Pennsylvania PA Schedule RK-1 - Resident Schedule of Shareholder/Partner/Beneficiary Pass Through Income, Loss and Credits

PA Schedule RK-1 - Resident Schedule of Shareholder/Partner/Beneficiary Pass Through Income, Loss and Credits
2023 PA Schedule RK-1 - Resident Schedule of Shareholder/Partner/Beneficiary Pass Through Income, Loss and Credits (PA-20S/PA-65 RK-1)
IMPORTANT: FILL IN FORM MUST BE DOWNLOADED ONTO YOUR COMPUTER PRIOR TO COMPLETING

PA SCHEDULE RK-1
Resident Schedule of Shareholder/
Partner/Beneficiary Pass Through
Income, Loss and Credits
PA-20S/PA-65 RK-1 (DR) MOD 04-23 (FI)
PA Department of Revenue

2307210050

2023
Suffix First Name

Last Name

START
➜ SSN
Spouse’s SSN
If jointly held

MI

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

9 DIGIT - NO DASH

FEIN
Street Address - If Address has Apartment Number, Suite, RR No.
Place on this Line.

First Line of Address

Amended Schedule

Do not exceed six decimal places

Final

Owner Type:

Shareholder’s stock ownership: ________%
SECTION
I

Second Line of Address
If Owner is D Fill in:

Partner’s percentage of:

City or Post Office

State

ZIP Code

FEIN

Profit sharing: ________%
Use ALL CAPITAL LETTERS
for address information.

Loss sharing: ________%
Ownership of capital: ________%

Name of Entity Issuing RK-1
Partner Type:

City or Post Office
FEIN

State

ZIP Code

General Partner
or LLC Member
- Manager

Entity Type:

9 DIGIT - NO DASH

Short Year
52/53 Week
Begin
End
MM/DD/YY
NOTE: Amounts from this schedule must be reported on the appropriate PA Tax Return.
1
1 PA-Taxable Business Income (Loss) from Operations . . . . . . . . . . . If a loss, fill in the oval.

Limited Partner
or Other LLC
Member

SECTION
VII

SECTION SECTION
V
VI

SECTION
IV

SECTION
III

SECTION
II

Fiscal Year

Enter whole dollars only

00

l

00

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

2

If a loss, enter "0"

l

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

3

If a loss, enter "0"

l

4 Net Gain (Loss) from the Sale, Exchange or Disposition of Property . . . . . . If a loss, fill in the oval.

4

l

5 Net Income (Loss) from Rents, Royalties, Patents and Copyrights . . . . . . . . If a loss, fill in the oval.

5

l

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

6

7 Gambling and Lottery Winnings (Loss)

7

l

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

8

l

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

9

l

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

10

l

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

11

l

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

12

l

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

13

l

14 Distributions from PA Accumulated Adjustments Account . . . . If liquidating, fill in the oval.

14

l

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

15

l

16 Nontaxable income (loss) or nondeductible expenses required to . . . . If a loss, fill in the oval.
calculate owner’s basis. Submit statement.
17 Owner’s Share of IRC Section 179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

l

17

l

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

18

l

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

19

l

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

20

l

2307210050
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If a loss, fill in the oval.

00

00
00

If a loss, enter "0"

00

l

00
00
00

00
00
00
00

00

00
00
00

00

00
00

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2023
Instructions for PA-20S/PA-65 Schedule RK-1
PA-20S/PA-65 RK-1 IN (DR) MOD 04-23

Resident Schedule of Shareholder/Partner/Beneficiary
Pass Through Income, Loss and Credits

WHAT’S NEW
The Phone Number field was removed.
The Owner section was updated to include Disregarded
Entity and beneficial owner information.
A 52/53 Week oval was added.
Please see each section in the instructions for more
information.

GENERAL INFORMATION
PURPOSE OF SCHEDULE
Partnerships and S corporations use the PA Schedule
RK-1 to report income and losses by class of income to
each of its resident owners. A PA Schedule RK-1 is
prepared for each individual partner, member or
shareholder showing the share of income (losses) by
class and other items required to be reported.
Pennsylvania partners, members or shareholders (owners)
who are individuals are subject to Pennsylvania personal
income tax on their share of the entity’s income, whether or
not the income is actually distributed.
Owners who are individuals who reside in Pennsylvania are
taxed on their share of the entity’s income, regardless of the
income source.
The PA-20S/PA-65 Schedule RK-1 provides each partner,
member or shareholder (owner) and entity owner their share
of income, losses and credits from the partnership, PA S
corporation, estate, trust and/or entity formed as a limited
liability company classified as a partnership or S corporation
for federal income tax purposes.

WHO SHOULD RECEIVE
PA SCHEDULE RK-1
A PA-20S/PA-65 Schedule RK-1 must be completed for every
Pennsylvania resident owner that has an ownership interest
in a partnership, S corporation, estate, trust and/or entity
formed as a limited liability company classified as a
partnership or S corporation for federal income tax purposes.
A copy of the PA-20S/PA-65 Schedules RK-1 for each
partner, member or shareholder (owner) must accompany
the entity’s PA-20S/PA-65 Information Return. Owners must
receive a copy or copies to prepare Pennsylvania tax or
information returns. The PA S corporation or partnership
must also retain a copy of all PA-20S/PA-65 Schedules RK-1
as part of the entity’s records.
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In addition, a PA-20S/PA-65 Schedule RK-1 must be
completed for all resident owners that are estates, trusts,
other PA S corporations, other partnerships, and other pass
through entities. The Pennsylvania taxable income passes
through to the final taxpayer. Therefore, the immediate
partners, members and shareholders must know the total
Pennsylvania taxable income in the event the final owner is
a Pennsylvania resident. In the event that the final owner
is a nonresident of Pennsylvania, the owner must know
Pennsylvania source taxable income.
A partnership, S corporation or limited liability company
classified as a partnership or S corporation for federal tax
purposes (entity) that fails to file a PA-20S/PA-65, S
Corporation/Partnership Information Return may be subject
to a $250 non-filer penalty. The $250 penalty also applies
to each missing PA Schedule RK-1 or NRK-1.
NOTE: An entity that is the owner of another entity
receives both the PA-20S/PA-65 Schedules RK-1
and NRK-1.

PA SCHEDULE RK-1 FOR
C CORPORATION PARTNERS
PAPER RETURNS AND ELECTRONIC FILED RETURNS
The PA-20S/PA-65 Schedule RK-1 submitted with the
PA-20S/PA-65 Information Return does not need to be
issued to C corporation taxpayers unless a credit from the
PA-20S/PA-65 Schedule OC has been allocated.
Partnerships, PA S corporations, estates, trusts and/or
limited liability companies must submit PA-20S/PA-65
Schedule RK-1 with the applicable Pennsylvania tax returns.
If a C corporation taxpayer receives a PA-20S/PA-65
Schedule RK-1, the amount from Line 9, Total Other
Credits, must be reported on the appropriate Pennsylvania
tax return.

PART-YEAR RESIDENT OWNERS
The requirements are different for PA S corporations and
partnerships to issue PA Schedules RK-1 and/or NRK-1 to
its owners as described below.
PA S CORPORATIONS ONLY
SHAREHOLDER RESIDENCY PERIOD
A PA S corporation must submit a separate PA-20S/PA-65
Schedule RK-1 for that portion of the tax year during which
a part-year resident shareholder was a resident of
Pennsylvania. Part-year shareholders have business
income and losses prorated based upon the number of days
in the tax year these individuals are located within and
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1

outside the state. Each shareholder’s pro rata distributive
share of total income, losses and credits reported on the
PA-20S/PA-65 Information Return determines the income
amounts for the lines that are included on the PA Schedule
RK-1. Income is allocated based on days residing or not
residing in Pennsylvania. Pennsylvania considers any day
or partial day an owner has a residence or domicile within
the commonwealth to be a Pennsylvania residency day. The
owner will receive a PA-20S/PA-65 Schedule RK-1 and
NRK-1 reflecting the proportionate share of income earned
while a resident and a nonresident.
In order to calculate the PA Schedule RK-1 income and
losses by class for the residency period, first determine the
proportional number of days a shareholder resided in the
state. Using the number of days a shareholder was located
in the state as the numerator, divide this figure by the total
number of days in the tax year representing the
denominator. The resulting ratio should be multiplied by the
PA and non-PA income and losses by class shown on page
one of the PA-20S/PA-65 Information Return. This figure is
then multiplied by the shareholder’s stock ownership
percentage to determine the PA Schedule RK-1 income and
losses by class.
PARTNERSHIPS ONLY
RESIDENCY PERIOD
A resident partner reports income based upon residency
status at year-end and does not prorate the income. The
partnership must submit a separate PA-20S/PA-65 Schedule
RK-1 for each individual partner if during the partnership’s
taxable year the partner was:
● A Pennsylvania resident at the close of the taxable year;
● Deceased and a Pennsylvania resident at the time of
death during the taxable year; and/or
● A Pennsylvania resident at the close of business on the
day during the taxable year that the partner sold,
exchanged, disposed of, liquidated, or redeemed their
entire interest in the partnership.
NOTE: Income is considered earned on the final day
of the tax year. If the partner is a resident on the last
day of the year, they will receive a PA-20S/PA-65 Schedule
RK-1. The Partner can claim out-of-state credit on income
taxed elsewhere.

ENTITIES WITH A SIGNIFICANT
NUMBER OF OWNERS
The department will not accept any PA Schedules RK-1 and
NRK-1 in CD rom format. Please reference Informational
Notice PIT 2013-02. Schedules RK-1 and NRK-1 submitted
in this format will not be processed and the entity may be
subject to the $250 non-filer penalty that applies for each
missing PA Schedule RK-1 and NRK-1.
2

HOW TO AMEND PA SCHEDULE RK-1
An amended PA-20S/PA-65 Information Return and an
amended PA-20S/PA-65 Schedule RK-1 for each owner
must be filed to correct any error on or reflect any change to
the original PA-20S/PA-65 Information Return, whether or
not an amended federal Form 1120S or federal Form 1065
was filed for that year.
To amend an original PA-20S/PA-65 Schedule RK-1, use a
blank schedule for the tax year to be amended and fill in the
“Amended Schedule” oval at the top of the schedule. Do not
send a copy of the original schedule. Complete the schedule
by entering the corrected information and submit it with the
amended PA-20S/PA-65 Information Return. See WHERE
TO FILE in the PA-20S/PA-65 Information Return
instructions.
IMPORTANT: When submitting an amended RK-1, the
amended PA-20S/PA-65 Information Return must
accompany it.

COMPLETING PA SCHEDULE RK-1
FOREIGN ADDRESS STANDARDS
If the PA S corporation, partnership or entity formed as a
limited liability company classified as a partnership or PA S
corporation for federal income tax purposes is located
outside the U.S., it is important to write the foreign address
on the PA-20S/PA-65 Schedule RK-1 according to U.S.
Postal Service standards.
Failure to use these standards may delay processing or
correspondence necessary to complete the processing of
the return.
To comply with foreign address standards, use the following
rules when completing the address portion of the PA-20S/
PA-65 Schedule RK-1.
● Eliminate apostrophes, commas, periods and hyphens.
Write the address in all uppercase letters. Addresses
should have no more than four lines and must be written
in black ink or typewritten. Pencil is unacceptable.
● Write the name of the entity in the space provided. Mail
may not be addressed to a person in one country “in
care of” a person in another country. The address of
items sent to general delivery must indicate the
addressee’s full legal name.
● Write the address in the space provided, including street
and building name and number, apartment or suite
numbers, city name and city or provincial codes. All lines
of the delivery address should appear in all capital
letters. The house number and street address or box
number must appear when mail is addressed to towns
or cities.

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● Write only the name of the country in the space provided
for the city or post office.
● Do not include any entries in the state field other than
“OC” for Out-of-Country. The ZIP Code spaces should
remain blank on the PA-20S/PA-65 Schedule RK-1.
Providing the address in this format will better ensure that
the department is able to contact the entity if additional
information is required.
Below are examples of properly completed foreign
addresses.
FOREIGN ADDRESS EXAMPLES
Name: DIETRICH ENTERPRISES
Address 1: HARTMANNSTRASSE 7
Address 2: 5300 BONN 1
City: GERMANY
State: OC
ZIP Code: Leave Blank
OR
Name: DIETRICH ENTERPRISES
Address 1: 117 RUSSELL DR
Address 2: LONDON W1PGHQ
City: ENGLAND
State: OC
ZIP Code: Leave Blank
CANADA (ONLY) ADDRESS EXAMPLE
The following address format may be used when the postal
address delivery zone number is included in the address:
Name: NORTH BY NORTHWEST CO
Address 1: 1010 CLEAR ST
Address 2: OTTAWA ONT K1A 0B1
City: CANADA
State: OC
ZIP Code: Leave Blank
If the entity’s address does not fit in the available spaces on
the PA-20S/PA-65 Schedule RK-1 using this format, please
submit a separate statement that includes the entity’s name,
entity’s federal employer identification number, tax year and
complete address.
NOTE: For a Canadian address, two spaces must exist
between the province abbreviation and the postal code.
Please review previous example where “ONT” (province
abbreviation) and “K1A 0B1” (postal code) are shown with
the proper address format, separated by two spaces.

SECTION I
GENERAL INFORMATION
SSN
Enter the nine-digit Social Security number (SSN) of the
individual receiving the PA-20S/PA-65 Schedule RK-1. If the
owner is a disregarded entity, use the SSN of the beneficial
owner. Do not use the TIN of a disregarded entity.
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LAST NAME, SUFFIX, FIRST NAME, MIDDLE INITIAL
Enter the last name; suffix such as Jr., Sr., etc.; first name
and middle initial of the individual receiving the
PA-20S/PA-65 Schedule RK-1.
SPOUSE’S SSN
Enter the nine-digit SSN of the spouse (if jointly held)
receiving the PA-20S/PA-65 Schedule RK-1.
FEIN
Enter the nine-digit federal employer identification number
(FEIN) of the owner (if other than an individual) receiving the
PA-20S/PA-65 Schedule RK-1.
NOTE: Do not use the TIN of a disregarded entity as
the owner receiving NRK-1. List the TIN of the
beneficial owner in the appropriate section for SSN or FEIN.
Provide the FEIN of the disregarded entity within in the
owner portion of Section I.
NAME OF OWNER RECEIVING RK-1 (IF OTHER THAN
AN INDIVIDUAL)
If the owner of the entity is a partnership, PA S corporation,
estate, trust or entity formed as a limited liability company
classified as a partnership or PA S corporation for federal
income tax purposes, enter the name of the entity owner
receiving the PA-20S/PA-65 Schedule RK-1. Eliminate all
punctuation such as apostrophes, commas, periods and
hyphens.
If the PA Schedule RK-1 is being issued to an individual or
disregarded entity whose beneficial owner is an individual
(See, NOTE under FEIN above), leave this field blank.
FIRST LINE OF ADDRESS
Enter the street address of the owner receiving the PA-20S/
PA-65 Schedule RK-1. If the address has an apartment
number, suite or RR number, enter it after the street address.
Eliminate all punctuation such as apostrophes, commas,
periods and hyphens.
NOTE: If the street address along with the apartment
number, suite or RR number does not fit on the first
line of address, then enter the street address on the second
line of address and the apartment number, suite or RR
number on the first line of address.
SECOND LINE OF ADDRESS
Enter the post office box, if appropriate, of the owner
receiving the PA-20S/PA-65 Schedule RK-1. If there is no
post office box, leave the second line of the address blank.
Eliminate all punctuation such as apostrophes, commas,
periods and hyphens.
For a foreign address enter the city or municipal designation.
See FOREIGN ADDRESS EXAMPLES.
For a Canadian address, enter the city and postal delivery
zone number. See CANADA ADDRESS EXAMPLE.
IMPORTANT: If the address has only a post office box,
enter on the first line of address.
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3

CITY, STATE AND ZIP CODE
Enter the appropriate information in each box. Eliminate all
punctuation such as apostrophes, commas, periods and
hyphens.
NAME OF ENTITY ISSUING RK-1
Enter the name of the entity issuing the PA-20S/PA-65
Schedule RK-1. Eliminate all punctuation such as
apostrophes, commas, periods and hyphens.
CITY, STATE AND ZIP CODE
Enter the appropriate information of the entity issuing the PA
Schedule RK-1 in each box. Eliminate all punctuation such
as apostrophes, commas, periods and hyphens.
FEIN
Enter the nine-digit FEIN of the entity issuing the PA-20S/
PA-65 Schedule RK-1.

● P = Partnership
● L = LLC
● X = Exempt
● D = Disregard Entity
If owner is a disregarded entity, the FEIN field below must
be filled out.
PARTNER
Fill in the oval that designates what type of partner received
the PA-20S/PA-65 Schedule RK-1. Fill in one oval only.
ENTITY
From the list below, enter the code that corresponds with the
type of owner issuing the PA-20S/PA-65 Schedule NRK-1.
If issuer is a disregarded entity, the FEIN field below the
Entity field must be filled out.

AMENDED SCHEDULE
Fill in the oval if the PA-20S/PA-65 Schedule RK-1 is an
amended schedule.

● S = S Corporation

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

● T = Trust

SHAREHOLDER’S STOCK OWNERSHIP
Enter the shareholder’s percentage of stock ownership in
the PA S corporation.
Valid values are: “00000” to “10000”, where 10000 = 100%
Decimal point is implied after 3rd character from the left
e.g. to indicate 33.33%, the value should be “03333”
e.g. to indicate 25%, the values should be “02500”
PARTNERSHIP PERCENTAGE
Enter the partner’s percentage of each of the following at the
close of the taxable year:
● Profit sharing
● Loss sharing
● Ownership of capital
Valid values are: “00000” to “10000”, where 10000 = 100%
Decimal point is implied after 3rd character from the left
e.g. to indicate 33.33%, the value should be “03333”
e.g. to indicate 25%, the values should be “02500”
OWNER
From the list below, enter the code that corresponds with the
type of owner is receiving the PA-20S/PA-65 Schedule
NRK-1:
● I = Individual
● S = S Corporation
● C = C Corporation
● E = Estate

● E = Estate
● L = LLC
FISCAL YEAR
If the PA S corporation, partnership or limited liability
company filing as a partnership or PA S corporation for
federal income tax purposes does not file on a calendar-year
basis, fill in fiscal-year oval. Enter the month, day and year
(MMDDYY) when the fiscal year begins and ends.
52/53 WEEK
If the PA S Corporation, partnership or limited liability
company filing as a partnership or PA S corporation for
federal income tax purposes files on a basis of 52/53 week,
fill in the oval. Enter the month day and year (MMDDYY)
when the 52/53 week year begins and ends.
NOTE: Do not fill in the fiscal filer oval.
SHORT YEAR
A short year is an accounting period shorter than one year
and not a 52/53 week taxable year.
A short-year return is required for the following reasons:
● Changes in the annual accounting period. For example,
the entity changes from a fiscal-year filer to a
calendar-year filer; or
● An entity is in existence during only part of the tax year.
For example, if the year is the initial year or final year
for all entities.
See the PA-20S/PA-65 Information Return instructions on
how to file a short-year return.

LINE INSTRUCTIONS
SECTION II
OWNER’S DISTRIBUTIVE SHARE OF PENNSYLVANIA
SOURCE INCOME (LOSS)

● T = Trust
4

● P = Partnership

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LINE 1
PENNSYLVANIA TAXABLE BUSINESS INCOME (LOSS)
FROM OPERATIONS
Enter the owner’s pro rata distributive share from the
PA-20S/PA-65 Information Return, Line 1e. The entity must
report the owner’s share of income (loss) whether distributed
or not. If reporting a loss, fill in the oval.
Guaranteed payments should not be included on Line
1 of the PA-20S/PA-65 Schedule RK-1.

LINES 2 THROUGH 7
Enter the owner’s pro rata distributive share of the
separately stated items of other Pennsylvania taxable
income (loss) from the PA-20S/PA-65 Information Return.
Pennsylvania taxable income includes total of Pennsylvania
source and outside Pennsylvania income (loss). If reporting
a loss on Lines 4, 5 and/or 7, fill in the oval.

SECTION III
OWNER’S SHARE OF PENNSYLVANIA CREDITS
Enter the owner’s pro rata distributive share of the
separately stated credits that the PA S corporation or
partnership passes through to the owners from the
PA-20S/PA-65 Information Return.

LINE 8
RESIDENT CREDIT - SUBMIT STATEMENT
Do not use Line 8 to report a resident credit for an Entity
Level Tax. Certain states have imposed an entity level tax
(ELT) on pass-through entities resulting from the Federal Tax
Cut and Jobs Act (P.L. No: 115-97). Please see Answer ID
3618 (https://revenue-pa.custhelp.com/app/answers/
detail/a_id/3618/kw/3618) on the Department’s website for
additional information and clarification.
Enter the Pennsylvania resident owner’s pro rata distributive
share of credit calculated from composite returns filed by the
PA S corporation or partnership on behalf of resident
owners. Submit a statement with the PA-20S/PA-65
Schedule RK-1 to notify the owner of the breakdown of
states, breakdown by Pennsylvania income class, taxes paid
to those states and the resident credit claimed, which is the
lessor of the actual tax paid or 3.07 percent of the total
income taxed in the other state.
The statement must include the entity’s name, entity’s
federal employer identification number, tax year, owner
name(s), and owner tax identification number(s).
NOTE: If a composite return is filed in other states,
the entity must submit a copy of the out-of-state
returns for all resident credits claimed.

LINE 9
TOTAL OTHER CREDITS - SUBMIT STATEMENT
Enter the owner’s pro rata share from the PA-20S/PA-65
Information Return, Section V, Line 13a. The entity must
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provide the owner with a statement listing which credit(s)
have been passed through to them. When applicable, Line
9 includes credits for PA S corporations treated as C
corporations in other states.
The statement must include the entity’s name, entity’s
federal employer identification number, tax year, owner
name(s), and owner tax identification number(s).
IMPORTANT: See PA-20S/PA-65 Schedule OC
instructions for which credits must be applied to
corporate tax liability prior to being passed through to the
entity’s owners. C corporation owners cannot claim credit for
taxes paid to other states.

SECTION IV
DISTRIBUTIONS FROM PARTNERSHIPS
Noncorporate shareholders and partners should use
amounts from PA-20S/PA-65 Schedule RK-1, Section IV
through Section VII to determine or calculate owner’s basis.
Partners include Line 12 in net classified income on their
Pennsylvania tax returns.

LINE 10
DISTRIBUTION OF CASH, MARKETABLE SECURITIES
AND PROPERTY NOT INCLUDING GUARANTEED
PAYMENTS
Enter the partner’s share of distribution of cash, marketable
securities and property, other than guaranteed payments.
With respect to liquidating property distributions, this line will
include the total of cash and the fair market value of
marketable securities and property distributed to the
Pennsylvania resident partner.
The partner reduces his basis in the partnership by amount
of distributions. If the distribution amount is in excess of
basis, it must be reported on the resident partner’s return as
taxable gain on PA-20S/PA-65 Schedule D.

LINE 11
GUARANTEED PAYMENTS FOR CAPITAL
OR OTHER SERVICES
Enter the partner’s share of guaranteed payments for capital
or other services.
Pennsylvania does not follow federal treatment for
guaranteed payments for services. Under Pennsylvania tax
law, to the extent paid for other services or for the use of
capital, a guaranteed payment is:
● A withdrawal proportionately from the capital of all
partners;
● A gain from the disposition of the recipient’s partnership
interest and a loss from the disposition of the other
partners’ partnership interests, to the extent derived from
the capital of the other partners; and
● A return of capital by the recipients to the extent derived
from their own capital.
Pennsylvania allows the deduction.
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LINE 12
ALL OTHER GUARANTEED PAYMENTS
FOR SERVICES RENDERED
Enter the partner’s share of such payments. Typically,
guaranteed payments to partners are paid to the extent the
services are rendered directly in the production of income
from a business, profession or farm, and/or from rental or
royalty income.
NOTE: The partner must know the class of income
from which the partnership made the guaranteed
payments. The partner must then properly classify the
payments on their PA-40 Individual Income Tax Return.
IMPORTANT: If the total guaranteed payment includes
more than one of the income classes described below,
the partnership must provide a statement to the partners
showing the amounts for each line.
For Pennsylvania personal income tax purposes,
guaranteed payments are classified as follows:
● If services are rendered directly in the production of
income from a business, profession, or farm, the
guaranteed payments are gross income from that
income class.
● If services are rendered directly in the production of
rental or royalty income, the guaranteed payments are
gross income from that income class.
HEALTH SAVINGS ACCOUNTS (HSA)
Contributions by a partnership to a bona fide partner’s HSA
are not contributions by an employer. The contributions are
treated as a distribution of money and are not included in
the partner’s income.
Contributions by a partnership to a partner’s HSA for
services rendered, however, are treated as guaranteed
payments that are deducted by the partnership and included
in the partner’s income. In both situations, the partnership
can deduct the contribution made to the partner’s HSA.
Contributions to a nonresident partner’s HSA for services
must be apportioned.
Contributions by an S corporation to a 2 percent
shareholder/employee’s HSA for services rendered are
deducted by the S corporation as wage or salary expense
and included in the shareholder/employee’s gross
compensation. The shareholder-employee can deduct the
contribution made to the shareholder/employee’s HSA.

plan must meet such requirements as are prescribed by Reg
§1.1402(a)-17. It must apply to partners generally or to a
class or classes of partners, and provide such payments at
least until the retired partner's death.
The exclusion applies to retirement payments received by a
retired partner only if he or she renders no services in any
business conducted by the partnership during the taxable
year of such partnership, ending within or with his or her
taxable year in which amounts were received. At the end of
such partnership's taxable year: (1) there must be no
obligation from other partners to the retired partner, other
than to make retirement payments under the plan; and (2)
the retired partner's share in the capital of the partnership
had been paid to him or her in full. Code Sec. 1402(a)(10)
Reg §1.1402(a)-17.

SECTION V
DISTRIBUTIONS FROM PA S CORPORATIONS

LINE 14
DISTRIBUTIONS FROM PA ACCUMULATED
ADJUSTMENTS ACCOUNT
Enter the shareholder’s share of such distributions. If a
liquidating distribution, fill in the oval. If the amount is in
excess of basis, it must be reported on the shareholder’s
return as taxable gain on PA-20S/PA-65 Schedule D-I,
Line 15.

LINE 15
DISTRIBUTIONS OF CASH, MARKETABLE
SECURITIES AND PROPERTY
Enter the shareholder’s share of such distributions. This
line will include the total of cash and the fair market
value of all marketable securities and property
distributed to the shareholder.

SECTION VI
NONTAXABLE INCOME (LOSS) IN OWNER’S BASIS

LINE 16

GUARANTEED PAYMENTS TO RETIRED PARTNER
Guaranteed payments to a retired partner must meet the
exception described in IRC §1402(a)(10).

NONTAXABLE INCOME (LOSS) OR
NONDEDUCTIBLE EXPENSES REQUIRED
TO CALCULATE OWNER’S BASIS
The difference between federal and Pennsylvania
depreciation should not be included on this line. Line 16 is
based on permanent nontaxable income or nondeductible
expenses in calculating Pennsylvania taxable income. This
amount is generally not the same amount reported on the
PA-20S/PA-65 Information Return, Section IV, Line 12
because Line 12 should include non-permanent items.

Generally, retirement payments received by a retired partner
from a partnership (of which he or she is a member or former
member) are counted as net earnings from self-employment.
Certain periodic payments by a partnership to a retired
partner made on account of retirement under a written plan
of partnership are excluded from the tax. To be effective, the

Submit a statement that includes the entity’s name, entity’s
federal employer identification number and tax year. Provide
a breakdown of all nontaxable income earned and all
nondeductible expenses not taken. This amount should only
include permanent differences needed to calculate the
owner’s basis in the entity. If reporting a loss, fill in the oval.

LINE 13

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The entity provides the owners with this information so the
owners can calculate their basis. Examples of nontaxable
income are tax-exempt interest, gifts, inheritance, loan
proceeds, insurance proceeds and federal tax refunds.
Examples of non-deductible expenses are partner's
retirement contributions, partner's life and health
insurance premiums.
These items may be listed on federal Form 1120S Schedule
K as “Items Affecting Shareholder Basis” and on federal
Form 1065 Schedule K as “Other Information.”

SECTION VII
SUPPLEMENTAL INFORMATION
The owners will need certain information to determine their
outside Pennsylvania basis in the entity, taking into
consideration distributions that may exceed their
ownership interests.

LINE 17
OWNER’S SHARE OF IRC §179 ALLOWED
Enter the owner's share of IRC §179 depreciation expense.
Each entity and individual taxpayer is limited to the IRC §179
federal depreciation expense for years beginning on or after
January 1, 2023. Do not deduct this amount from any
income class. This is for information only and is used to
verify the owner has not exceeded the IRC §179 depreciation
expense on an individual entity or aggregate basis.

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LINE 18
OWNER’S SHARE OF STRAIGHT-LINE DEPRECIATION
Enter the owner’s share of the entity’s total expense.
Assets for which accelerated depreciation has been
calculated must be recalculated using straight-line
depreciation in order to calculate outside Pennsylvania basis
in the entity. The life of the asset must be the same life that
was used to calculate depreciation expense deducted in
determining Business Income (Loss) from Operations and/or
Rental Income (Loss).

LINE 19
PARTNER’S SHARE OF NONRECOURSE LIABILITIES
AT YEAR-END
Enter the partner’s share of nonrecourse liabilities at
year-end.
A nonrecourse liability is a secured liability, identified by the
partnership, for which the partners are not personally liable.
Nonrecourse liabilities apportion such debts to each
partner’s outside basis and validate deductions based on
such liabilities.

LINE 20
PARTNER’S SHARE OF RECOURSE LIABILITIES AT
YEAR-END
Enter the partner’s share of recourse liabilities at year-end. A
recourse liability is one for which a partner is personally liable.

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