Arizona Schedule K-1(NR) Arizona Nonresident and Out-of-State Partner's Share of Income and Deductions

Schedule K-1(NR) Arizona Nonresident and Out-of-State Partner's Share of Income and Deductions
Arizona Form 165 Schedule K-1(NR)
Arizona Form

165 Schedule K-1(NR)

Arizona Nonresident and Out-of-State Partner’s
Share of Income and Deductions

2022

All corporate partners must use this schedule.
For the  calendar year 2022 or  fiscal year beginning M M D D 2 0 2 2 and ending M M D D 2 0 Y Y .
CHECK ONE:

 Original	  Amended

Partner’s Tax Identification Number

Partnership’s Employer Identification Number (EIN)

Partner’s Name

Partnership’s Name

Partner’s Address – number and street or rural route

Partnership’s Address – number and street or rural route

Partner’s City, Town or Post Office

Partnership’s City, Town or Post Office

State ZIP Code

State ZIP Code

Pass-Through Entity Election:
Did the partnership make the Pass-Through Entity (PTE) Election?

Yes No

If the partnership made the PTE Election, did this partner consent to that election?

Partner’s Percentage of:

Yes No

Beginning of Year

End of Year

Profit sharing................................................

%

%

Loss sharing.................................................

%

%

Ownership of capital.....................................
Type of partner (individual, trust, estate,
IRA, corporate, or partnership).....................

%

%

Part 1: Distributive Share Items From
federal Form 1065, Schedule K-1

(a)
Distributive
Share Amount

(b)
Arizona
Apportionment Ratio

(c)
Arizona
Source Income

1 Ordinary income (loss) from trade or
business activities.....................................................
2 Net income (loss) from rental real estate activities....
3 Net income (loss) from other rental activities............
4 Total: Add lines 1, 2, and 3.......................................
5 Interest......................................................................
6 Dividends...................................................................
7 Royalties....................................................................
8 Net short-term capital gain (loss)..............................
9 Net long-term capital gain (loss)................................
10 Guaranteed payments to partner..............................
11 Net IRC Section 1231 gain (loss)..............................
12 Other income (loss): include schedule.....................
13 IRC Section 179 expense..........................................
14 Other deductions: include schedule.........................

Part 2: Partner’s Distributive Share of
the Adjustment of Partnership Income
From federal to Arizona Basis

Line 21
Line 16
Line 17
Line 21
Line 20
Line 20
Line 20
Line 22
Line 21

(a)
Distributive
Share Amount

(b)
Arizona
Apportionment Ratio

(c)
Arizona
Source Income

15 Adjustment of partnership income from federal to
Arizona basis from Form 165, page 1, line 6.............
NOTE: Corporate partners see Form 120 or Form 120A instructions for information on reporting the amount from line 15.

ADOR 10345 (22)

Form 140NR Filers:
Enter the amount in
column (c) on:

Form 140NR Filers:
Enter the amount in
column (c) on:

Line 29 or 41

Name of Partnership (as shown on page 1)

Part 3

EIN

Net Capital Gain (Loss) From Investment in a Qualified Small Business – Information Schedule

If the partner’s federal Schedule K-1 (Form 1065) does not include any net capital gain (loss) from investment in a qualified small
business as determined by the Arizona Commerce Authority, the partnership is not required to complete Part 3.
(a)
Distributive Share Amount

Pro Rata Share Items
16 Net capital gain (loss) from investment in a
qualified small business.................................

Part 4

(b)
Arizona
Apportionment Ratio

(c)
Arizona
Source Income

16

Net Capital Gain (Loss) From the Exchange of Legal Tender – Information Schedule

If the partner’s federal Schedule K-1 (Form 1065) does not include any net capital gain (loss) from the exchange of legal tender, the
partnership is not required to complete Part 4.
(a)
Distributive Share Amount

Pro Rata Share Items

(b)
Arizona
Apportionment Ratio

(c)
Arizona
Source Income

17 Net capital gain (loss) from the exchange of
legal tender.....................................................

Part 5

17

Net Long-Term Capital Gain (Loss) Subtraction – Information Schedule

If the partner’s federal Schedule K-1 (Form 1065) includes capital gain (loss), complete lines 18 through 20. If the partner’s federal
Schedule K-1 (Form 1065) does not include any capital gain (loss), the partnership is not required to complete Part 5.
(a)
Distributive Share
Amount
Enter the total of the
amounts on page 1,
line 9, column (a), and
line 11, column (a).

Pro Rata Share Items
From federal Form 1065, Schedule K-1

(b)
Arizona
Source Income
Enter the total of the
amounts on page 1,
line 9, column (c), and
line 11, column (c).

(c)
Net long-term capital
gain (loss) included
in column (b) from
assets acquired before
January 1, 2012

(d)
Net long-term capital
gain (loss) included
in column (b) from
assets acquired after
December 31, 2011

18 Total net long-term capital gain (loss)............... 18

ADDITIONAL INFORMATION:
19 Net long-term capital gain (loss) from
investment in a qualified small business
(amount already included in line 18,
column (d))....................................................

19

20 Net long-term capital gain (loss) from the
exchange of legal tender (amount already
included in line 18, column (d)).....................

20

Part 6

Partner’s Share of the Partnership’s Pass-Through Entity Tax Credit

If the partner consented to the partnership’s election to be a Pass-Through Entity, complete Part 6. Otherwise, leave blank.
Partner’s Pro Rata Share of PTE Election

Partner’s Distributive Share

21 Partner’s pro-rata share of the PTE Tax Credit.
Individuals, enter this amount on Form 355, Part 1, line 1.
Estates and trusts, see the instructions for Form 141AZ, line 19, to claim this credit................................................. 21
22 Partner’s pro-rata share of the Arizona PTE Taxes paid in 2022 for taxable year 2022.
Individuals, add this amount back on Form 140NR, page 5, line K, or Form 140NR-SBI, line 24.
Estates and trusts, add this amount back on Form 141AZ, Schedule B, line B3........................................................ 22
23 Partner’s pro-rata share of comparable PTE Taxes from other states paid in 2022 for taxable year 2022.
Individuals, add this amount back on Form 140NR, page 5, line K, or Form 140NR-SBI, line 24.
Estates and trusts, add this amount back on Form 141AZ, Schedule B, line B3........................................................ 23

ADOR
10345 (22)
	

AZ Form 165, Schedule K-1(NR) (2022)

Print Form

Page 2 of 2

2021 Nonresident and Out-of-State Partner’s
Share of Adjustment to Partnership Income
Instructions for Partners
Part 1 - Distributive Share Items from Federal
Form 1065, Schedule K-1
Column (c) is your Arizona source income.
• If you are a nonresident individual, use the line numbers
on Schedule K-1(NR) to report the amounts in column
(c) on your Arizona Form 140NR.
• If you are a nonresident trust or nonresident estate, add
lines 4 through 16, column (c), and enter the total on
Arizona Form 141AZ, page 2, Schedule A.
If Arizona Form 165 Schedule K-1(NR) shows a loss, you
may only claim such losses on your Arizona nonresident
return to the extent:
• Those losses are included in:
o The federal adjusted gross income of an individual,
or,
o The federal taxable income of a trust or an estate.
• The loss is not considered to be a passive activity loss
for federal purposes. (If it is, the loss will be treated as
a passive activity loss for Arizona purposes.)
If the partnership passes through to you a passive activity
loss derived from Arizona sources:
• Do not begin the Arizona return with the amounts
shown in column (c) of Arizona Form 165 Schedule K1(NR).
• You must first determine if any portion of the loss has
been limited on your federal return due to federal
passive activity loss rules.
In addition:
• Only the amount of passive activity loss derived from
Arizona sources will be allowed on the Arizona return.
• Any portion of the passive activity loss not allowed on
the federal return due to passive activity loss limitations
will be limited on the Arizona return.
• That portion of the passive activity loss derived from
Arizona sources required to be carried forward for federal
purposes will be carried forward for Arizona purposes.
NOTE: The amount of Internal Revenue Code (IRC) § 179
expense deductible is limited to the Arizona portion of the
amount deducted on federal Form 1040, Schedule E.

Part 2 - Partner’s Distributive Share of the
Adjustment of Partnership Income from
Federal to Arizona Basis
Line 15
Nonresident Individuals, Estates and Trusts:
Line 15 reflects the amount of partnership income which
must be adjusted to determine the difference between
Internal Revenue Code § 702(a)(8) and Arizona Revised
Statutes § 43‑1401(2).

Arizona Form
165 Schedule K-1(NR)

If the amount on line 15, column (c) is a positive number:
• Individual partners, enter this amount as an “other
addition to income” on Arizona Form 140NR, line 29.
• Estates or trusts, enter this amount as an “other
addition” on Arizona Form 141AZ, page 2, line B3.
If the amount on line 15, column (c) is a negative number:
• Individual partners, enter this amount as an “other
subtraction from income” on Arizona Form 140NR, line 41.
• Estates or trusts, enter this amount as an “other
subtraction” on Arizona Form 141AZ, page 2, line B9.

Corporate partners:
•

•

If the amount on line 15 is positive, enter the amount
from line 15, column (a) on Schedule A, line A8 of
Form(s) 120 or 120A.
If the amount on line 15 is negative, enter the amount
from line 15, column (a) on Schedule B, line B10 of
Form(s) 120 or 120A.

Partnerships that are partners:
•

•

If the amount on line 15 is positive, enter
from line 15, column (a) on Schedule A,
Arizona Form 165.
If the amount on line 15 is negative, enter
from line 15, column (a) on Schedule B,
Arizona Form 165.

the amount
line A4 of
the amount
line B5 of

Part 3 - Net Capital Gain (Loss) from
Investment in a Qualified Small Business –
Information Schedule
Arizona allows individuals, estates and trusts a subtraction
from Arizona gross income for any net capital gain derived
from investment in a qualified small business if:
• The gain is included in:
o The individual’s federal adjusted gross income, or
o The federal taxable income of the estate or trust.
• The business in which the partnership invested is
determined to be a qualified small business by the
Arizona Commerce Authority.
Although the subtraction is only available to individuals,
estates and trusts, a partner that is a pass-through entity
(estate, partnership, S Corporation, or trust) will need this
information to calculate the subtraction for the estate or
trust, or to complete:
• Arizona Form 141AZ, Schedule K-1 or Schedule K1(NR), for each beneficiary;
• Arizona Form 120S, Schedule K-1 or Schedule K1(NR), for each shareholder; or,
• Arizona Form 165, Schedule K-1 or Schedule K-1(NR),
for each partner.

Line 16
The amount on line 16, column (c), is your share of net
capital gain (loss) from investment in a qualified small
business that is apportioned to Arizona. To determine if you
qualify to claim this subtraction from your Arizona tax
return, see the instructions for Arizona Form 140NR or
Arizona Form 141AZ.

Arizona Form 165 Schedule K-1(NR)

Part 4 - Net Capital Gain (Loss) from the
Exchange of Legal Tender - Information Schedule

For more information, see the instructions for Arizona Form
140PY or Arizona Form 141AZ.

For taxable years beginning from and after December 31,
2017, Arizona allows the exclusion from gross income the
amount of net capital gain (loss) derived from the exchange
of one kind of legal tender for another kind of legal tender.
(a) “Legal tender” means a medium of exchange, including
specie, that is authorized by the United States
Constitution or Congress for the payment of debts,
public charges, taxes and dues.
(b) “Specie” means coins having precious metal content.

Line 20
Line 20 is your share of the partnership’s net long-term
capital gain (loss) from the exchange of legal tender
that is included in the amount on line 18, column (d).
The amount on line 20 cannot be included in your
subtraction for any net long-term capital gain from the
exchange of legal tender from assets acquired after
December 31, 2011.

Worksheet for Long-Term Capital Gain Subtraction
for Assets Acquired After December 31, 2011
(Worksheet)

Line 17
The amount on line 17, column (c) is your share of net
capital gain (loss) from the exchange of legal tender that is
apportioned to Arizona.

To determine if you qualify to claim a subtraction from
income on your Arizona personal income tax return:
• Nonresident partner, complete the worksheet included
in the instructions for Arizona Form 140NR. Use only
the amount of Arizona-sourced, net long-term capital
gain (loss) entered on line 19, column (d), and line 20,
column (d) to figure the subtraction on the Worksheet
included in the instructions for Arizona Form 140NR
• Nonresident Estate or Trust partner, use only the
amount of Arizona-sourced, net long-term capital gain
(loss) entered on line 19, column (d), and line 20,
column (d) to complete the Worksheet included in the
instructions for Arizona Form 141AZ.
o If the net long-term capital gain (loss) in Part 4 and
Part 5 is distributed to the beneficiaries, the
Worksheet will assist the estate or trust in
completing the Net Long-Term Capital Gain
Subtraction – Information Schedule, on Arizona
Form 141AZ Schedule K-1, or Schedule K-1(NR)
for each beneficiary,
• Partnership or S Corporation partner, use only the
amount of Arizona-sourced, net long-term capital gain
(loss) entered on line 19 column (d), and line 20
column (d) to figure the subtraction on the Worksheet.
The Worksheet will assist the partnership or S
Corporation in completing the Net Long-Term Capital
Gain Subtraction – Information Schedule, on:
o Arizona Form 165 Schedule K-1 or Schedule K1(NR), for each partner, or
o Arizona Form 120S, Schedule K-1 or Schedule K1(NR) for each shareholder.
• C Corporation or Exempt Organization partner, this
subtraction is not allowed for a C Corporation or an
exempt organization. The information in Part 5 is
informational only and is not required to be reported by
the C Corporation or the exempt organization.

Part 5 - Net Long-Term Capital Gain
Subtraction – Information Schedule
Arizona allows a subtraction from Arizona gross income for
a percentage of any net long-term capital gain if:
• The gain arises from assets acquired after
December 31, 2011,
• The gain is included in:
o The individual taxpayer’s federal adjusted gross
income, or,
o The federal taxable income of the estate or trust.
In addition,
• Only include net long-term gains if you can verify the
asset was acquired after December 31, 2011.
• If you cannot verify the asset was acquired after
December 31, 2011, treat it as a capital gain asset
acquired before January 1, 2012.
• An asset acquired by gift or inheritance is considered
acquired on the date it was acquired by the gift-giver, or
the deceased.
Although the subtraction is only available to individuals,
estates and trusts, a partner that is a pass-through entity
(estate, partnership, S Corporation, or trust) will need this
information to:
• Calculate the subtraction for the estate or trust, or
• To complete:
o Arizona Form 141AZ, Schedule K-1, or
Schedule K-1(NR), for each beneficiary;
o Arizona Form 120S, Schedule K-1, or
Schedule K-1(NR), for each shareholder; or
o Arizona
Form 165, Schedule K-1, or
Schedule K-1(NR), for each partner.

Line 18
Line 18, column (d) is your share of net long-term capital
gain (loss) from assets acquired after December 31, 2011.

Line 19
Line 19 is your share of the partnership’s net long-term
capital gain from investment in a qualified small business
that is included in the amount on line 18, column (d). The
amount on line 19 cannot be included in your subtraction for
any net long-term capital gain from assets acquired after
December 31, 2011.

2