Minnesota Partner's Share of Income, Credits and Modifications

Partner's Share of Income, Credits and Modifications
2023 KPI, Partner's Share of Income, Credits and Modifications
*237211*

2023 KPI, Partner’s Share of Income, Credits
and Modifications
Partnership: Complete and provide Schedule KPI to each nonresident individual, estate or trust partner and any Minnesota individual, estate or trust partner who has adjustments
to income or credits, or all partners if the partnership is electing PTE tax. For corporate and partnership partners, use Schedule KPC instead.

Tax year beginning (MM/DD/YYYY)

	

/	

/

and ending (MM/DD/YYYY)

/	

Partner’s Federal ID or Social Security Number		

Partnership’s Federal ID Number 	

Partner’s Name			

Partnership’s Name	

Mailing Address			

Mailing Address

City 	

State	

Entity of Partner (check one box):

ZIP Code	

Individual	

City 	

Trust	

/

Amended KPI:

Partnership’s Minnesota ID

State	

ZIP Code

Estate	

%
Partner’s Distributive Share
Calculate lines 1-35 the same for all resident and nonresident partners. Calculate lines 36-52 for estate, trust, and nonresident individual partners only.
Round amounts to the nearest whole dollar.
Form M1 filers,
include on:
Individual, Estate and Trust Partners
	1	 Interest income from non-Minnesota state and municipal bonds . . . . . . . . . . . . . . . . . . . . . . . .  1

M1M, line 1

	2	State taxes deducted in arriving at partnership’s net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
	3	 Expenses deducted attributable to income not taxed by Minnesota
		 (other than interest or mutual fund dividends from U.S. bonds)  . . . . . . . . . . . . . . . . . . . . . . . .  3

M1MB, line 2

	4	 100% of partner’s distributive share of federal bonus depreciation  . . . . . . . . . . . . . . . . . . . . . .  4

M1MB, see line 1 inst

5	 Foreign-derived intangible income (FDII) deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

M1M, line 3

M1MB, line 3

6	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
	 7a	 Partner’s Pro rata gross profit from installment sales of pass-through
		
businesses (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7a
	 7b	 Partner’s pro rata installment sale income from pass-through . . . . . . . . . . . . . . . . . . . . . . . . . . .  7b
		
businesses (see instructions)
8	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

M1AR, line 1
M1AR, line 3 		

	 9	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
	 10	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
	 11	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
	12	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
	13	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
	14	 Interest from U.S. government bond obligations, minus any expenses
	 deducted on the federal return that are attributable to this income . . . . . . . . . . . . . . . . . . . . .  14

9995

	 M1M, line 14
Continued next page

2023 KPI, page 2
*237221*
Partner’s Name		

Partner’s Federal ID Number or SSN

Partnership’s Name		

Partnership’s Federal ID Number

	 15	 Deferred foreign income (section 965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

	

	 M1MB, line 17

	16	Disallowed section 280E expenses of a licensed cannabis business  . . . . . . . . . . . . . . . . . . . . .  16 	

	 M1MB, line 16

	 17	 Delayed business interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17 	

	

(see Schedule KPI Inst.)

	 18	 State income tax refund included in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18 	

	

M1, line6

	

M1C, line 15

	 22	 Short Line Railroad Infrastructure Modernization Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22 	

	

M1C, line 14

	 23	 Credit for Sales of Manufactured Home Parks to Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . .  23 	

	

M1C, line 13

	24	 Credit for increasing research activities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24 	

	 M1C, line 16

	 25	 Film Production Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25

	 M1C, line 11

	 19	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19 	
	 20	 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20 	
	 21	 Housing Tax Credit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21 	
	

	 Enter the credit certificate number: SHTC -

-

	

		
Enter the credit certificate number: TAXC -

	 26	 Tax Credit for Owners of Agricultural Assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26 	
		
Enter the certificate number from the certificate received from the
	 	 Rural Finance Authority:

	

M1C, line 12

	

M1REF, line 6	

	28	 Employer Transit Pass Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28 	

	

M1C, line 5

	29	 Enterprise Zone Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29 	

	

M1REF, line 7

	

(see instructions)

	

M1W, line 7, col C

		
AO	

	

	27	 Credit for historic structure rehabilitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27 	
Enter National Park Service (NPS) number  
		

	 30	 Pass-through Entity Credit. If the pass-through entity tax

	

	 satisfies the partner’s filing requirement, check this box   

	

 . . . . . . . . . . . . . . . . . . . . . . . .  30 	

	 31	 Minnesota backup withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31

	

Relating to Alternative Minimum Tax
	32	 Intangible drilling costs  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32 	
	 33	 Gross income from oil, gas and geothermal properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33 	

9995

Use lines 32-35 to
compute M1MT,
lines 6 and 7. See
M1MT instructions
for details.

Continued next page

2023 KPI, page 3
*237231*
Partner’s Name		

Partner’s Federal ID Number or SSN

Partnership’s Name		

Partnership’s Federal ID Number

	34	 Deductions allocable to oil, gas and geothermal properties  . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
	35	 Depletion  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
Minnesota Portion of Amounts From Federal Schedule K-1 (1065)
	36	 Minnesota source gross income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

info only (see inst.)

	37	 Ordinary Minnesota source income (loss)
	 from trade or business activities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37

M1NR, line 6, col B

	38	 Income (loss) from Minnesota rental real estate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

M1NR, line 6, col B

	39	 Other net income (loss) from Minnesota rental activities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

M1NR, line 6, col B

	40	 Guaranteed payments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

M1NR, line 6, col B

	41	 Interest income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41

M1NR, line 2, col B

	42	 Ordinary dividends  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42

M1NR, line 2, col B

	43	 Royalties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43

M1NR, line 6, col B

	44	 Net Minnesota short-term capital gain (loss)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44

M1NR, line 4, col B

	 45	 Net Minnesota long-term capital gain (loss)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45

M1NR, line 4, col B

	46	 Section 1231 Minnesota net gain (loss)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46

M1NR, line 4 or 8, col B

	47	 Other Minnesota income (loss). (Describe type of income
		
or include separate sheet:
)  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47

M1NR, line 8, col B

	48	 Section 179 expense deduction apportionable to Minnesota  . . . . . . . . . . . . . . . . . . . . . . . . . .  48

M1NR inst, line 6, col B

	49	 Partnership’s Minnesota apportionment factor
		
(line 5, column C of M3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  49

information only

Nonresident Individual Partners Only:
Composite Income Tax or Nonresident Withholding
	50	 Minnesota source distributive income (see instructions)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  50

See Schedule KPI Inst.

	 51	 Minnesota composite income tax paid by partnership.
	 If the partner elected composite income tax, check this box:   

composite income tax

 . . . . . . . . . . . . . . . . . . . . . .  51

	 52	 Minnesota income tax withheld for nonresident individual
	 partner not electing to file composite income tax. If the
	 partner completed and signed a Form AWC, check this box:    
 . . . . . . . . . . . . . . . . . . . . .  52
		Partnership: Include this schedule and copies of federal Schedules K and K-1 with your Form M3.
		Partner: Include this schedule with your Form M1 (individuals) or Form M2 (estates and trusts).

9995

M1W, line 7, col C

2023 Schedule KPI Instructions
Individual, estate and trust partner’s use of information provided on Schedule KPI

Purpose of Schedule KPI

Schedule KPI is a supplemental schedule provided by the partnership to its individual, estate or trust partners.
The partners will need this information to complete a Minnesota Form M1, Individual Income Tax Return, or Form M2, Income Tax Return
for Estates and Trusts.
An individual partner who is a Minnesota resident will be taxed by Minnesota on all of his or her distributive income from the partnership
even if the income is apportioned between Minnesota and other states. An estate, trust, and individual nonresident partner will be taxed on the
Minnesota distributive income from the partnership.
These instructions are intended to help you report your share of the partnership’s income, credits and modifications on your Minnesota return.
You must include Schedule KPI when you file your Form M1 and Form M2. If you do not include the schedule with your return as required,
the department will disallow any credits and assess the tax or reduce your refund.
If you received an amended Schedule KPI from the partnership and your income or deductions have changed, you must file an amended
Minnesota return. To amend your return, use Form M1X, Amended Minnesota Income Tax Return, or Form M2X, Amended Income Tax
Return for Estates and Trusts.

Line Instructions

Include amounts on the appropriate lines as shown on Schedule KPI.

Line 1 – Non-Minnesota State and Municipal Bond Interest
Individuals: Include on line 1 of Schedule M1M.

Estates and Trusts: Include on line 41 of Form M2.

Line 2 – State Taxes Deducted

Individuals: Include on line 2 of Schedule M1MB.
Estates and Trusts: Include on line 42 of Form M2.

Line 3 – Expenses Deducted Attributed to Income Not Taxed by Minnesota
Individuals: Include on line 3 of Schedule M1M.

Estates and Trusts: Include on line 43 of Form M2.

Line 4 –Federal Bonus Depreciation

Individuals: See Schedule M1MB, worksheet for line 1 instructions, to determine how to report this amount.
Estates and Trusts: Include this amount on step 2 for the worksheet to determine Line 45 of the Form M2.

Line 5 – Foreign Derived Intangible Income (FDII) Deduction
Individuals: Include on line 3 of Schedule M1MB.

Estates and Trusts: Include on line 49 of Form M2.

Line 6 – This line intentionally left blank
Lines 7a, and 7b – Accelerated Installment Sale Gains

Nonresident Individuals: If any information is reported to you on line 7a of Schedule KPI, file Form M1AR, Accelerated Recognition of
Installment Sale Gains, with your Minnesota individual income tax return.
Resident Individuals: If any information is reported to you on line 7 of Schedule KPI, retain a copy of this schedule for your records for the
entire period that you or an entity, you have an interest in, is receiving installment sale payments. If you become a nonresident in a future year
while payments are being made, you are required to file Form M1AR, Accelerated Recognition of Installment Sale Gains, with your final
resident tax return.
Estates and Trusts: Pass through pro rata to your beneficiaries.

Lines 8 through 13

These lines are intentionally left blank.

Line 14 – Interest on U.S. Government Bond Obligations
Individuals: Include on line 14 of Schedule M1M.

Estates and Trusts: Include on line 57 of Form M2.
Continued

1

2023 Schedule KPI Instructions (Continued)
Line 15 – Deferred Foreign Income (Section 965)
Individuals: Include on line 17 of Schedule M1MB.
Estates and Trusts: Include on line 63 of Form M2.

Line 16 – Disallowed Section 280E Expenses of a Licensed Cannabis Business
Individuals: Include on line 16 of Schedule M1MB.
Estates and Trusts: Include on line 64 of Form M2.

Line 17 – Delayed Business Interest
Individuals: This line does not apply.

Estates and Trusts: This line does not apply.

Line 18 – State income tax refund included in income
Individuals: Include on line 6 of Form M1.

Estates and Trusts: Include on line 58 of Form M2.

Lines 19 through 20

These lines are intentionally left blank.

Line 21 – Housing Tax Credit

Individuals: Include on line 15 of Form M1C and enter the certificate number in the space provided. To claim this credit, you must include this
schedule with Form M1.
Estates and Trusts: Include on line 19 of Form M2 and enter the certificate number in the space provided. To claim this credit, you must
include this schedule with Form M2.

Line 22 – Short Line Railroad Infrastructure Modernization Credit

Individuals: Include on line 14 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 20 of Form M2. To claim this credit, you must include this schedule with Form M2.

Line 23 – Credit for Sales of Manufactured Home Parks to Cooperatives

Individuals: Include on line 13 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 21 of Form M2. To claim this credit, you must include this schedule with Form M2.

Line 24 – Credit for Increasing Research Activities

Individuals: Include on line 16 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 22 of Form M2. To claim this credit, you must include this schedule with Form M2.

Line 25 – Film Production Tax Credit

Individuals: Include on line 11 of Form M1C and enter the certificate number in the space provided. To claim this credit, you must include this
schedule with Form M1.
Estates and Trusts: Include on line 16 of Form M2 and enter the certificate number in the space provided. To claim this credit, you must
include this schedule with Form M2.

Line 26 – Tax Credit for Owners of Agricultural Assets

Individuals: Include on line 12 of Form M1C and enter the certificate number in the space provided. To claim this credit, you must include this
schedule with Form M1.
Estates and Trusts: Include on line 17 of Form M2 and enter the certificate number in the space provided. To claim this credit, you must
include this schedule with Form M2.

Line 27 – Credit for Historic Structure Rehabilitation

Individuals: Include on line 6 of Schedule M1REF and enter the NPS project number in the space provided. To claim this credit, you must
include this schedule with Form M1.
Estates and Trusts: Include on line 29 of Form M2 and enter the NPS project number in the space provided. To claim this credit, you must
include this schedule with Form M2.

Line 28 – Employer Transit Pass Credit

Of the credit amount from Schedule ETP, any amount not claimed on line 6 of Form M3 may be passed through to partners based on their
distributive share.
Individuals: Include on line 5 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 23 of Form M2. To claim this credit, you must include this schedule with Form M2.

Continued

2

2023 Schedule KPI Instructions (Continued)
Line 29 – Enterprise Zone Credit

Individuals: Include on line 7 of Form M1REF. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 30 of Form M2. To claim this credit, you must include this schedule with Form M2.

Line 30 – Pass-Through Entity Tax Credit

Individuals: Include on line 9 of Schedule M1REF. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 26 of Form M2. To claim this credit, you must include this schedule with Form M2.
Nonresidents: If your only Minnesota source income is from entities making a PTE tax election, or entities in which you elected composite
income tax, you do not need to file Form M1 or M2.

Line 31 – Minnesota Backup Withholding

Individuals: Include on line 7, column C of Schedule M1W. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Pass through pro rata to your beneficiaries. You must include this schedule with Form M1.

Lines 32 – 35 Items Relating to Alternative Minimum Tax

Individuals: Use the information on lines 32 through 35 to complete Schedule M1MT.
Estates and Trusts: Use the information on lines 32 through 35 to complete Schedule M2MT.

Lines 36 – 49 Minnesota Portion of Federal Amounts

Lines 36-49 apply to estate, trust, and nonresident individual shareholders.
If certain items are not entirely included in your federal income because of passive activity loss limitation, capital loss limitations, section 179
limitations or for other reasons, include only the amounts that you included in your federal adjusted gross income.
Individuals: Use the information on lines 36 through 48 to complete Schedule M1NR.
Minnesota source gross income is used to determine if a nonresident is required to file a Minnesota individual income tax return. Gross
income is income before business or rental deductions and does not include losses.
If your 2023 Minnesota source gross income is $13,825 or more and you did not elect composite tax filing or elected to have the PTE tax
filing to fulfill your filing requirement, you are required to file Form M1 and Schedule M1NR, Nonresident/Part-Year Residents.
If your 2023 Minnesota source gross income is less than $13,825 and you had Minnesota tax withheld (see line 31 and line 52 of Schedule
KPI), file Form M1 to receive a refund.
Estates and Trusts: Use the information on lines 36 through 47 to complete Schedule M2NM.

Line 50 – Minnesota Source Distributive Income

Although Minnesota source gross income (line 36 of Schedule KPI) determines whether you must file a Minnesota return, your Minnesota
source distributive income is ultimately taxed.

Line 51 – Minnesota Composite Income Tax

Individuals: If you elected composite income tax, the amount paid on your behalf equals 9.85% of your Minnesota taxable income on line 50,
minus your share of any credits on lines 21-23, 25-29 and 31. You are not required to file Form M1.
Estates and Trusts: This line does not apply.

Line 52 – Minnesota Nonresident withholding

Individuals: Include the amount from line 52 on Schedule M1W, line 7, column C. Also include the amount from line 50 on Schedule M1W,
line 7, column B.
Estates and Trusts: This line does not apply.

Sale of a Partnership Interest

If you sell any portion of your interest in a partnership, some or all of the gain may be taxable. Or you can use any loss on the sale to offset
other Minnesota income to the extent the losses are deducted on your federal return.
To determine the ratio of gain or loss that is assigned to Minnesota at the time of the sale, divide the original cost of the partnership’s tangible
property in Minnesota by the original cost of all tangible property of the partnership. (Tangible property includes real estate, inventory and
equipment.) If you don’t have these numbers, contact the partnership.
If more than 50 percent of the value of the partnership’s assets are intangibles, the gain/loss is allocated to Minnesota using the partnership’s
prior year sales factor. Include the result on Schedule M1NR, line 4, column B.
3