New Hampshire Fiduciary Business Profits Tax Return Instructions

Fiduciary Business Profits Tax Return Instructions
nh-1041-instructions-2022 Draft.pdf
New Hampshire
Department of
Revenue Administration

2023
NH-1041

FIDUCIARY BUSINESS PROFITS
TAX RETURN
GENERAL INSTRUCTIONS

WHO MUST FILE
All business organizations, including single member Limited Liability Companies (SMLLC), taxed as a fiduciary federally must file a Form NH-1041 return provided they
have conducted business activity in New Hampshire and their gross business income from everywhere is in excess of $103,000 (for taxable periods beginning January
1, 2023). For the definition of a business organization refer to RSA 77-A:1, I.
"Gross business income" means all income for federal income tax purposes from whatever source derived in the conduct of business activity, including but not limited
to gross proceeds from sales, compensation for rendering services, gross proceeds realized from trading in stocks, bonds, or other evidences of indebtedness, gross
proceeds realized from sale of assets used in trade or business, interest, discount, gross rents, royalties, fees, commissions, dividends, without any deduction on
account of the cost of property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense paid or accrued and without
any deduction on account of losses.
Grantor Trusts: Income from Grantor Trusts (Section 671 of the IRC) shall be included in the Business Profits Tax return of the owner(s).

CONFIDENTIAL INFORMATION
Tax information disclosed to the New Hampshire Department of Revenue Administration is held in strict confidence by law. The information may be disclosed to the
United States Internal Revenue Service, agencies responsible for the administration of taxes in other states in accordance with compacts for the exchange of
information, and as otherwise authorized by RSA 21-J:14.

TAXPAYER IDENTIFICATION
The Commissioner of the Department of Revenue is authorized pursuant to RSA 21-J:27-a to require submission of an SSN, FEIN, or any other identifying number used
in filing or preparing federal tax documents. If you do not have any such identifying number, or share one with another taxpayer, then, under N.H. Code of Admin.
Rules, Rev 2903.01, you must obtain a Department Identification Number (DIN). If you have a DIN, use it on all New Hampshire filings. To ensure that your filings and
payments are applied to the correct account, the sequence of names and taxpayer ID numbers on all filings must be consistent. The failure to provide a taxpayer
identification number may result in the rejection of filed documents. Failure to timely file documents complete with a consistent taxpayer identification number may
result in the imposition of penalties and interest, the disallowance of claimed exemptions, exclusions, credits, deductions, or an adjustment that may result in
increased tax liability.

NEED FORMS?
To obtain additional forms, you may visit our website at www.revenue.nh.gov or call the Forms Line at (603) 230-5001.

NEED HELP?
Call the Department of Revenue Administration, Taxpayer Services at (603) 230-5920. Individuals with hearing or speech impairments may call TDD Access: Relay NH
1-800-735-2964.

NH-1041 Instructions 2023
Version 1 11/2023

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New Hampshire
Department of
Revenue Administration

FIDUCIARY BUSINESS PROFITS
TAX RETURN
LINE-BY-LINE INSTRUCTIONS

2023
NH-1041

NAME AND TAXPAYER IDENTIFICATION NUMBER
Enter the taxpayer's name and taxpayer identification number in the spaces provided.
Enter the beginning and ending dates of the taxable period.

LINES 1(a)-1(j) - GROSS BUSINESS PROFITS
The Business Profits Tax is a 7.5% (for taxable periods ending on or after December 31, 2023) tax assessed on taxable business profits.
Round every entry to the nearest whole dollar (if 49 cents or less round down, if 50 cents or more round up).
REPORT NEGATIVE AMOUNTS USING A MINUS SIGN.
The following describes items of income and deductions reported on Federal Form 1041 and how these items should be reported on Form NH-1041.
LINE 1(a)
Report interest income from investments made by the trust related to business activities, Federal Form 1041, Line 1.
LINE 1(b)
Report all dividends received by the trust from investments made by the trust related to business activities, Federal Form 1041, Line 2(a).
LINE 1(c)
Report the business income or loss, Federal Form 1041, Line 3.
LINE 1(d)
If the trust sells investments assets, defined as business assets for New Hampshire Business Profits Tax purposes, report the net gain, but not loss, from sale of
investment assets, Federal Form 1041, Line 4. New Hampshire law defines business assets as those assets used in a business activity (see RSA 77- A:1, XI); therefore,
assets used in a rental activity would be business assets.
LINE 1(e)
Report the royalties and net rental profit or loss for this entity, Federal Form 1041, Line 5. Report activities for any other business entities separately.
LINE 1(f)
Report farm income or loss, Federal Form 1041, Line 6.
LINE 1(g)
If the trust sells a business asset, report the net gain only from the sale of business assets, Federal Form 1041, Line 7.
LINE 1(h)
Report other income related to the fiduciary business activity, Federal Form 1041, Line 8.
LINE 1(i)
Report all other business expenses not reported above related to the production of business income.
LINE 1(j)
Gross business profits from trust business activity. Combine Lines 1(a) through 1(h) and from the result subtract Line 1(i).

LINES 2(a) - 2(g), 3, 4, AND 5 - INCREASE OR DECREASE TO GROSS BUSINESS PROFITS TO RECONCILE WITH IRC
Adjustments necessary to increase or decrease gross business profits to reflect the applicable Internal Revenue Code (IRC) applicable pursuant to RSA 77-A:1, XX and
RSA 77-A:3-b.
Pursuant to RSA 77-A:1, XX, New Hampshire has adopted the IRC as of a particular date for each taxable period. As a result, taxpayers must identify any changes to the
IRC occurring subsequent to the version adopted by New Hampshire, and account for those changes on their return. Taxpayers must also make additional adjustments
as directed by RSA 77-A:3-b.

APPLICABLE INTERNAL REVENUE CODE
TAXABLE PERIOD - BEGINNING

IRC VERSION IN EFFECT

01/01/2020 - Current

December 31, 2018

01/01/2018 - 12/31/2019

December 31, 2016

01/01/2017 - 12/31/2017

December 31, 2015

01/02/2000 - 12/31/2016

December 31, 2000

For prior taxable periods reference RSA 77-A:1, XX
The adjustments on Lines 2(a) through 2(g) reflect the adjustments that are necessary to account for the version of the IRC adopted by New Hampshire. If a taxpayer
seeks to report a necessary adjustment that has not been specifically addressed, the taxpayer shall enter the item on either Line 2(c) and/or 2(e) and complete and
attach Schedule IV.
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Department of
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FIDUCIARY BUSINESS PROFITS
TAX RETURN
LINE-BY-LINE INSTRUCTIONS
(continued)

The statutory requirement to follow the applicable IRC pursuant to RSA 77-A:1, XX and RSA 77-A:3-b has significant impact on the tax basis of assets used in
businesses operating within and without New Hampshire. A separate accounting of the New Hampshire tax basis must be maintained for depreciation
purposes and for determination of the gain or loss in the event of the sale of business assets.
LINE 2(a)

Add the amount of IRC §179 expense taken on the federal return in excess of the amount permitted pursuant to RSA 77-A:3-a. For property placed in service
on or after January 1, 2017, the maximum IRC § 179 deduction is $100,000. For property placed in service on or after January 1, 2018, the maximum IRC §179
deduction is $500,000.
LINE 2(b)

Add the amount of bonus depreciation taken on the federal return for assets placed in service this period. Bonus depreciation, allowed federally under IRC
§168(k), is not allowed for New Hampshire BPT purposes.
LINE 2(c)

Add any other deductions or exclusions taken on the federal return that need to be eliminated or adjusted due to revisions to the IRC occurring subsequent
to the applicable version in the table above. Include foreign dividends, when actually distributed, that consist of amounts previously taxed federally as GILTI
under IRC §951A or of amounts previously taxed federally as deemed one-time repatriation under the Tax Cuts and Jobs Act of 2017, but not previously
subject to the Business Profits Tax. Complete and attach Form Schedule IV.
LINE 2(d)

Deduct additional depreciation related to IRC §179 and bonus depreciation not allowed for this tax year or for prior tax years. Because there may be a basis
difference due to the federal and state treatment of IRC §179 expense, and bonus depreciation, the regular depreciation allowed under IRC §167 and IRC
§168 may be different than that deducted on the federal return. Recalculate your allowable depreciation and deduct the difference on this line.
LINE 2(e)

Deduct any other items included on the federal return that are required to be eliminated or adjusted due to revisions to the IRC occurring subsequent to the
version adopted by New Hampshire pursuant to RSA 77-A:1, XX and RSA 77-A:3-b. Also include the deduction allowed for global intangible low-taxed
income under RSA 77-A:4, XIX. Complete and attach Form Schedule IV.
LINE 2(f)

Increase or decrease the net gain or loss on the sale of assets used in the business which have a state adjusted basis different from the tax adjusted basis
reported on the federal return. Because there may be a basis difference to the federal and state treatment of IRC §179 expense, and bonus depreciation, the
regular depreciation pursuant to IRC §167 and IRC §168 allowed may be different than that deducted on the federal return. This may create a different
adjusted basis to assets used in the business which have not been completely depreciated and thus a different gain or loss for state reporting than that
reported on the federal return on the sale of business assets. Recalculate the gain or loss and enter the difference on this line. Adjustments required to
account for the net gain or loss attributable to an increase or step-up in the basis of assets pursuant to RSA 77-A:4, XIV shall be reported in Section 6(g).
LINE 2(g)

The sum of Lines 2(a) through 2(c), minus Lines 2(d) and 2(e), adjusted by Line 2(f); if negative result, use a minus sign.
LINE 3

Subtotal Line 1(j) adjusted by Line 2(g); if negative result, use a minus sign.
LINE 4

Separate entity adjustments to income or expense, attach schedule. Enter the amounts which arise from the necessity of adjusting Gross Business Profits to
accommodate the New Hampshire requirement of separate entity treatment for business organizations. Do not eliminate investment income on this line, as
New Hampshire requires that all business income be included. New Hampshire does not have a non-business income statute.
LINE 5

Gross Business Profits (combine Line 3 and Line 4).

LINES 6(a)-6(j), 7, 8, 9, 10, 11, 12, 13, AND 14 - ADDITIONS AND DEDUCTIONS (RSA 77-A:4)
LINE 6(a)
Deduct interest or dividend income that is subject to taxation under RSA 77. Deduct the amount of interest and dividends reported on the Interest and Dividends Tax
return (Form DP-10) on this line. Partnerships, LLCs, and associations, whose gross interest and dividends do not exceed $2,400 are not subject to the Interest and
Dividends Tax, and thus cannot make a deduction on this line. See RSA 77:3, I(b). If the amount of interest and dividends exceeds $2,400, the entity may be subject to
the Interest and Dividends Tax. The application of the term “subject to tax” is not affected by the proportionate amount taxed related to a New Hampshire inhabitant
partner(s). See RSA 77:14-a.
LINE 6(b)
Deduct interest income earned resulting from investments in direct United States obligations, net of expenses, on this line. Do not include any amounts already
deducted on Line 6(a).

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Department of
Revenue Administration

2023
NH-1041

FIDUCIARY BUSINESS PROFITS
TAX RETURN
LINE-BY-LINE INSTRUCTIONS
(continued)

LINE 6(b) continued

The Constitutional doctrine of intergovernmental immunity exempts federal obligations from tax by states or their political subdivisions when obligations
are issued to secure credit to carry on the necessary functions of government. Exempt U.S. Government interest claimed as a deduction must be reduced by
the following expenses if the expenses were claimed as deductions in arriving at your federal taxable income:
• interest on money borrowed to purchase or carry the bonds or securities; and
• ordinary and necessary expenses paid or incurred in connection with producing exempt income.
These expenses may also be added back on Line 6 (e), do not add back twice.
LINE 6(c)

Add net income taxes, franchise taxes measured by net income, or capital stock taxes taken as deductions on the federal return for any state or political
subdivision, or foreign taxes based on or measured by net income.
The Business Enterprise Tax (BET) is not based on or measured by net income and is not added back. Business Profits Tax (BPT) is based on net income and
must be added back if a deduction for BPT has been taken on your federal return.
LINE 6(d)

Deduct the wage adjustment required by IRC §280C. Deduct the wages or salaries paid or incurred for the taxable year which is equal to the sum of the
credits determined for the taxable year under IRC §45A(a), §51(a), §1396(a), §1400P(b), and §1400R.
LINE 6(e)

Add expenses related to constitutionally exempt income. Expenses that are incurred to produce income that is constitutionally exempt from taxation in New
Hampshire must be added back to gross business profits. These expenses include such items as interest expense and other expenses incurred to earn
interest from investments in direct U.S. obligations. This add back also includes expenses related to the production of non-unitary income not included on
this return.
LINE 6(f)

A deduction is allowed for the contribution of scientific equipment or apparatus to an educational organization or institute of higher education equal to the
sum of the taxpayer's basis in the contributed property plus 50 percent of the unrealized appreciation, or twice the basis of the property, whichever is less.
LINE 6(g)

The following adjustments are required to account for the increase in the basis of assets federally due to the sale or exchange of an interest in the business
organization:
LINE 6(g) - A
Report the amount of the increase in the basis of assets federally, attributable to the sale or exchange of an interest in the business organization. If multiple
sales or exchanges, provide an aggregated figure, check the appropriate box(es) below, and attach a schedule of transactions.
CHECKBOX
If making an election pursuant to RSA 77-A:4, XIV(b) to recognize the basis increase for any sale or exchange reported on Line 6(g) - A, check the “Yes” box. If
reporting elections for multiple transactions check the “Yes” box and attach a schedule reporting the details for each transaction.
LINE 6(g) - B
If not making an election pursuant to RSA 77-A:4, XIV(b) to recognize the basis increase for a sale or exchange reported on Line 6(g) - A, deduct the basis
increase associated with the sale(s) or exchange(s) for which an election is NOT being made. If multiple sales or exchanges provide an aggregated figure and
attach a schedule of transactions.
LINE 6(g) - C
Add the amount of depreciation claimed on the federal return that is attributable to an increase in the basis of assets that has not been recognized for NH
purposes pursuant to RSA 77-A:4, XIV(a)(1).
For sales or exchanges occurring on or after January 1, 2016, an entry on this line is required to account for federally reported depreciation attributable to an
increase in the basis of assets attributable to a sale or exchange transaction where an election to recognize the basis increase pursuant to RSA 77-A:4, XIV(b)
was not made in the current taxable period, or a prior taxable period, for the economic life of the asset(s) in question.
For sales or exchanges occurring before January 1, 2016, an entry on this line is required to account for federally reported depreciation attributable to an
increase in the basis of assets attributable to a sale or exchange transaction where an addition to gross business profits was not made in accordance with Rev
303.05, for the economic life of the asset(s) in question.
LINE 6(g) - D
Adjust the gain or loss with respect to the sale of assets to account for an increase in the basis of assets that was not recognized for NH purposes pursuant to
RSA 77-A:4, XIV(a)(2).
For sales or exchanges occurring on or after January 1, 2016, an entry on this line is required to account for federally reported depreciation attributable to an
increase in the basis of assets attributable to a sale or exchange transaction where an election to recognize the basis increase pursuant to RSA 77-A:4, XIV(b)
was not made in the current taxable period, or a prior taxable period, upon the sale or disposition of the asset(s) in question.

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Department of
Revenue Administration

2023
NH-1041

FIDUCIARY BUSINESS PROFITS
TAX RETURN
LINE-BY-LINE INSTRUCTIONS
(continued)

LINE 6(g) - D continued
For sales or exchanges occurring before January 1, 2016, an entry on this line is required to account for federally reported depreciation attributable to an
increase in the basis of assets attributable to a sale or exchange transaction where an addition to gross business profits was not made in accordance with Rev
303.05, upon the sale or disposition of the asset(s) in question.
Enter the cumulative total of all items and adjustments reported on lines 6(g) - A through 6(g) - D.
LINE 6(h)
Add Qualified Investment Company (“QIC”) holder's proportional share of QIC profits on this line. A business organization which holds an interest in a QIC must add to
gross business profits its share of the QIC profits for the year, losses are not deducted. If the QIC makes a distribution, do not include the distribution in gross business
profits of the interest holder.
LINE 6(i)
Deduct assistance payments under 12 U.S.C. §1823. Deduct assistance payments included on the federal return for assistance payments made to insured depository
institutions. The Federal Deposit Insurance Corporation is authorized, in its sole discretion and upon such terms and conditions as the Board of Directors may
prescribe, to make loans to, to make deposits in, to purchase the assets or securities of, to assume the liabilities of, or to make contributions to, any insured depository
institution.
LINE 6(j)
Net Lines 6(a) through 6(i).
LINE 7
Adjusted Gross Business Profits (combine Lines 5 and 6(j)).
LINE 8 - NEW HAMPSHIRE APPORTIONMENT
Business organizations which have business activity, including rental activity, both inside and outside this state AND which are subject to income taxes (or a franchise
tax measured by net income) in another state, or are subject to the jurisdiction of another state to impose a net income tax or capital stock tax upon it, whether or not
actually imposed by the other state, must apportion gross business profits to New Hampshire by using Form DP-80, Apportionment of Income. Form DP-80 may be
obtained from the Department's website at www.revenue.nh.gov or by calling the Forms Line at (603) 230-5001.
After completing Form DP-80, enter the apportionment to six decimal places on Line 8. All others enter 1.00 on Line 8. A business organization whose activities do not
exceed the protection of P.L. 86-272 shall claim the exemption by checking the box and entering 0.00 on Line 8.
LINE 9
Enter New Hampshire Business Profits before NOL. Enter the product of Line 7 multiplied by Line 8. If negative, enter zero.
LINE 10
Deduct the allowable net operating loss carry forward from a prior year on this line. Use Forms DP-131-A and DP-132 to calculate this deduction.
The Net Operating Loss Deduction (NOLD) must be apportioned to the taxable period(s) in which the loss occurred to determine the amount of the carry forward
based on the apportionment reported on the Form DP-80 in the year of the loss. Form DP-132 must be attached for this deduction. You must report the NOLD
available and the amount of NOLD available on Line 10-A and the amount of the NOLD to be carried forward on Line 10-B.
LINE11
New Hampshire Business Profits. Line 9 minus Line 10. The amount cannot be less than zero.
LINE 12
Enter the product of Line 11 multiplied by 7.5% (for taxable periods ending on or after December 31, 2023).
LINE 13(a) - CREDITS
If you have paid the BET in this tax period, or have carry over BET credits from the tax period ending on or after December 31, 2014, and have no other credits, enter
the BET credit here, and you must include the Business Enterprise Tax Credit Worksheet, Form BET-CW.
LINE 13(b)
If you have credits in addition to the BET credit enter the total credits available on this line. Do not also enter BET credits on Line 13(a). (Attach Form DP-160; only use if
you have available credits other than BET).
LINE 14
New Hampshire Business Profits Tax Net of Statutory Credits (Line 12 minus Line 13(a) or Line 13(b)). The amount cannot be less than zero. Enter the amount from Line
14 on Line 1(b) of the NH BT- Summary Form.

THIS RETURN MUST BE FILED WITH THE BT-SUMMARY AND ALL APPLICABLE FEDERAL SCHEDULES.

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