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11778: AZ - Resident Partners Not Issued K-1


Arizona

Why isn’t the program producing AZ Form 165 Schedule K-1 for Arizona residents?

 

An Arizona resident partner’s Schedule K-1 is produced only when there is a net adjustment on line 6 of the main form, the AZ 165. If there is no net adjustment, the resident partner does not receive a K-1, and the AZ DOR expects that partner to rely on the federal Schedule K-1 information to fill out an individual tax return.

By contrast, a nonresident partner always receives a Schedule K-1(NR), because it provides specific details that AZ requires for non-resident partners.

Take for example an Arizona partnership return where there is federal depreciation but no other adjustment. If there is federal depreciation, there will be an addition to partnership income for federal depreciation (line A1). However, if it happens that the recalculated AZ depreciation is an equal amount (line B1), the result is no net adjustment on line 6 and no Schedule K-1 for a resident partner. That partner will use the federal K-1 information to prepare an AZ individual income tax return.

The option Force print Form AZ-165K1 if no adjustments on screen 165 allows you to force the AZ-165K1 without any adjustment being present.

For more information, see the Arizona Partnership Income Tax Return Instructions.


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