165PA Schedule K-1(NR): and Out-of-State Partner's Share of Arizona Partnership Adjustment (2025)
Arizona · Arizona DOR · Used for tax years 2025
Arizona Form 165PA Schedule K-1(NR) reports a nonresident or out-of-state partner’s share of an Arizona partnership adjustment following an IRS audit. It shows the partner’s portion of the adjustment, the partnership’s Arizona apportionment ratio, and the resulting Arizona-source
Who files this form
This schedule reports a nonresident or out-of-state partner’s share of an Arizona partnership adjustment after an IRS audit. The partnership prepares it to help the partner report the adjustment on an amended Arizona income tax return.
Corporate partners and partners that are partnerships must use this schedule. It also provides reporting instructions for nonresident individual partners and nonresident estate and trust partners.
Do not use this schedule to distribute a partner’s share of income from Form 165.
When it's due
For the 2025 Arizona amended return, submit the return to the department within 150 days of the IRS final determination date shown on line 1.
If the due date falls on a Saturday, Sunday, or legal holiday, the return is timely if postmarked on the next business day.
What you'll need
The schedule calls for:
- The partner’s name, address, and identifying number.
- The partnership’s name, address, and employer identification number (EIN).
- The calendar or fiscal tax year and the IRS final determination date.
- If the “Amended” box is checked, the date the original Form 165PA was filed.
- The partner’s portion of the Arizona partnership adjustment and the partnership’s Arizona apportionment ratio.
To report the adjustment, the form identifies these amended returns by partner type: Form 140X for nonresident individuals, Form 141AZ for nonresident estates and trusts, Form 165 for partnerships, and Form 120X for corporate partners.
How to file
The partnership completes the schedule. Enter the partner’s portion of the adjustment on line 3 and the Arizona apportionment ratio on line 4. Multiply line 3 by line 4 and enter the Arizona-source adjustment on line 5.
Partners report the adjustment as follows:
- Nonresident individuals: Report a positive line 5 amount on Form 140X, line 23. Report a negative line 5 amount as a positive number on line 25.
- Nonresident estates and trusts: Report a positive line 5 amount on amended Form 141AZ, Schedule B, line B3. Report a negative amount as a positive number on line B9.
- Partnership partners: Report a positive line 3 amount on amended Form 165, Schedule A, line A4. Report a negative amount as a positive number on Schedule B, line B5.
- Corporate partners filing Form 120X: Report a positive line 3 amount on Schedule D, line D8. Report a negative amount as a positive number on Schedule E, line E10.
For corporate partners, no additional adjustments are necessary if the partnership income is business income. For nonbusiness income, include any nonapportionable or allocable portion of line 3 on Form 120X, page 1, line 7. Include any portion of line 5 allocable to Arizona on page 1, line 11.
The form directs partners to submit their amended Arizona return to the department. It does not provide a mailing address or e-filing instructions.
Common mistakes
- Using this schedule for regular partnership income: The form says not to use it to distribute a partner’s share of income from Form 165.
- Checking “Amended” without a prior schedule: Check this box only if Form 165PA, Schedule K-1(NR) for the same year was previously provided to this partner.
- Replacing an amount when the schedule is marked “Original”: Line 3 is in addition to the amount passed through on Form 165, Schedule K-1(NR). Do not replace that original amount.
- Adding an amount when the schedule is marked “Amended”: Line 3 replaces the amount previously passed through on Form 165PA, Schedule K-1(NR).
- Using the wrong calendar year: If you file on a calendar-year basis and the partnership uses a fiscal year, report the adjustment on your amended return for the calendar year in which the partnership’s fiscal year ends.
Questions people ask
Why did I receive this schedule?
The IRS audited a partnership in which you are a partner, and the partnership passed the assessment through to its partners. This schedule helps you report your share of the Arizona adjustment.
What is the difference between lines 3 and 5?
Line 3 is your portion of the Arizona partnership adjustment. Line 5 is that amount multiplied by the partnership’s Arizona apportionment ratio on line 4.
Do all partners use line 5 on their amended returns?
No. Nonresident individuals, estates, and trusts use line 5. Partnership partners and corporate partners use line 3 for their additions or subtractions. Corporate partners with nonbusiness income may also need the adjustments described in the form.
How do I report a negative adjustment?
Enter it as a positive number on the applicable subtraction line identified in the partner instructions.