2023 Pass-Through Entity Partnership Example

Note: Partnerships and LLCs being taxed as a partnership that have resident partners will need to complete Schedule PTE-RP and file it with Schedule PTE. 

Lines 1 through 27 of this Schedule PTE does not include any of Cruz’s attributes since he is a resident partner and will report his distributive share on Schedule PTE-RP. It does not include any of Hudson Corporation’s attributes since it is a nonqualifying owner. 

Based on information from Rusty Bumpers federal 1065, Line 1 of Schedule PTE is $24,000. Line 4 is $21,000 based on the amount reported on Sally’s Schedule KPI. 

Rusty Bumpers’ Minnesota apportionment factor is 75% and entered on Line 6. 

Line 8 is the Minnesota portions of Sally’s amounts from her Schedule K-1.

Line 11 is $15,000 based on the amount reported on Sally’s Schedule KPI.

Line 14 is Sally’s distributive share of Rusty Bumpers PTE taxable income. 

Line 22 equals Line 14 since Sally is electing to have her Minnesota income tax filing requirement fulfilled by the entity’s filing of Schedule PTE. 

Lines 23 and 24 allow subtractions for a portion of Section 179 and federal bonus depreciation for specific partners and shareholders. These lines only apply to partners and shareholders that:

• Have the current year Schedule PTE fulfill their filing obligation.
• Have elected composite tax or had PTE tax fulfill their filing requirement in a prior year in which an addition for Section 179 or federal bonus depreciation was required.

The Schedule PTE is fulfilling Sally’s filing requirement and she elected composite in a year during which a $30,000 bonus depreciation addition was required.

Line 27 is Sally’s $20,685 PTE tax.  

Line 28 is Cruz’s $55,160 PTE tax from Schedule PTE-RP, Line 13. See the Schedule PTE-RP example for more information.  

Line 29 is the sum Lines 21, 27, and 28. This amount flows to forms M3 or M8 and is paid by the entity. 

Note: Schedule PTE-RP is only used by partnerships electing to pay PTE tax who have resident partners. Schedule PTE-RP must be filed with Schedule PTE.

This Schedule PTE-RP does not include any of Sally’s attributes since she is a non-resident partner and will report her distributive share on Schedule PTE.

Based on information from Rusty Bumpers federal 1065, Line 1 of Schedule PTE-RP is $48,000. Line 4 is $42,000 based on the amount reported on Cruz’s Schedule KPI. 

Line 5 is the total amounts from Cruz’s federal Schedule K-1, special allocations, and guaranteed payments.

Line 8 is $30,000 based on the amount reported on Cruz’s Schedule KPI.

Lines 9 and 10 allow subtractions for a portion of Section 179 and federal bonus depreciation for specific partners and shareholders. These lines only apply to partners and shareholders that:

• Have the current year Schedule PTE fulfill their filing obligation.
• Have elected composite tax or had PTE tax fulfill their filing requirement in a prior year in which an addition for Section 179 or federal bonus depreciation was required.

Line 9 reports Cruz’s $60,000 delayed bonus depreciation subtraction. 

Line 13 is Cruz’s $55,160 PTE tax. This amount flows to Schedule PTE Line 28. 

Cruz’s credit amount from the credit distribution on Schedule PTE flows to Schedule KPI, Line 30. The box on line 30 is not checked on his Schedule KPI. Cruz is not eligible to have Schedule PTE fulfill his filing requirement because he is a full year resident of Minnesota.

Sally’s credit amount from the credit distribution on Schedule PTE flows to Schedule KPI, Line 30. The box on line 30 is checked on her Schedule KPI, because she is a non-resident and is having Schedule PTE fulfill her filing requirement.