is reported on PA-40 Schedule C,Profit or Loss from Business or Profes-sion, or PA-40 Schedule E, Rent andRoyalty Income (Loss), of the member’sPA-40, Individual Income Tax Return,and the single-member limited liabilitycompany does not file a PA-20S/PA-65Information Return. Examples includerental property or partnership interestheld by a limited liability company.

2. Income Reported on Federal TaxReturn of another Business Entity

The income of a single-member limitedliability company owned by anotherentity is reported on the tax return of themember as if earned by the member.The limited liability company is an entityseparate from its owner for corporationtax purposes and is liable for capitalstock/foreign franchise tax. It is prohib-ited to combine the activity of the lim-ited liability company with the activityof the member when reporting capitalstock/foreign franchise tax.

Qualified Subchapter S Subsidiaryand its Parent S CorporationPennsylvania personal income tax lawdoes not treat a qualified subchapter Ssubsidiary (QSSS) owned by a PA Scorporation (parent) as a separatecorporation for personal income tax.

However for corporation tax, Pennsyl-vania law does treat a QSSS owned bya PA S corporation as two separatecorporations.

Consequently a QSSS may not have apersonal income tax filing obligationbut may have a corporation tax filingobligation.

Pennsylvania personal income tax lawtreats all assets, liabilities and items ofincome, deduction and credit of a QSSSas assets, liabilities and items of income,deduction and credit of the parent PA Scorporation for income tax purposes.

The parent PA S corporation mustreport the assets, liabilities, and itemsof income, deduction, and credit of theQSSS on the parent’s PA-20S/PA-65Information Return.

Note. Shareholders receive theincome distribution from the par-

ent corporation, not from each QSSS.

The following provisions apply only to aqualified subchapter S subsidiary inPennsylvania:

● A QSSS cannot elect corporationtreatment independent of its parentcorporation.

If a QSSS and/or parent of a QSSSdoes not desire to be taxed as a PAS corporation, the parent must fileREV-976, Election Not to be Taxedas a Pennsylvania S Corporation,for itself and all QSSS(s). The parentcorporation submits a schedule withthe election, identifying the name,address, the PA S corporation’sRevenue ID and federal employeridentification number (FEIN) of eachQSSS owned by the corporationand doing business in Pennsylvania.

● The parent corporation is not re-quired to register with the Depart-ment of State if its only activity inPennsylvania is its investment in theQSSS that is registered in Pennsyl-vania. Therefore, the parent corpo-ration is not required to file theRCT-101, PA Corporate Tax Report.If the QSSS is not registered, theneither the parent or the QSSS mustregister.

Additionally, the parent is requiredto file a PA-20S/PA-65 InformationReturn and list the QSSS(s) on PartIX and include all of the QSSS’items of income, deduction andcredit on the return. There is noownership percentage for the QSSSbecause it is a division of the parentcompany.

Since the QSSS is a division of theparent company, the QSSS is notincluded on the Partner/Member/Shareholder Directory. Only theowners of the parent company arelisted on the directory.

● For Pennsylvania corporation taxpurposes (capital stock and foreignfranchise tax), the parent corpora-tion and each QSSS is a separateentity with its own Revenue ID.

Each entity must file an RCT-101,PA Corporate Tax Report, on a sep-arate company basis. On a separatecompany basis, each entity submitswith its RCT-101, PA Corporate TaxReport, its individual income state-ment, beginning and ending balancesheet and statement of retainedearnings (or a pro–forma federalForm 1120S).

● If the parent corporation must filethe RCT-101, PA Corporate TaxReport, the parent must also submita consolidated beginning and endingbalance sheet that includes allforeign and domestic QSSS(s).Please refer to REV-1200, CT-1PA Corporation Tax Booklet on thedepartment’s website for additionalguidelines.

The parent PA S corporationmay also file the PA-40 Non-

resident Consolidated Income TaxReturn (NRC) for its nonresidentowners if they meet the parame-ters. See the PA-40 NRC instruc-tions on the department's website.

ASSEMBLING THE PA-20SPA-65 S CORPORATION/

PARTNERSHIPINFORMATION RETURN

Assemble the PA-20S/PA-65 Informa-tion Return, forms and schedules in thefollowing order:

● Signed original PA-20S/PA-65 Infor-mation Return (Pages 1 through 3).Do not mail a photocopy;

● PA Schedule P-S KOZ – attachbehind the information return;

● PA-20S/PA-65 Partner/MemberShareholder Directory;

● PA-20S/PA-65 Schedule D-I, D-II,D-III and D-IV;


● PA-20S/PA-65 Schedule E;

● PA-20A/PA-65 Schedules RK-1 thatthe entity provides to residentowners;

● PA-20S/PA-65 Schedules NRK-1 thatthe entity provides to nonresidentowners;

● PA-20S/PA-65 Schedule M;

● PA-20S/PA-65 Schedule OC and therequired supporting documents forclaiming any of the business creditsallowed by Pennsylvania law;

● PA-20S/PA-65 Schedule A;

● PA-20S/PA-65 Schedule B;

● PA-20S/PA-65 Schedule H;

● PA-20S/PA-65 Schedule H-Corp;

● PA-20S/PA-65 Schedule NW;

● PA-20S/PA-65 Schedule J;

● PA-20S/PA-65 Schedule T;

● All other required supporting andsupplemental documentation, includ-ing a copy of the federal extension;

● A complete copy of the correspon-ding federal tax return, including allschedules, statements and federalSchedules K-1. If the entity is a PA Scorporation or limited liability com-pany and has already forwarded acomplete copy of its federal returnto the Bureau of Corporation Taxeswith the RCT-101, PA Corporate TaxReport, do not send another copy.

Assemble documents in theorder above.

● Do not staple documents.

● On all additional statements youinclude with your return, pleaseinclude the entity’s name, FEIN, taxyear and brief line reference to PA-20S/PA-65 Information Return orPA-20S/PA-65 Schedules.

● Do not include federal returns orfederal Schedules K-1 in CD format.The PA-20S/PA-65 information Re-turn will be considered incompleteif the federal information is not in-cluded in the paper form with thepaper return unless the entity is aPA S corporation or limited liabilitycompany and included a completecopy of its federal return with theRCT-101, PA Corporate Tax Report.

Important. Do not create a sub-stitute PA-20S/PA-65 Information

Return that has not been approved bythe department. A spreadsheet is anunapproved and unacceptable tax form.Unapproved tax forms filed with the de-partment may be rejected and returnedto the taxpayer or tax return preparer.This may result in an assessment ofinterest and penalty.

If you are filing any tax form other thanan official tax form, please reviewMiscellaneous Tax Bulletin 2008-02 onthe department’s website.

ESTIMATED QUARTERLYTAX PAYMENTS AND

WITHHOLDING

Estimated Quarterly Tax Paymentsfor Resident OwnersIndividual resident partners and share-holders (owners) are subject to theestimated quarterly tax provisions underthe Pennsylvania Income Tax Act.

Resident owners must file declarationsand make quarterly estimated Pennsyl-vania tax payments if they reasonablyexpect income, other than compensationon which Pennsylvania tax is withheld, toexceed $8,000.

The individual owners use REV-414I,Individuals Worksheet and REV-413I,Instructions for Estimating PA PersonalIncome Tax (For Individuals Only),to determine the proper amount ofestimated tax payments.

Estimated Quarterly WithholdingPayments for Nonresident OwnersUnder Act 22 of 1991, entities mustwithhold and pay quarterly Pennsylva-nia personal income tax for nonresidentpartners and shareholders (owners)that are individuals, estates or trusts.

This quarterly withholding tax paymentis based on each nonresident owner’sexpected share of distributable Pennsyl-vania-source taxable income.

When there has been a change in anaccounting period that requires filing ofa short-year return, the tax is calculatedon an annualized basis. See Short-YearReturn.

The entity must indicate the amount ofPennsylvania personal income tax itwithheld for each nonresident on the

PA-20S/PA-65 Schedule NRK-1 and pro-vide the PA-20S/PA-65 Schedule NRK-1to each nonresident owner.

The entity uses REV-414 P/S, Partner-ships and PA S Corporations Withhold-ing Tax Worksheet and REV-413 P/S,Instructions for Withholding PA PersonalIncome Tax from Nonresident Ownersby Partnerships and PA S Corporations,to determine the proper amount ofwithholding.

Partnerships or PA S corporations filinga nonresident quarterly withholding taxreturn for the first time should use PA-40ESR (F/C), Declaration of EstimatedTax or Estimated Withholding Tax forFiduciaries and Partnerships. Thereafter,the department will provide preprintedforms PA-40ES (P/S).

The partnership or PA S corporationmakes the initial quarterly tax withhold-ing payment and all future quarterly taxwithholding payments under the federalemployer identification number, nameand address of the entity.

Important. An entity cannotwithhold Pennsylvania personal

income tax on another entity or a Penn-sylvania resident individual, and shouldnot withhold Pennsylvania personalincome tax on income from intangiblessuch as interest, dividends or sale ofstock.

If the entity did not make any orsufficient estimated quarterly

withholding tax payments for its non-resident owners, a final payment orcatch-up payment can be made withthe filing of the PA-20S/PA-65 Informa-tion Return or PA-40 NRC, NonresidentConsolidated Income Tax Return. Failureto remit withholding payments for allnonresident owners on a quarterly basiswill result in the imposition of interest,penalty and underpayment penalty. SeeFinal Payment of Nonresident Withhold-ing Tax for how and where to send thefinal nonresident withholding tax pay-ment with the PA-20S/PA-65 Informa-tion Return.

Please review the instructions on thedepartment’s website for the PA-40NRC, Nonresident Consolidated IncomeTax Return for how and where to sendthe final nonresident withholding taxpayment with the PA-40 NRC, Nonresi-dent Consolidated Income Tax Return.


Be sure to review the electronic option.See Fed/State Electronic Filing Optionfor Estimated Nonresident IndividualWithholding Payments.

Overpayment/Adjustment of With-holding Tax for Nonresident OwnersThe PA-20S/PA-65 PA S Corporation/Partnership Information Return is forinformation purposes only.

It is not a return where you can indicatea refund or carry forward credit. Pay-ments submitted to this account are fornonresident tax withholding only andare held for transfer to the partner,member or shareholder (owner) asindicated on their individual tax returns.The department will not make theassumption that the entity paid morethan was needed.

Under Act 22 of 1991, entities mustwithhold quarterly Pennsylvania personalincome tax from nonresident partnersand shareholders (owners) that areindividuals, estates or trusts. This with-holding tax is based on each nonresidentowner's expected share of distributablePennsylvania-source taxable income.The partnership, PA S corporation orlimited liability company classified as apartnership or PA S corporation isrequired to remit the withholding tax tothe department on a quarterly basis.

If the entity overpaid the nonresidentwithholding tax, the entity should passthrough the total nonresident owners’withholding tax payment (including theoverpayment) as PA Nonresident TaxWithheld on Line 6 of their PA ScheduleNRK-1. The owners can then includeLine 6 amount as a tax payment ontheir respective PA-40, PennsylvaniaIncome Tax Return on Page 2, Line 17,Nonresident Tax Withheld from your PASchedule(s) NRK-1.

If the entity did not pass through theoverpayment of nonresident tax with-holding to its nonresident owners on PASchedule NRK-1, and if the entity wantsa refund or to carry-forward to the nexttax year the entire amount of tax with-held or the excess over the withholdingpassed through to the nonresident own-ers that are individuals, estates or trusts(providing the entity did not file a PA-40Nonresident Consolidated Income Tax

Return), the entity must submit awritten request to:

PA DEPARTMENT OF REVENUEBUREAU OF INDIVIDUAL TAXESNONRESIDENT WITHHOLDING TAXREFUNDPO BOX 280600HARRISBURG PA 17128-0600

The request must be on companyletterhead and include the entity’s name,federal employer identification number,tax year, Social Security number(s) ofthe owner(s), amount of nonresidentwithholding paid, amount of nonresidentwithholding tax liability, the requestedrefund amount and/or carry-forward tothe next year of nonresident withholdingand reason for request.

WHEN TO FILEFile the PA-20S/PA-65 InformationReturn for the current calendar year orthe fiscal year that begins in the currenttax year and ends in the next tax year.Use the current tax year return for a taxyear of less than 12 months that beginsand ends in the current tax year.

For a calendar-year filer, file the currenttax year PA-20S/PA-65 InformationReturn and PA-20S/PA-65 SchedulesRK-1 and NRK-1 on or before April 15,2014 including an extension date ofSept. 15, 2014.

For a fiscal-year filer, file the current taxyear PA-20S/PA-65 Information Returnand PA-20S/PA-65 Schedules RK-1 andNRK-1 on or before the 15th day of thefourth month following the close of thefiscal year including an extension dateof five months after the original duedate.

If the entity cannot file by the originaldue date, request an extension of timeto file. See Extension of Time To File.

If the entity does not file its return bythe original due date or extended duedate and does not pay the tax due bythe original due date, the departmentimposes late filing and underpaymentpenalties.

Tax YearsPennsylvania follows the same tax yearas federal rules.

Calendar-Year EntityAn entity that files on a calendar yearbasis, reports all taxable income recog-

nized between Jan. 1 and Dec. 31. SeeWhen To File.

Fiscal-Year EntityA fiscal year is a period of 12 consecutivemonths without regard to the calendaryear. The fiscal year is designated bythe calendar year in which it begins. Afiscal-year entity reports all taxableincome recognized during the fiscalyear. See When To File.

An entity may use a 52/53 week taxableyear if it keeps its books on that basis.

Changing From a Fiscal-Year Entityto a Calendar-Year EntityTo change from a fiscal-year filer to acalendar-year filer, the entity files ashort-year return. See Short-Year Return.The entity then files the next calendaryear on or before April 15, 2014 includingan extension date of Sept, 15, 2014.

The entity is also required to submit acopy of its federal election Form 1128,Application to Adopt, Change or Retain aTax Year, with both the short-year returnand the calendar-year return.

Short-Year ReturnA short year is an accounting periodshorter than one year and not a 52/53week taxable year.

A short-year return is required for thefollowing reasons:

● Changes in the annual accountingperiod. For example, the entitychanges from a fiscal-year filer to acalendar-year filer; or

● An entity is in existence during onlypart of the tax year. For example, ifthe year is the initial year or finalyear for all entities; or, if the part-nership or an entity formed as alimited liability company classifiedas a partnership for federal incometax purposes sells or exchanges 50percent or more of ownership inter-est (technical termination).

When there has been a change inan accounting period that requiresfiling of a short-year return, the taxis calculated on an annualized basis.

How To File a Short-Year ReturnIf the entity is required to file a short-year return, the entity must use themost recent PA-20S/PA-65 InformationReturn, schedules and forms on thedepartment’s website.


If the tax year on the forms is not thecurrent tax year and/or the tax year forwhich the entity is filing, then the entitymust cross out and write the correct taxyear for which it is filing a short-yearreturn.

If the entity is a calendar-yearfiler and files a short-year return,

do not fill in the fiscal-year oval. Ashort-year return is not a fiscal-yearreturn.

Technical TerminationA technical termination occurs whenthere is a sale or exchange of 50 per-cent or more of the total interest in thepartnership capital and profits within a12-month period and the taxable yearof the partnership closes.

The terminating partnership is requiredto file a short-year, PA-20S/PA-65Information Return for the taxable yearending with and including the date of itstermination.

The new partnership is required to filea PA-20S/PA-65 Information Return forits taxable year beginning after the dateof termination of the terminated partner-ship. The new partnership retains theemployer identification number of theterminated partnership and its RevenueID if it’s a limited liability company.

When the new partnership files itsPA-20S/PA-65 Information Return, it isrequired to list on the Partner/Member/Shareholder Directory all partners/members/shareholders (owners) in-volved with the entity within the taxyear or in this case, short year.

EXTENSION OF TIMETO FILE

If the entity cannot file the PA-20S/PA-65Information Return on or before theoriginal return due date, the entity canuse REV-276, Application for Extensionof Time to File, to file for a five-monthextension. See How to Obtain an Exten-sion of Time to File.

The department will not grant an exten-sion for more than five months, exceptfor taxpayers outside the U.S.

An extension of time to file does notextend the full payment of the tax. Payin full the amount reasonably estimatedas the entity’s Pennsylvania tax due onor before the original return due date.

How To Obtain an Extension ofTime to FileFollow one of these procedures whenapplying for an extension of time to file:

1. If the entity owes catch-up nonresi-dent withholding tax with the PA-20S/PA-65 Information Return, theentity must pay by check with atimely filed REV-276, Application forExtension of Time to File, on or beforethe original return due date. Thereturn due date is usually April 15for calendar-year filers and the 15thday of the fourth month followingthe close of the fiscal year for fiscal-year filers. The department will notsend a letter granting the extension.But it will write if there is a questionconcerning the request.

2. If the entity has an extension oftime to file federal Form 1065 orfederal Form 1120S and does notowe Pennsylvania nonresident with-holding tax on the PA-20S/PA-65Information Return, the departmentwill automatically grant the entity afive-month extension of time to filethe PA-20S/PA-65 InformationReturn. The entity is not required tosubmit REV-276 or federal Form7004 before the original return duedate. However, federal Form 7004must be submitted with the filingof the PA-20S/PA-65 InformationReturn.

3. If a PA S corporation or limited lia-bility company has an extension oftime to file the RCT-101, PA Corpo-rate Tax Report, the department willautomatically grant a five-monthextension of time to file the PA-20S/PA-65 Information Return. Theentity is not required to submit REV-276 or federal Form 7004 before theoriginal return due date. However,federal Form 7004 must be submittedwith the filing of the PA-20S/PA-65Information Return.

4. If the entity does not have an exten-sion to file federal Form 1065 or fed-eral Form 1120S and/or the RCT-101,request an extension on REV-276,and file it in sufficient time for thedepartment to consider and actupon it prior to the original returndue date.

Caution. An extension of time tofile the PA-20S/PA-65 Information

Return by filing REV-276, Application for

Extension of Time to File, does not ex-tend the filing deadline for the RCT-101,PA Corporate Tax Report. A PA S corpo-ration or limited liability company mustobtain a separate extension of timeto file the RCT-101, PA Corporate TaxReport.

A five-month extension of time to filerequires PA Schedules RK-1 and NRK-1to be filed one month earlier and allowsowners time to prepare and file theirpersonal income tax returns withinthe normal six-month time period forindividuals.

You do not have to explain why you areasking for the extension. The departmentwill contact you only if your request isdenied.

Qualifying for the ExtensionWhen an entity requests an extensionof time to file, it does not extend thefiling time for its owners. Each ownermust individually obtain an extensionof time to file the PA-40, IndividualIncome Tax Return, PA-41, FiduciaryIncome Tax Return, or other Pennsylva-nia tax returns.

An extension of time to file a PA-20S/PA-65 Information Return does notextend the time for full payment of thecatch-up nonresident withholding tax,nor does it preclude an assessment ofinterest and penalty for late paymentand underpayment of tax due.

To get the extra time to file you must:

1. Properly estimate the current yearnonresident withholding tax liabilityusing the information available toyou.

2. Enter the tax liability on REV-276.

3. File REV-276 by the original due dateof the return along with a check ormoney order for the current yeartax liability.

File a Paper REV-276REV-276 can only be filed in paper formand cannot be filed electronically. Ifthe entity electronically filed the PA-20S/PA-65 Information Return and didnot file REV-276 in paper form andrequested an extension for the federalreturn, include a copy of federal Form7004 with the PA-20S/PA-65 Informa-tion Return as a PDF attachment.


Mail REV-276 To:PA DEPARTMENT OF REVENUEBUREAU OF INDIVIDUAL TAXESPO BOX 280504HARRISBURG PA 17128-0504

How to File the PA-20S/PA-65 In-formation Return with an ExtensionWhen filing a PA-20S/PA-65 InformationReturn for which an extension wasrequested, the entity must:

● Fill in the “Extension Requested”oval at the top of the PA-20S/PA-65Information Return;

● Submit a copy of federal Form 7004with the PA-20S/PA-65 InformationReturn if the entity did not file REV-276, Application for Extension ofTime to File.

● Submit a statement with the federalconfirmation number received if theentity electronically filed a federalextension and did not file REV-276;

● List the extension payment amounton the statement and be sure toinclude the total nonresident with-holding payments on PA-20S/PA-65Schedule NW, Line B.

Note. Do not submit REV-276,Application for Extension of Time

to File, with the PA-20S/PA-65 Informa-tion Return.

Extension Due DatesSee When To File.

WHERE TO FILEThe entity must submit the PA-20S/PA-65 Information Return, the PA-20S/PA-65 supporting schedules and the PA-20S/PA-65 Schedules RK-1 and/or NRK-1,and if applicable, the final withholdingpayment or “catch-up” payment.

If the entity did not forward a completecopy of federal Form 1065 or 1120Sincluding the federal Schedules K-1 tothe Bureau of Corporation Taxes withthe RCT-101, PA Corporate Tax Report, itmust submit a complete copy of federalForm 1065 or 1120S, with the federalForm 1065 or 1120S Schedules K-1.

Where the entity should mail the PA-20S/PA-65 Information Return dependswhether there is a final withholding pay-ment or “catch-up” payment. Choosethe appropriate mailing address:

Without Payment:PA DEPARTMENT OF REVENUEBUREAU OF INDIVIDUAL TAXESPO BOX 280509HARRISBURG PA 17128-0509

With Payment:PA DEPARTMENT OF REVENUEBUREAU OF INDIVIDUAL TAXESPO BOX 280502HARRISBURG PA 17128-0502

See Final Payment of Nonresident With-holding Tax for how and where to sendthe final nonresident withholding taxpayment.

Important. Do not mail thePA-20S/PA-65 Information Return

with the RCT-101, PA Corporate TaxReport.

HOW TO PAYFinal Payment of NonresidentWithholding Tax

Payment by CheckIf your tax preparation software printsa Nonresident Withholding Voucherfacsimile approved by the Departmentof Revenue, that voucher may be usedwhen no preprinted voucher (PA-40ES(P/S) is available. Mail the voucher andcheck to the department. See Where toFile.

In the event the entity does not havea preprinted voucher and your softwareis unable to produce a department-ap-proved facsimile, make the check ormoney order payable to PA Dept. ofRevenue. Write the entity’s federalemployer identification (FEIN) and 2013Final Nonresident Withholding on thecheck or money order. The departmentwill need the entity’s FEIN to accuratelyapply the payment. See Where to File.

Do not staple the check or money orderto the return.

Electronic PaymentSee Fed/State Electronic Filing OptionFor Estimated Nonresident IndividualQuarterly Withholding Payments.

Important. The nonresidentindividual quarterly withholding

tax payment may not be submittedthrough Electronic Funds Transfer (EFT),credit/debit cards or e-TIDES.

Mailing Address for FinalWithholding PaymentSee Where To File.

RECORDKEEPINGAn entity must retain all books andrecords for at least seven years. Allamounts reported on the PA-20S/PA-65Information Return, schedules andforms are subject to verification andaudit by the department.

Information that substantiates thecalculation of basis for an entity orindividual, in any investment (partner-ship, S corporation, stocks, bonds, realestate, etc.), must be retained indefi-nitely or for at least four years after theinvestment is sold.

Information that substantiates thecalculation of basis in an investmentshall include but not be limited to brokerstatements, Pennsylvania and otherstates’ income tax returns, PA-20S/PA-65Schedules RK-1, closing statements, etc.

COMPLETING PA-20S/PA-65INFORMATION RETURN

Foreign Address StandardsIf the entity is located outside the U.S.,it is important to write the foreign ad-dress on the PA-20S/PA-65 InformationReturn, according to U.S. Postal Servicestandards.

Failure to use these standards maydelay processing or correspondencenecessary to complete the processing ofthe return.

To comply with foreign address stan-dards, use the following rules whencompleting the address portion of thePA-20S/PA-65 Information Return.

● Eliminate apostrophes, commas,periods and hyphens.

● Write the name of the entity in thespaces provided.

● Write the address in the space pro-vided, including street and buildingname and number, apartment orsuite numbers, city name and cityor provincial codes.

● Write only the name of the countryin the space provided for the city orpost office.


● Do not include any entries in thestate or ZIP code spaces on thePA-20S/PA-65 Information Return.

Providing the address in this format willbetter ensure that the department isable to contact the entity if we needadditional information.

Below are two examples of properlycompleted foreign addresses.

Foreign Address ExampleDIETRICH ENTERPRISESHARTMANNSTRASSE 75300 BONN 1FEDERAL REPUBLIC OF GERMANY

OR

DIETRICH ENTERPRISES117 RUSSELL DRLONDON W1PGHQENGLAND

Canada (Only) Address ExampleThe following address format may beused when the postal address deliveryzone number is included in the address:

NORTH BY NORTHWEST CO1010 CLEAR STOTTAWA ONT K1A OB1CANADA

If the entity’s address does not fit in theavailable spaces on the PA-20S/PA-65Information Return using this format,please include a separate statementwith the return showing the completeaddress.

PAGE 1

Filing StatusFill in the oval for a PA S corporation(PA-20S) or partnership (PA-65).

P-S KOZFill in the oval if approved for the Key-stone Opportunity Zone and includea PA Schedule P-S KOZ – KeystoneOpportunity Zone.

TAX IDENTIFICATION NUMBERS

Federal Employer IdentificationNumber (FEIN)Enter the entity’s nine-digit federalemployer identification number.

REVENUE IDS Corporations/Limited LiabilityCompaniesEnter the Revenue ID of the PA S cor-poration or limited liability company.

Caution. Do not use the taxnumber assigned by the Depart-

ment of State.PartnershipsA partnership is not a corporate entityand would not have a seven-digit PA TaxAccount ID or 10-digit Revenue IDunless it is an entity formed as a limitedliability company that is classified as apartnership.If the taxpayer is such an entity, it mustregister with the Department of Statefor a certificate of authority. Once thelimited liability company is registeredwith the Department of State, businessinformation is shared with the Depart-ment of Revenue so Revenue can assigna Revenue ID.North American Industry Classifica-tion System (NAICS) CodeProvide your six-digit federal NAICScode identified on Page 1 of your federalForm 1120S or 1065. If this numberchanged from the previous year, fill inthe NAICS oval.Business NameEnter the complete name of the entityor business.First Line of AddressEnter the street address. If the addresshas an apartment number, suite or RRnumber, enter after the street address.Eliminate all punctuation such as apos-trophes, commas, periods and hyphens.

Note. If the street address alongwith the apartment number, suite

or RR number does not fit on the firstline of address, then enter the streetaddress on the second line of addressand the apartment number, suite or RRnumber on the first line of address.The U.S. Postal Service preference is toput the actual delivery address on theline immediately above the city, stateand ZIP code.Second Line of AddressEnter the post office box, if applicable.If there is no post office box, leave thesecond line of address blank. Eliminateall punctuation such as apostrophes,commas, periods and hyphens.

For a foreign address, enter the city ormunicipal designation. See ForeignAddress Example.For a Canadian address, enter the cityand postal delivery zone number. SeeCanada (Only) Address Example.

Important. If the address hasonly a post office box, enter on

the first line of address.City or Post Office, State and ZIPCodeEnter the appropriate information ineach box. Eliminate all punctuation suchas apostrophes, commas, periods andhyphens.For Canadian and foreign addresses,the bottom line of the address shouldshow only the country name, written infull (no abbreviations) and in capitalletters. See Foreign Address Exampleand Canada (Only) Address Example.

FILL IN THEAPPLICABLE OVALS

Method of AccountingIndicate whether the entity uses theaccrual, cash or other method of ac-counting. If other, please identify yourmethod of accounting on a supplementalstatement.Income is calculated under the methodof accounting on which the entity regu-larly calculates income in keeping itsbooks. If the department determinesthat no method has been regularly usedor the method used does not clearlyreflect income, the calculation of incomeshall be made under a method thatclearly reflects income in the opinion ofthe department.

Important. If the entity changesits method of accounting, it must

submit a copy of its federal Form 3115,Application for Change in AccountingMethod with its PA-20S/PA-65 Informa-tion Return.Extension RequestedFill in the oval if the entity requested anextension of time to file the PA-20S/PA-65 Information Return. If the entity didnot file REV-276, Application for Exten-sion of Time to File, submit a copy offederal Form 7004, Application forAutomatic Extension of Time to FileCertain Business Income Tax, Informa-tion, and Other Returns with the PA-20S/PA-65 Information Return. SeeExtension of Time To File.


Initial YearIf the entity is in the first year of oper-ations, fill in the oval.Fiscal YearA fiscal year is a 12-month accountingperiod, other than a calendar year, end-ing on the last day of a particularmonth, for example July 1 to June 30 ofthe following year.The entity must use its federal taxableyear for Pennsylvania purposes.If the entity does not file on a calendar-year basis, fill in the fiscal-year oval.Enter the month, day and year (MMD-DYY) when the fiscal year begins andends.

Note. A fiscal year includes any-thing other than a calendar year.

Do not fill in the fiscal-year ovalfor a calendar-year filer whose

initial year does not begin 01/01/20XXor for a calendar-year filer whose finalreturn does not end 12/31/20XX.If the entity is a calendar-year filer andfiles a short-year return, do not fill inthe fiscal- year oval.Short YearFill in the short-year oval if the entity isfiling a short-year return. Enter themonth, day and year (MMDDYY) whenthe short year begins and ends.For more information about short-yearreturns, refer to Short-Year Return.Final ReturnFill in the oval if the PA S corporation orpartnership went out of business duringits taxable year.FEIN/Name/Address ChangeFill in the oval if the FEIN, name or ad-dress on the PA-20S/PA-65 InformationReturn differs from the last filed return.Amended Information ReturnFill in the oval if amending the PA-20S/PA-65 Information Return. The entitymust also provide amended PA-20S/PA-65 Schedules RK-1 and NRK-1 to itsowners.For more information on amended re-turns, see How To Amend PA-20S/PA-65Information Return.Date Activity Began InPennsylvaniaThe entity must include the date activitybegan in Pennsylvania.

If the entity is only filing the PA-20S/PA-65 Information Return because it has aPennsylvania resident shareholder orpartner and has no Pennsylvania-sourceincome, then the date activity beganin Pennsylvania would be the datethe shareholder or partner moved toPennsylvania.

LINE INSTRUCTIONS

PAGE 1 - PART 1Total Taxable Business Income(Loss) from Operations EverywhereIn Part I, report the entity’s income(loss) from all business operations fromall sources within and from outsidePennsylvania.

LINE 1aTaxable Business Income (Loss)from Operations EverywhereEnter the calculation from PA-20S/PA-65Schedule M for the total amount of tax-able income (loss) from its own sepa-rate operation of a business, professionor farm from the books and records ofthe entity.

This is the entity’s total business income(loss) from all of its operations every-where. Do not include income (loss)received as an owner from other entitiesproviding PA-20S/PA-65 Schedules RK-1or federal Schedules K-1 on Line 1a.Report only the income (loss) from anentity’s own operations from all loca-tions inside Pennsylvania and outsidePennsylvania. If a negative amount, fillin the “loss” oval.

LINE 1bShare of Business Income (Loss)from All Other EntitiesEnter the share of net profit (loss) thatthe entity receives as a partner orshareholder (owner). Also complete thePA-20S/PA-65 Information Return, PartIX on Page 3. If a negative amount, fillin the “loss” oval.

If the entity completing the PA-20S/PA-65 Information Return received a PA-20S/PA-65 Schedule RK-1 from anotherentity in which it is a shareholder orpartner (owner), this PA-20S/PA-65Schedule RK-1 already has the classified

income (loss) amount for completingPA-20S/PA-65 Information Return.

On Line 1b, enter the business income(loss) received as an owner from allother entities reported on the PA-20S/PA-65 Schedules RK-1, Line 1.

LINE 1cTotal Income (Loss)Add Line 1a and Line 1b. Include losseswhen determining Line 1c. If Line 1c isa negative, fill in the “loss” oval.

LINE 1dPreviously Disallowed CorporateNet Income (CNI) DeductionsPA S Corporations OnlyEnter the total amount of previouslydisallowed corporate net income deduc-tions on this line.

The department allows any deductionthat it disallowed when the corporationwas subject to Pennsylvania corporatenet income tax as an additional deduc-tion while the corporation is in a PA Scorporation status, except a net losscarry forward deduction.

Pennsylvania limits the additional deduc-tion to the same extent and in the samemanner that the additional deductionwould have been allowed had the corpo-ration remained subject to Pennsylvaniacorporate net income tax.

Any previously disallowed Pennsylvaniacorporate net income deduction shall beseparately determined and must betaken against net profits from a business,profession or farm. Resident sharehold-ers are allowed the full amount of anypreviously disallowed Pennsylvaniacorporate net income deduction.

Nonresident shareholders are allowedonly a previously disallowed Pennsylva-nia corporate net income deduction tothe extent that the deduction wouldhave been considered a deductionagainst income from sources withinPennsylvania in the year disallowed.

Submit a separate statement for eachdeduction indicating the basis for eachclaimed deduction and the year in whichthe deduction was disallowed. Use theearliest previously disallowed Pennsyl-vania corporate net income deductionfirst.


Disallowed Accelerated Depreciationon Tax Preference ItemsPennsylvania allows accelerated depre-ciation of tax preference items thatwere disallowed when the corporationwas subject to Pennsylvania corporatenet income tax as an additional deduc-tion, to the extent and amount allowedhad the corporation remained subject toPennsylvania corporate net income tax.For further information, refer to thedepartment’s regulations in Title 61 PACode § 153.14.

LINE 1eTotal Adjusted BusinessIncome (Loss)Subtract Line 1d from Line 1c. Includelosses when determining Line 1e. If anegative amount, fill in the “loss” oval.

PAGE 1 - PART IIApportioned/Allocated PA-TaxableBusiness Income (Loss)In Part II, an entity that has businessoperations within and outside Pennsyl-vania must allocate or apportion itsincome (loss), costs, expenses andliabilities if it has an owner that is:

● A nonresident individual;

● A resident or nonresident estate ortrust;

● A PA S corporation; or

● A partnership

Note. If the entity’s opera-tions are entirely within

Pennsylvania, the amounts in Part Iwill be the same as the amounts inPart II, PA source Column. Part II,Outside PA Column, will have allzero amounts.

When an entity operates a businessthat is neither wholly within norwholly outside Pennsylvania and isrequired to allocate or apportionits income (loss), it allocates byseparate accounting if both of thefollowing conditions are met:

● The business operations withinPennsylvania and the business op-erations outside Pennsylvania con-stitute independent profit centers.

This means there are no transfersof finished or partly finished goods,raw materials, supplies, services, oroperational assets interspersed;each center is free to buy outside;and because of geographical loca-tion, no center is in direct competi-tion with another; and

● The entity retains its books so thatthe amounts of revenues, costs,and expenses attributable to Penn-sylvania operations can be properlydisclosed.

For more information on the appor-tionment and allocation of incomefrom a business carried on partlywithin and partly outside, Pennsyl-vania, refer to Title 61 PA Code, §109.5.

If the entity must apportion income,submit a completed PA-20S/PA-65Schedule H, Apportioning Incomefrom a Business, Profession or Farmderived from sources both withinand outside Pennsylvania. Pleasereview the PA-20S/PA-65 ScheduleH instructions on the department’swebsite.

Note. For reporting income(loss) from another entity on

Lines 1b, 2b and 2f, the Pennsylvaniaentity needs both a PA-20S/PA-65Schedule RK-1 and NRK-1 so it canpass through Pennsylvania-sourceamounts and amounts from sourcesoutside Pennsylvania to its owners.

If the other entity is not a PA Scorporation, partnership or entityformed as a limited liability companythat is classified as a partnership orS corporation for federal income taxpurposes, a supplemental statementmust be provided by the other entitythat shows Pennsylvania-sourceamounts in the same class in whichthe other entity received the income.

LINE 2a

Net Business Income (Loss)Outside PA ColumnSubtract Line 2e in Part II from Line 1ain Part I. Enter the difference. If a neg-ative amount, fill in the “loss” oval.

LINE 2bShare of Business Income (Loss)from Other EntitiesOutside PA ColumnSubtract Line 2f in Part II from Line 1bin Part 1. Enter the difference. If a neg-ative amount, fill in the “loss” oval.

If the entity completing the PA-20S/PA-65 Information Return received a PA-20S/PA-65 Schedule RK-1 and/or NRK-1from another entity in which it is anowner, it already has the classifiedincome (loss) amount for completingthe PA-20S/PA-65 Information Return.

If the entity completing this PA-20S/PA-65 Information Return received a federalSchedule K-1 from another entity, inwhich it is an owner, it should request aPA-20S/PA-65 Schedule RK-1 and/orNRK-1 from the entity because thefederal Schedule K-1 does not classifyincome for Pennsylvania personal incometax purposes.

LINE 2cPreviously Disallowed PA-SourceCorporate Net Income DeductionsOutside PA ColumnPA S Corporations OnlySubtract Line 2g in Part II from Line 1din Part I. Enter the difference.

LINE 2dCalculate Adjusted/ApportionedNet Business Income (Loss)Outside PA ColumnAdd Line 2a and Line 2b and thensubtract Line 2c. Enter the difference.Include losses when determining Line2d. If a negative amount, fill in the“loss” oval.

LINE 2eNet Business Income (Loss)PA-Source ColumnIf the entity has operations insideand outside of Pennsylvania, enter theapportioned income (loss) from PA-20S/PA-65 Schedule H, Line 7. If theentity only has operations inside Penn-sylvania, enter the allocated income(loss) from its PA-20S/PA-65 Schedule M,Part B, Section G, Line 1. If a negativeamount, fill in the “loss” oval.


LINE 2fShare of Business Income (Loss)from Other EntitiesPA-Source ColumnEnter the sum of Line 1 of all the PA-20S/PA-65 Schedules NRK-1 received.If a negative amount, fill in the “loss”oval.If the entity completing the PA-20S/PA-65 Information Return received a PA-20S/PA-65 Schedule NRK-1 from anotherentity in which it is an owner, this PA-20S/PA-65 Schedule NRK-1 already hasthe classified income (loss) amount forcompleting PA-20S/PA-65 InformationReturn.If the entity completing the PA-20S/PA-65 Information Return received a federalSchedule K-1 from another entity inwhich it is an owner, it should request aPA-20S/PA-65 Schedule RK-1 and/orNRK-1 from the entity because thefederal Schedule K-1 does not classifyincome for Pennsylvania personal incometax purposes.

LINE 2gPreviously Disallowed PA-SourceCorporate Net Income Deductions PA-Source ColumnPA S Corporations OnlyMultiply Line 1d by the applicable appor-tionment figure(s) from the RCT-101, PACorporate Tax Report, for the year(s) inwhich the deduction was disallowed.The corporation’s corporate net incomethree-factor apportionment decimal forthe year in which the deduction was dis-allowed may be used. Enter the result.

LINE 2hCalculate Adjusted/ApportionedNet Business Income (Loss)PA-Source ColumnAdd Line 2e and Line 2f and then sub-tract Line 2g. Include losses when deter-mining Line 2h. If a negative amount, fillin the “loss” oval.

PAGE 1 - PART IIIAllocated Other PA PIT Income(Loss)In Part III, the entity must allocate allother income (loss) to Pennsylvania-

source and outside Pennsylvania. If allowners are full-year nonresident indi-viduals, zero amounts must be shownin Part III on Lines 3, 4.

LINE 3Interest Income fromPA Schedule APA-SourceEnter the amount from PA-20S/PA-65Schedule A, Line 8. This is the totalamount of interest income earned bythe entity.

The entity must report on Line 3 anyamount it received for the use of itsmoney that it does not include in an-other income class. Do not report onLine 3 interest from obligations that arestatutorily free from Pennsylvania tax.

Include in Line 1a, not Line 3,interest from assets to generate

working capital and interest used inoperating commercial activities (gener-ally from current assets) when deter-mining net profit (loss).

LINE 4Dividend Income fromPA Schedule BPA-SourceEnter amount from PA-20S/PA-65Schedule B, Line 9.

Dividend income is any distribution tothe entity of cash or property from theaccumulated earnings and profits orcurrent earnings and profits of a corpo-ration, association, or business trust.

Include in Line 1a, not Line 4,dividend income from assets to

generate working capital and dividendincome that the entity used in operatingits commercial activities (generally cur-rent assets) when determining its netprofit (loss).

LINE 5Net Gain (Loss) fromPA Schedule DPA-Source ColumnA PA-20S/PA-65 Schedule D must becompleted for any net gain (loss) income.

These figures represent net gains or netincome, less net losses, derived from

the sale, exchange or disposition ofproperty including real or personal,whether tangible or intangible, as de-termined in accepted accounting princi-ples and practices per 72 P.S. Section7303(a)(3).

LINE 5aNet Gain (Loss) from PA Schedule DOutside PA ColumnIf the entity disposed of property locatedoutside Pennsylvania, complete PA-20S/PA-65 Schedule D-III and Schedule D-IV.Enter the amount from PA-20S/PA-65Schedule D-III, Line 16. If a negativeamount, fill in the “loss” oval.

LINE 5bNet Gain (Loss) from PA Schedule DPA-Source ColumnIf the entity disposed of property locatedinside Pennsylvania from information onits books and records complete PA-20S/PA-65 Schedule D-I and Schedule D-II.Enter the amount from PA-20S/PA-65Schedule D-I, Line 16. If a negativeamount, fill in the “loss” oval.

Important. Include the sales,exchanges or dispositions of

inventories and/or stock-in-trade indetermining net business income (loss).

LINE 6Rent/Royalty Net Income (Loss)from PA Schedule M, Part BNet RentNet rents and royalties from real and tan-gible personal property located in Penn-sylvania are allocable to Pennsylvania.Net RoyaltiesPatent, copyright and other intangibleroyalties are allocable to Pennsylvaniato the extent that the payer of suchincome uses the patent or copyright inPennsylvania.

A business uses a patent in Pennsylvaniato the extent that it employs the patentin the production, fabrication, manufac-turing, or other processing in Pennsylva-nia, or to the extent that it produces apatented product in Pennsylvania.

A business uses a copyright in Penn-sylvania to the extent that it prints orotherwise publishes in Pennsylvania.


LINE 6aRent/Royalty Net Income (Loss)from PA Schedule M, Part BOutside PA ColumnComplete and submit a PA-20S/PA-65Schedule E. The PA-20S/PA-65 Sched-ule E should reflect what is reported onfederal Form 8825, Rental Real EstateIncome and Expenses of a Partnershipor S Corporation.

Complete PA-20S/PA-65 Schedule M,Part B to reflect your Pennsylvania ad-justments. From PA-20S/PA-65 Sched-ule M, Part B, Section G, enter thedifference of Line 2 minus Line 1. If anegative amount, fill in the “loss” oval.

LINE 6bRent/Royalty Net Income (Loss)from PA Schedule M, Part BPA-Source ColumnComplete and submit a PA-20S/PA-65Schedule E. PA-20S/PA-65 Schedule Eshould reflect what is reported on federalForm 8825, Rental Real Estate Incomeand Expenses of a Partnership or SCorporation.

Complete PA-20S/PA-65 Schedule M,Part B to reflect your Pennsylvaniaadjustments. Enter the amount fromPA-20S/PA-65 Schedule M, Part B, Sec-tion G, Line 1. If a negative amount, fillin the “loss” oval.

LINE 7aEstates or Trusts fromPA Schedule JOutside PA ColumnComplete and submit the PA-20S/PA-65Schedule J. If the entity is a beneficiaryof an estate or trust, enter the total fig-ure from the PA-20S/PA-65 Schedule J,Column (d) minus the total figure fromPA-20S/PA-65 Schedule J, Column (c).

LINE 7bEstates or Trusts fromPA-20S/PA-65 Schedule JPA-Source ColumnComplete and submit PA-20S/PA-65Schedule J. If the entity is a beneficiaryof an estate or trust, enter the total fig-ure from the PA-20S/PA-65 Schedule J,Column (c).

LINE 8Gambling and Lottery Winnings(Loss) from PA Schedule TComplete and submit PA-20S/PA-65Schedule T. The entity must enter anywinnings it realizes from gambling orlotteries other than the PennsylvaniaLottery. It may not deduct any ex-penses related to realizing such income.However, it can offset winnings andlosses within this income class. Submitwith Schedule T a detailed statement/explanation of any amount reported,including information such as the sourceof winnings, specific amounts, etc.

LINE 8aGambling and Lottery Winnings(Loss) from PA Schedule T OutsidePA ColumnEnter the total figure from the PA-20S/PA-65 Schedule T, Column (b) minusthe total figure from PA-20S/PA-65Schedule T, Column (a). If a negativeamount, fill in the “loss” oval.

LINE 8bGambling and Lottery Winnings(Loss) from PA-20S/PA-65Schedule TPA-Source ColumnEnter the total figure from the PA-20S/PA-65 Schedule T, Column (a). If a neg-ative amount, fill in the “loss” oval.

LINE 9Total Other PA PIT Income (Loss)PA-Source ColumnIf all owners are full year residents, acombination of Pennsylvania residentsand nonresidents; or a part-year resi-dent, then Line 9 equals the sum ofLines 3, 4, 5a, 5b, 6a, 6b, 7a, 7b, 8aand 8b. Include losses.

If all owners are full-year nonresidentindividuals, then Line 9 equals the sumof Lines 5b, 6b, 7b and 8b. Includelosses. If a negative amount, fill in the“loss” oval.

When determining income (loss)distributable to their owners for

each class of income, the entity doesnot use Line 9 because the income(loss) is reflected in Line 9.

The figure on Line 9 is a sum of totalother income used in calculating accu-mulated adjustments account and thetotal in Part IV.

SummaryBelow are cross references for residentand nonresident partners and share-holders (owners) for Parts I, II, III fromthe PA-20S/PA-65 Information Returnand the line entries on the PA-20S/PA-65Schedule(s) RK-1 or NRK-1.

Resident Partners and Shareholders(Owners)Business IncomePA-20S/PA-65 Schedule RK-1Part I, Line 1e RK-1, Line 1

Interest IncomePA-20S/PA-65 Schedule RK-1Part III, Line 3 RK-1, Line 2

Dividend IncomePA-20S/PA-65 Schedule RK-1Part III, Line 4 RK-1, Line 3

Net Gain (Loss) - Schedule DPA-20S/PA-65 Schedule RK-1Part III, Line 5a+5b RK-1, Line 4

Rent, Royalty, Net IncomePA-20S/PA-65 Schedule RK-1Part III, Line 6a RK-1, Line 5+ 6b

Estates or Trust IncomePA-20S/PA-65 Schedule RK-1Part III, Line 7a+7b RK-1, Line 6

Gambling and Lottery WinningsPA-20S/PA-65 Schedule RK-1Part III, Line 8a RK-1, Line 7+ 8b

Nonresident Partners and Share-holders (Owners)Business IncomePA-20S/PA-65 Schedule NRK-1Part II, Line 2h NRK-1, Line 1

Net Gain (Loss) - Schedule DPA-20S/PA-65 Schedule NRK-1Schedule D, Part I NRK-1, Line 2Line 18

Rent, Royalty, Net IncomePA-20S/PA-65 Schedule NRK-1Part III, Line 6b (Loss) NRK-1, Line 3

Estates or Trust IncomePA-20S/PA-65 Schedule NRK-1Part III, Line 7b NRK-1, Line 4


Gambling and Lottery WinningsPA-20S/PA-65 Schedule NRK-1Part III, Line 8b NRK-1, Line 5

PAGE 2 - PART IV

Total PA S Corporation or Partner-ship Income (Loss)In Part IV, the entity calculates the dif-ference between its book income (loss)and the income (loss) it reports on thePA-20S/PA-65 Information Return. Theamounts reported to Pennsylvania differfrom the federal reportable income(loss).

LINE 10

Total Income (Loss) per Books andRecordsThe entity uses book income to arriveat this figure. This figure (book income)would not take into account any federalor Pennsylvania tax adjustments. Thisfigure is not Pennsylvania income afteradjustments.

Enter the total entity income (loss) fromits underlying Pennsylvania books andrecords for the taxable year. If a nega-tive amount, fill in the “loss” oval.

Interest and gains that the entity derivesfrom government obligations, exemptfrom Pennsylvania personal income tax,do not pass through to its owners astaxable.

Conversely, the entity cannot use losseson Pennsylvania personal income tax-exempt obligations to offset taxableincome.

In addition, the entity must include suchincome (loss) on Line 10 as the Penn-sylvania-exempt income (loss) affectseach owner’s basis. Accordingly, theentity passes through to each owner itspro rata share of the Pennsylvania-exempt income (loss).

LINE 11

Total Reportable Income (Loss)If the entity has only full-year residentindividual owners or both full-year resi-dent and nonresident individual owners,add Line 1e and Line 9. If a negativeamount, fill in the “loss” oval.

If entity has only full-year nonresidentindividual owners, add Line 2h and Line9. If a negative amount, fill in the “loss”oval.

LINE 12

Total Nontaxable/Non ReportableIncome (Loss)This amount represents the differencebetween book income and Pennsylva-nia-reportable income (loss). SubtractLine 11 from Line 10 (include losses). Ifa negative amount, fill in the “loss”oval.

PAGE 2 - PART V

Pass Through CreditsIn Part V, the entity is required to identifypass through credits that it reports onthe PA-20S/PA-65 Information Return.

LINE 13a

Total Other Credits. Submit PA 20S/PA-65 Schedule OCEnter amount from Schedule OC, Line17. The entity is required to submit thePA-20S/PA-65 Schedule OC detailing allcredits.

LINE 13b

Resident CreditThis figure is based on composite returnsfiled in other states on behalf of theindividual owners. This is an individualtax credit. Submit a copy of the out-of-state or foreign composite returns.

If the foreign tax return is not available,the taxpayer must submit a copy of thefederal Form 1116, Foreign Tax Credit,plus a copy of the statement showingthe amount of foreign income and anytaxes withheld at the source. Even if thetaxpayer does not claim the credit onthe federal tax return, the departmentwants the federal schedule. The depart-ment does not have a Pennsylvaniaschedule for this specific situation.

Certain PA S corporations are not taxedas S corporations in other states orcountries. Report taxes paid in thoseother states or countries on PA-20S/PA-65 Schedule OC, Line 5.

LINE 14aPennsylvania 2013 Quarterly TaxWithholding Payments/ExtensionPayment for Nonresident OwnersEnter the amount from PA-20S/PA-65Schedule NW, Line B. The amount onLine 14a will include an extension pay-ment (if one was made) as listed andreported on PA-20S/PA-65 ScheduleNW, Line B.

LINE 14bFinal Payment of NonresidentWithholding TaxEnter the amount from PA-20S/PA-65Schedule NW, Line C. See How To Pay.

LINE 14cTotal Pennsylvania Income TaxWithheldAdd Line 14a and Line 14b. Enter thetotal here.

International ACH TransactionsThe Federal Office of Foreign AssetsControl has imposed additional reportingrequirements on all electronic bankingtransactions that directly involve a finan-cial institution outside of the territorialjurisdiction of the U.S. These transac-tions are called international ACH trans-actions (IAT). Presently, the PennsylvaniaDepartment of Revenue does not sup-port IAT ACH debit transactions. Tax-payers who instruct the department toprocess electronic banking transactionson their behalf are certifying that thetransactions do not directly involve afinancial institution outside of the terri-torial jurisdiction of the U.S. at any pointin the process.

PAGE 2 - PART VIDistributions for PartnershipsOn Lines 15 through 18, list all distribu-tions and guaranteed payments madeto partners during the taxable year.

LINE 15Distributions of Cash, MarketableSecurities, and Property (Do notinclude guaranteed payments.)Distributions that the partnership makesthat represent cash, marketable securi-


ties, and other property that are notguaranteed payments may representPennsylvania-taxable income to theextent the distributions exceed theresident partner’s outside basis.Non-liquidating Distributions fromPartnership to PartnerWith respect to non-liquidating distribu-tions from a partnership to a residentpartner, the partner’s adjusted basis inits partnership interest is decreased tothe extent of the partnership’s Pennsyl-vania personal income tax adjustedbasis in the property distributed to thepartner.In non-liquidating distributions, a resi-dent partner will recognize taxable in-come to the extent that the partnership’sadjusted basis in the property distrib-uted exceeds the resident partner’sadjusted basis in its partnership interest.Although not taxable to a nonresidentpartner, the nonresident partner reduceshis or her economic investment by thepartnership’s adjusted basis in theproperty distributed.Liquidating Distributions fromPartnership to PartnerWith respect to liquidating distributionsfrom a partnership to a resident partner,the partner’s adjusted basis in its part-nership interest is decreased to theextent of the fair market value of theproperty distributed to the partner.In liquidating distributions, a residentpartner will recognize taxable gain onPA-40 Schedule D to the extent that thefair market value of the property distrib-uted exceeds the resident partner’s ad-justed basis in its partnership interest.

LINE 16Guaranteed Payments for Capitalor Other ServicesEnter the total guaranteed payments forcapital or other services made to thepartners.Pennsylvania personal income tax lawcharacterizes such distributions as:

● A withdrawal proportionately fromthe capital of all partners;

● A gain from the disposition of therecipient’s partnership interest anda loss from the disposition of theother partners’ partnership inter-ests, to the extent derived from thecapital of the other partners; and

● A return of capital by the residentrecipients to the extent derivedfrom their own capital. The distri-butions that the partnership makesthat represent repayments of thepartner’s own capital are notincome for Pennsylvania personalincome tax purposes.

Important. Pennsylvaniapersonal income tax law

does not allow a deduction forguaranteed payments for capital orif services have not been rendered.

LINE 17All Other Guaranteed Payments forServices RenderedEnter the total guaranteed payments topartners to the extent that the partner-ship makes guaranteed payments forservices rendered directly in the produc-tion of income for a Pennsylvania incomeclass.

The partnership characterizes guaran-teed payments to partners in the follow-ing manner:

● to the extent paid for services ren-dered directly in the production ofincome from a business, profes-sion, or farm, the guaranteed pay-ments are gross income from thatincome class; and

● to the extent paid for services ren-dered directly in the production ofrental or royalty income, the guar-anteed payments are gross incomefrom that income class.

If guaranteed payments havebeen deducted in calculating

business income, include thesepayments on Line 17.

LINE 18Guaranteed Payments to RetiredPartnersGuaranteed payments to retired part-ners are not taxable if the exception asstated in IRC §1402(a) (10) is met.Only nontaxable amounts should bereported on Line 18. For further detail,refer to the Pennsylvania PersonalIncome Tax Guide, Chapter 16.

Important. Pennsylvania doesnot allow a deduction for guaran-

teed payments for the use of capital, or

if services have not been rendered.Each recipient partner reports its classi-fied income (loss) in each class by addingits guaranteed payments to the amountsin their PA-20S/PA-65 Schedule(s) RK-1and/or NRK-1, Part IV.

LINE 19Distributions from PA AccumulatedAdjustments AccountGenerally, distributions from the Pennsyl-vania accumulated adjustments account(AAA) are not taxable to the extent ofthe resident shareholder’s basis. Theresident shareholder will recognize tax-able income to the extent that thePennsylvania AAA distribution exceedsthe shareholder’s basis in its stock.

Distributions for PA S CorporationsOn Lines 19 and 20, list all distributionsmade to shareholders during the tax-able year.

A distribution that a PA S corporationmakes from its Pennsylvania accumu-lated earnings and profits before be-coming a PA S corporation is dividendincome to its resident shareholders.Other distributions can represent a non-taxable return of the resident share-holders’ stock basis.

Nontaxable return of basis distributionwill reduce each resident shareholder’sbasis in the stock first. If the non-tax-able return of distribution exceeds theshareholder’s basis in its stock holdings,the shareholder can apply the excessagainst the basis of any indebtedness ofthe PA S corporation to that share-holder. If the distribution exceeds theshareholder’s basis in the stock and thePA S corporation’s indebtedness, theresident shareholder must report a gainfrom the disposition of property.

If the PA S corporation distributes appre-ciated property, it must treat the distri-bution as if it sold the property to theshareholders at fair market value. Sucha distribution will produce a gain fromthe sale of property that the PA S cor-poration will have to report as net gain(loss) from the sale, exchange or dispo-sition of property.

Distributions out of C corporationaccumulated earnings and profits

are reported as dividends on PA-20S/PA-65 Schedule B, Line 5.


Although not taxable to a nonresidentshareholder, the nonresident share-holder reduces its economic investmentby the fair market value of the propertydistributed.A nonresident cannot deduct losses inexcess of its economic investment inthe PA S corporation.

Important. When distributionsare determined from all income

sources and the shareholders are onlyfull-year nonresident individual owners,the Pennsylvania AAA distribution shouldbe factored by the PA-20S/PA-65Schedule H percentage to prevent pre-mature depletion of the PennsylvaniaAAA balance, which may trigger a pos-sible tax event.

LINE 20Distributions of Cash, MarketableSecurities, and PropertyDistributions by the PA S corporationfrom its C corporation earnings andprofits are Pennsylvania-taxable divi-dends. Include such Pennsylvania-tax-able dividends on each shareholder’sPA-20S/PA-65 Schedule RK-1, Line 3.Distributions of cash, marketable secu-rities and property (other than divi-dends) in excess of the shareholder’sPennsylvania AAA are considered a tax-free return of investment to the extentof the resident shareholder’s basis in itsstock. The resident shareholder will rec-ognize taxable income to the extentthat the fair market value of such dis-tribution exceeds the resident share-holder’s basis in its stock.Although not taxable to a nonresidentshareholder, the nonresident share-holder reduces its economic investmentby the fair market value of the propertydistributed.

PAGE 2 - PART VIIOther InformationThis section asks a series of questionssimilar to federal Schedule B. The ques-tions should be answered with a “Yes”or “No.” If the entity answered yes,supplemental statements must besubmitted.

LINE 1The entity must answer “Yes” to Question1 if during the tax year:

● It owned an interest in anotherpartnership, foreign (located outsidethe U.S.) or domestic; or

● It was the tax owner of a foreignentity, located outside the U.S. thatwas disregarded as an entity sepa-rate from its owner under federalTreasury Regulations Sections301.7701-2 and 301.7701-3. Thetax owner of a foreign entitylocated outside the U.S. that wasdisregarded as an entity is treatedas owning the assets and liabilitiesof the foreign disregarded entitylocated outside the U.S. for purposesof U.S. income tax law.The statement must show eachentity’s name, federal employeridentification number (if any), andthe country under whose laws theentity was organized if the entitydirectly or indirectly owned at leasta 10 percent interest in any otherforeign (located outside the U.S.)or domestic partnership.

LINE 2The entity must answer “Yes” if there areany tax-exempt partners/members/shareholders and select tax-exempt asthe owner type on the PA-20S/PA-65Schedule RK-1 and/or NRK-1.

LINE 3The entity must answer “Yes” and submita statement indicating entity andforeign location if the partnership, Scorporation or limited liability companyclassified as a partnership or PA Scorporation had any owners locatedoutside the U.S. at any time during thetax year.

LINE 4The entity must answer “Yes” if therewas a distribution of property or atransfer (e.g., by sale or death) of apartner/member interest during the taxyear (partnership only). If the entityanswered yes, submit a statementindicating the disposing partner, theacquiring partner and the amount paidfor the interest.

LINE 5The entity must answer “Yes” if the fed-eral government changed taxable in-

come as originally reported for any priortax year for which amended returnshave not been filed in Pennsylvania. Ifthe entity answered yes, submit astatement indicating tax year and in-clude a copy of the Revenue Agent’s Re-port.If required, the entity must file anamended return within 30 days of theadjustment.

LINE 6The entity must answer “Yes” if either 1or 2 of the following apply to the part-nership.1. At any time during the tax year,

the entity had signature or otherauthority over a bank account,securities account, or other financialaccount in a foreign country (out-side the U.S.); and● The combined value of the

accounts was more than $10,000at any time during the calendaryear; and

● The accounts were not with aU.S. financial institution.

2. The entity owns more than 50 per-cent of any partnership or 50 per-cent of the stock in any corporationthat would answer the question“Yes” based on item 1 above.If the entity answered yes:● Submit a statement with the

name of the foreign country/countries; and

● Submit a copy of federal Form TDF 90-22.1 that was filed with theDepartment of the Treasury.

LINE 7The entity must answer “Yes” if it isinvolved in a reportable transaction,listed transaction, or registered taxshelter within this return.Federal Form 8886, Reportable Transac-tion Disclosure Statement, must besubmitted with any return on which adeduction, loss, credit or any other taxbenefit is claimed or is reported; or anyincome the partnership reported froman interest in a registration-required taxshelter. If the partnership is required tofile this form with the federal return,submit a copy with the partnership’sPA-20S/PA-65 Information Return.


A reportable transaction is any transac-tion as defined in Treasury Regulation1.6011-4 and includes, but is not limitedto:

● A confidential transaction, which isoffered to an entity under conditionsof confidentiality and for which theentity has paid a minimum fee;

● A transaction with contractual pro-tections, which provides the entitywith the right to a full or partialrefund of fees if all or part of theintended tax consequences fromthe transaction are not sustained;

● A loss transaction under IRC § 165,which is at least $10 million in anyone year or $20 million in anycombination of tax years;

● A transaction with a significantbook-tax difference; and

● A transaction where the entity isclaiming a tax credit of greater than$250,000 and held the asset forless than 45 days.

A listed transaction is a specificreportable transaction, or one thatis substantially similar, which hasbeen identified by the IRS to be atax avoidance transaction.

A registered tax shelter is anyinvestment that must be registeredwith the Internal Revenue Serviceunder IRC § 6111.

LINE 8The entity must answer “Yes” if theentity filing as a partnership has otherpartnerships as partners.

LINE 9The entity must answer “Yes” if taxcredits were sold.

If the entity answered yes, submit astatement identifying the buyer, theSocial Security number or federalemployer identification number, thetype and amount of credit sold and thesales price.

LINE 10The entity must answer “Yes” if itchanged its method of accounting forfederal income tax purposes during thistax year.

Pennsylvania does not allow the four-year spread of the effect in accountingmethod change under IRC § 481. Theeffect of the change must be recognizedentirely in the year of the change.

LINE 11The entity must answer “Yes” if it enteredinto any like-kind exchanges under IRC§ 1031 for the current tax year.

If the entity answered yes, submitfederal Form 8824.

If Section 179 properties are involvedsubmit the information provided to theowners on their federal Schedules K-1.

LINE 12Enter the Pennsylvania-apportionmentdecimal from PA-20S/PA-65 ScheduleH-Corp used for calculating CNI tax. Ifusing special apportionment, enter thatdecimal here.

PAGE 3 - PART VIIIAccumulated Adjustments Accountand Accumulated Earnings andProfits

PA S Corporations OnlyThe Pennsylvania accumulated adjust-ments account (AAA) should not equalthe federal AAA, because PennsylvaniaAAA is based on Pennsylvania taxprinciples; however, Pennsylvaniaparallels certain federal calculation rulesin arriving at Pennsylvania AAA, such asthe following:

● The Pennsylvania AAA is based uponthe Pennsylvania personal incometax income (loss) and distributions.

● The PA S corporation’s AAA reflectsonly the income (loss) and distribu-tion from the inception of the elec-tion of PA S corporation status.

● The PA S corporation does not makean adjustment for any income (loss)that is not enumerated in Pennsyl-vania personal income tax law orany non-deductible Pennsylvaniapersonal income tax expense.

Example. For Pennsylvania personalincome tax purposes, tax-exemptincome is not added to income subjectto Pennsylvania personal income tax.

Important. The AE&P column isfor former C corporations only. If

an entity has been an S corporationfrom inception, this column will alwaysbe zero.

LINE 1Balance at the Beginning of theTaxable YearFor the corporation’s first tax year as aPA S corporation, enter zero. In subse-quent years, enter the ending balancefrom the prior year’s account. If a neg-ative amount, fill in the “loss” oval.

Note. If an S corporation had noprior earnings in Pennsylvania,

the beginning AAA would be zero.

LINE 2Total Reportable Income from PartIV, Line 11Enter the total Pennsylvania-reportableincome from the PA-20S/PA-65 Infor-mation Return, Part IV, Line 11.

Do not enter a loss from Part IV, Line11 on this line.

LINE 3Other Additions - Submit an Item-ized StatementEnter other additions to the PennsylvaniaAAA. Do not enter non-taxable income.Submit an itemized statement of theadditions reported on this line.

Example. If an S corporation acquiredanother S corporation, the AAA in theacquired S corporation would be includedin this line. The itemized statement mustinclude the name(s) of the S corporationpurchased and federal employer identi-fication number(s).

LINE 4Loss from Part IV, Line 11Enter the loss from Part IV, Line 11 ofthe PA-20S/PA-65 Information Return.

LINE 5Other Reductions - Submit an Item-ized StatementEnter other reductions to the Pennsyl-vania AAA. Do not enter Pennsylvanianon-deductible expenses associated


with non-taxable income. Submit anitemized statement of the reductionsreported on this line.

Example. If an S corporation acquiredanother S corporation, the negativeAAA in the acquired S corporation wouldbe included in this line. The itemizedstatement must include the name(s) ofthe S corporation purchased and federalemployer identification number(s).

LINE 6

Sum of Lines 1 through 5Enter the sum of Line 1 through Line 5.If a negative amount, fill in the “loss”oval.

LINE 7

DistributionsEnter all distributions other than dividenddistributions. Dividend distributions arenot part of the Pennsylvania AAA.

Important. When distributionsare determined from all income

sources and the shareholders are onlyfull-year nonresident individual owners,the Pennsylvania AAA distribution shouldbe factored by the PA-20S/PA-65 Sched-ule H percentage to prevent prematuredepletion of the Pennsylvania AAAbalance, which may trigger a possibletax event.

LINE 8

Balance at Taxable Year-EndSubtract Line 7 from Line 6. Enter thetotal. If a negative amount, fill in the“loss” oval.

If a PA S corporation reverts to being acorporation subject to corporate netincome tax, it may distribute the balanceof its Pennsylvania AAA to shareholdersas a non-taxable return of capital to theextent of basis. Such distributions, how-ever, will reduce the shareholder’s basisin the C corporation.

If the distributions exceed the residentshareholder’s basis in the stock of theformer PA S corporation, the sharehold-ers must report the distributions astaxable gains on the sale, exchange ordisposition of property to the extent ofPennsylvania AAA.

PAGE 3 - PART IXOwnership in Pass Through EntitiesIf the entity received income (loss) froman S corporation, partnership, estate ortrust, limited liability company or anyother pass through entity including aqualified subchapter S subsidiary (QSSS),list the federal employer identificationnumber and name and address of eachentity.If the income (loss) is from a qualifiedsubchapter S subsidiary, enter “yes” inthe qualified subchapter S subsidiarybox.The entity filing the PA-20S/PA-65Information Return would list in Part IXall entities in which it is a shareholder,member, partner or beneficiary.An S corporation can be a member,partner or beneficiary in a limited liabilitycompany, partnership, estate or trust,respectively. An S corporation cannotown another S corporation unless theother corporation is a qualified subchap-ter S subsidiary.A partnership can be a member, partneror beneficiary in a limited liabilitycompany, partnership, estate or trust,respectively. A partnership cannot be ashareholder in an S corporation.The entities listed in Part IX provide aSchedule RK-1 and NRK-1 to the entityfiling the PA-20S/PA-65 InformationReturn. However, a qualified subchapterS subsidiary does not issue a PA Sched-ule K-1.The entity must report the income fromPA Schedules RK-1 and NRK-1 in thesame class of income on the PA-20S/PA-65 Information Return.The entity reports pass through businessincome from PA Schedules RK-1 andNRK-1 on the PA-20S/PA-65 Informa-tion Return, Part I and II.Income from PA-20S/PA-65 ScheduleRK-1 less the amount reported on PA-20S/PA-65 Schedule NRK-1 is reportedin the Outside PA column and incomefrom PA-20S/PA-65 Schedule NRK-1 isreported in the PA Source column onthe PA-20S/PA-65 Information Return.

Note. If additional space isneeded, submit on a separate

statement. Do not submit additionalcopies of Page 3 from the PA-20S/PA-65Information Return.

PAGE 3 - PART X

WHO MUST SIGN

Paper-Filed ReturnsGeneral Partner, Principal Officer orAuthorized Individual Signatureand NameThe PA-20S/PA-65 Information Returnmust be signed and dated.

The entity has not filed a valid PA-20S/PA-65 Information Return unless itis properly signed. The individual signingthe return must be a general partner,principal officer or individual expresslyauthorized to sign.

The PA S corporation or partnershipofficial signing the return verifies bywritten declaration, under penalties ofperjury, that he or she personally hasexamined the PA-20S/PA-65 Informa-tion Return and its accompanyingschedules and to the best of his or herknowledge, PA-20S/PA-65 InformationReturn is true, correct and complete.

The PA S corporation or partnershipofficial that is responsible for signingthe PA-20S/PA-65 Information Returnmust sign it by hand; signature stampsor labels are not acceptable, and includehis or her title, date and daytime phonenumber.

The responsible official must submit allrequired schedules with the PA-20S/PA-65 Information Return, includingthe PA-20S/PA-65 Schedules RK-1 andNRK-1 for each owner.

Preparer’s Signature and NameA paid preparer may sign original oramended returns by rubber stamp,mechanical device, or computer softwareprogram. Pennsylvania follows federalguidelines for signature requirementsfor the preparer.

If a partner, shareholder or employee ofthe entity completes the PA-20S/PA-65Information Return, the paid preparer’sspace should remain blank. In additionanyone who prepares the PA-20S/PA-65Information Return but does not chargethe entity should not complete the paidpreparer section.

Anyone who prepares a PA-20S/PA-65Information Return for a fee or incidentto the performance of services for whichthe preparer charges a fee, e.g., an


attorney provides legal services for a feeand includes for free, the preparation ofthe PA-20S/PA-65 Information Return,must complete the required paid pre-parer information listed below:

● Print or type the paid preparer’sname in the space provided.

● Sign the return in the space providedfor the paid preparer’s signature.

● Fill in the other areas in the “PaidPreparer Use Only” section.

● Print or type the paid preparer’scompany or corporation name andfederal employer identificationnumber, if applicable.

● Print or type the paid preparer’sPreparer Tax Identification Number(PTIN). If you are a paid preparer,you must use a PTIN issued by theInternal Revenue Service (IRS) toidentify yourself in the paid pre-parer section of the tax return.

● Give a copy of the return to thetaxpayer.If someone prepares the return atno charge, the paid preparer’s areaneed not be completed.

Electronically Filed ReturnsAn electronic return must be signed bya general partner, principal officer orauthorized individual.

An electronic return must also be signedby the paid preparer, if applicable.

Two signature options are available:1. PA-8879-P, Pennsylvania e-File

Signature Authorization for PA SCorporation/Partnership InformationReturn (PA-20S/PA-65) – Directoryof Corporate Partners (PA-65 Corp);or

2. PA-8453-P, PA S Corporation/Part-nership Information Return (PA-20S/PA-65) – Directory of CorporatePartners (PA-65 Corp) Tax Declara-tion for a State e-File Return.

PA-8879-P FormThe federal self-select PIN option con-sists of two PINs, one for the taxpayerand one for the practitioner.

In order for the department to acceptthe federal self-select PIN as a signa-ture, software developers must display ajurat/disclosure statement (similar to thelanguage on the PA-8453-P and meetingthe requirements of 72 P.S. § 7333 and61 Pa. Code § 121.23) attached as Page3 to PA-8879-P.

Taxpayers and Electronic Return Origi-nators (ERO) must complete PA-8879-Pwhen using this method and consentingto electronic funds withdrawals.

The department requires the ERO toretain completed PA-8879-P forms forthree years after the due dates of thereturns or the dates the returns werefiled electronically, whichever is later. Donot mail these forms to the department.PA-8453-P FormIf a taxpayer elects not to use the federalself-select PIN option, or if the state sub-mission is filed as a state stand-alone(no link to an original federal submis-sion), the department requires the EROto retain completed PA-8453-P forms forthree years after date the returns werefiled electronically, whichever is later.

Do not mail these forms to the depart-ment. PA-8453-P must be completed andsigned by all appropriate parties beforethe return is transmitted electronically.

In the event the department selects anelectronic return for examination, theERO may be required to provide thePA-8879-P form and, if appropriate, thePA-8453-P form within five businessdays of the request. A percentage ofthese forms will be randomly requestedyearly for monitoring compliance.

pa s corporation/partnership information return · information return, pa-20s/pa-65. the department...

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