165 Schedule K-1(NR): Schedule K-1(NR) Arizona Nonresident and Out-of-State Partner's Share (2025)
Arizona · Arizona DOR · Used for tax years 2025
Arizona Form 165 Schedule K-1(NR) reports a nonresident or out-of-state partner’s share of partnership income and deductions, including Arizona-source amounts and adjustments from federal to Arizona income. It also reports certain capital gain information and the partner’s share
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 2025.
The form specifically states that all corporate partners and partners that are partnerships must use this schedule.
What you'll need
Have these forms and details available to complete the schedule:
- Federal Form 1065, Schedule K-1, for the partner’s share of income, deductions, and capital gains or losses.
- Arizona Form 165, page 1, line 6, for the adjustment of partnership income from federal to Arizona basis.
- The partner’s name, address, tax identification number, and type of partner, plus the partnership’s name, address, and EIN.
- The partner’s beginning- and end-of-year percentages for profit sharing, loss sharing, and ownership of capital.
- Arizona apportionment ratios and Arizona-source income amounts.
- The partnership’s PTE election status and the partner’s consent status. If line C applies, provide the beneficial owner’s name and tax identification number.
- When applicable, the partner’s share of PTE tax credits and PTE taxes paid in 2025, separated by the tax years covered.
Common mistakes
- Leaving out supporting schedules: Lines 12 and 14 say to include a schedule for other income or loss and other deductions.
- Using the wrong reporting guidance for corporate partners: The note for line 15 directs corporate partners to the Form 120 or Form 120A instructions.
- Overlooking 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 it includes none.
- Completing Part 8 without the required consent: Complete Part 8 only if the partner consented to the partnership’s PTE election for this year or a prior year. Otherwise, leave it blank.
- Including amounts already excluded or accounted for: Part 4 calls 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.
Questions people ask
Can this schedule be marked as amended?
Yes. The form has checkboxes for “Original” and “Amended.” Check one.
Must the partnership complete Part 3 for every partner?
No. Part 3 is not required if the partner’s federal Schedule K-1 does not include net capital gain or loss from investment in a qualified small business as determined by the Arizona Commerce Authority.
When can Part 6 be left uncompleted?
The partnership is not required to complete Part 6 if the partner’s federal Schedule K-1 does not include any net capital gain or loss from the exchange of legal tender.
Where does an individual report the PTE tax credit on line 23?
Individuals enter the amount on Form 355, Part 1, line 1. Estates and trusts are directed to the instructions for Form 141AZ, line 19.
How are Arizona PTE taxes paid in 2025 separated on this schedule?
Line 24 reports the partner’s share of Arizona PTE taxes paid in 2025 for taxable years before 2025. Line 25 reports the share paid in 2025 for taxable year 2025.