165: Partnership Income Tax Return (2025)
Arizona · Arizona DOR · Used for tax years 2025
Arizona Form 165 is the 2025 Partnership Income Tax Return. It reports partnership income and adjustments from federal to Arizona basis, and includes calculations for tax paid at the entity level under the Pass-Through Entity (PTE) election.
What you'll need
Have these records and details available to complete the return:
- Federal Form 1065 and Schedule K: The form uses federal ordinary business and rental income or loss and the federal business activity code.
- Arizona adjustment details: Federal and recalculated Arizona depreciation, interest, property basis adjustments, and applicable additions and subtractions.
- Partner information: Names, addresses, tax identification numbers, residency or entity classifications, distributive shares, and PTE election participation for Schedules D and E.
- Payment records, if applicable: Estimated tax payments, extension payments, payment dates, and payments or overpayments from earlier versions of the return.
- Multistate business records, if applicable: Property, payroll, sales, and other receipts for Arizona and everywhere. Qualifying air carriers must use Schedule ACA. Qualifying multistate service providers must include Schedule MSP.
Submit copies of IRS reports if the IRS made adjustments to the partnership’s federal returns that were not previously reported to the department.
How to file
E-file is required unless the partnership has a waiver or is exempt from e-filing. The form refers readers to the instructions for details, but no instructions were provided here.
A partner must sign and date the declaration and provide their printed name and title.
The supplied form does not give a mailing address or explain how to obtain an e-filing waiver.
Common mistakes
- Do not mark the area labeled “Revenue Use Only.”
- Complete Schedule D for all partners. Include additional schedules if there are more than 10 partners.
- Check that lines 16A and 16B add up to line 16.
- Check that lines 12, 14, 16, and 18 add up to line 10.
- Schedule E, line E8, column (c), should equal 1.000000.
- If you check “Sales Factor Only” on page 1, line F, complete only Schedule C, Section C3, lines a through f. Skip lines C4 and C5.
- Qualifying air carriers must use Schedule ACA, and qualifying multistate service providers must include Schedule MSP.
Questions people ask
When should the partnership complete Part 2?
Complete Part 2 if the partnership answered “Yes” to the PTE election question on page 1, or if it made estimated payments but is not claiming the PTE election.
What PTE tax rate appears on the 2025 form?
The form uses a rate of 2.5% (0.0250) on lines 20 and 24.
Can an overpayment be applied to next year’s estimated tax?
Yes. Line 39 lets the partnership apply part or all of the line 38 overpayment to 2026 estimated tax. Line 40 shows the amount to be refunded after subtracting line 39 from line 38.
How does the partnership report a federal imputed underpayment assessment?
For taxable years 2016 through 2025, the form says to file Arizona Form 165PA if the partnership received a federal imputed underpayment assessment or filed an Administrative Adjustment Request that resulted in one.