165 Schedule K-1(NR): SchedK1NR Schedule K-1(NR) Arizona Nonresident and Out-of-State Partner's Share (2024)
Arizona · Arizona DOR · Used for tax years 2024
Arizona Form 165 Schedule K-1(NR) reports a nonresident or out-of-state partner’s share of partnership income, deductions, and adjustments from federal to Arizona amounts. It also reports Arizona-source income and, when applicable, the partner’s share of pass-through entity tax c
Who files this form
Arizona Form 165 Schedule K-1(NR) reports a nonresident or out-of-state partner’s share of partnership income and deductions for 2024.
The form states that all corporate partners must use this schedule.
What you'll need
Have these forms and details available to complete the schedule:
- The partner’s federal Schedule K-1 (Form 1065), which provides the distributive share items and capital gain or loss information.
- Arizona Form 165, page 1, line 6, for the adjustment of partnership income from federal to Arizona basis.
- The partner’s tax identification number, the partnership’s EIN, and both parties’ names and addresses.
- The partner’s type and beginning- and end-of-year percentages for profit sharing, loss sharing, and ownership of capital.
- Arizona apportionment ratios and Arizona-source income amounts.
- Information about the partnership’s PTE election and the partner’s consent. If Part 8 applies, have the partner’s share of the PTE tax credit and the PTE taxes described on lines 24 through 27.
Include a schedule for any other income or loss reported on line 12 and other deductions reported on line 14.
Common mistakes
- Completing Part 8 without the required consent. Complete it if the partner consented to the partnership’s PTE election for this year or a prior year. Otherwise, leave it blank.
- Using the Form 140NR direction for a corporate partner’s line 15 amount. The form tells corporate partners to see the Form 120 or Form 120A instructions for reporting that amount.
- Including amounts already excluded or accounted for. Part 4 asks for airdrop values only to the extent not already excluded from Arizona gross revenue under the Internal Revenue Code. Part 5 covers gas fees not already included in the partnership’s virtual currency or non-fungible token basis.
- Overlooking the PTE tax addbacks. Lines 24 through 27 direct individuals to add the amounts back on Form 140NR, page 5, line L, or, if they made the Small Business Income election, Form 140NR-SBI, line 24. Estates and trusts use Form 141AZ, Schedule B, line B3.
Questions people ask
Does the partnership always need to complete Part 3?
No. Part 3 is not required if the partner’s federal Schedule K-1 does not include any net capital gain or loss from investment in a qualified small business as determined by the Arizona Commerce Authority.
When is Part 6 required?
The form says Part 6 is not required if the partner’s federal Schedule K-1 does not include any net capital gain or loss from the exchange of legal tender.
When should the partnership complete Part 7?
Complete lines 20 through 22 if the partner’s federal Schedule K-1 includes capital gain or loss. Part 7 is not required if that federal schedule does not include any capital gain or loss.
Where does an individual report the PTE tax credit from line 23?
Enter the amount on Form 355, Part 1, line 1. Estates and trusts should see the instructions for Form 141AZ, line 19, to claim the credit.