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                        Multnomah County Preschool for All Personal Income Tax 
                                     2022 Form MC-40 Personal Income Tax Return Instructions 
                                                       Full Year Resident 

                                                                    See Publication OR-17 for more information about personal 
Important Updates                                                   income      tax    laws. It is available at
                                                                    www.oregon.gov/dor/forms. To the extent  necessary, 
Net Operating Losses from Pass-Through Entities.                    references in Publication OR-17 to the state of Oregon or 
Individuals are allowed a net operating loss generated in the       its agencies should be treated as references to Multnomah 
current year on the MC-40 to the extent the loss is allowed         County and its agents. 
on  the  federal  and  Oregon  return  and  included  in             
Multnomah  County  taxable  income.  However,  a  net               Individuals  Required  to  File  a  Full-Year  Multnomah 
operating loss deduction (NOLD) claimed on your federal             County Preschool for All (PFA) Tax Return. Every full-
return must be added back on Schedule PTI if the NOLD is            year resident of Multnomah County who is required to file 
related to  a pass-through entity that was subject to the           an Oregon income tax return for the taxable year and who 
Multnomah County Business Income Tax. 
                                                                    reports Oregon  taxable  income  over $200,000 using 
 
                                                                    Oregon filing status married filing jointly, head of household, 
If you added back the net operating loss generated from a 
past-through entity that was also subject to the Multnomah          or  qualifying  surviving  spouse,  or  over  $125,000  using 
County  Business Income Tax, there are  two  options                Oregon filing status single or married filing separately is 
available:                                                          required  to  file  a  Multnomah  County  full-year  personal 
                                                                    income tax return. 
 1.  You may amend your 2021 Form MC-40 to remove 
             the pass-through  modification addition of  the net    Residency. You are a full-year Multnomah County resident 
             operating loss.                                        if you live within Multnomah County for the entire year. You 
 2.  You may make the correction on your 2022 Form                  are also a full-year Multnomah County resident, even if you 
             MC-40 by taking a pass-through modification for the    live outside of Multnomah County, if all of the following are 
             net operating loss that was added back in the prior    true: you consider Multnomah County as your permanent 
             year. If you elect this treatment, make sure to attach home;  Multnomah County  is the center of your financial, 
             a statement explaining the adjustment.                 social, and family life; and Multnomah County is the place 
                                                                    you intend to return after an absence. You are still a full-
If the full net operating loss cannot be utilized in the current    year resident  if you temporarily move out of  Multnomah 
year, there is no carryforward of the net operating loss for        County  or move back to  Multnomah County  after a 
Multnomah County Preschool for All Personal Income Tax 
                                                                    temporary  absence.  An  individual  must  be  an  Oregon 
purposes. 
                                                                    resident for taxable  purposes to  be a Multnomah County 
 
There’s no additional modification for the pass-through loss        resident. To determine if your place of residence is located 
allowed on the Form MC-40.                                          within the Multnomah County tax jurisdiction, utilize the tool 
                                                                    available at  www.portlandmaps.com to see  if Multnomah 
                                                                    County is listed as the county jurisdiction where the address 
General           Information 
                                                                    is located. 
File and Pay Online and Manage Your Tax Accounts at 
                                                                    Filing Deadline. The filing deadline for this return is April 
Pro.Portland.gov. Portland Revenue Online (PRO) allows 
                                                                    18, 2023. 
you to: 
                                                                    Extensions.  The  Revenue  Division  does  not  allow  an 
 •           Register your personal and business tax accounts 
                                                                    extension of time to pay your tax. The submission of an 
 •           Update your account information 
                                                                    extension payment by the original return due date provides 
 •           File a personal tax return                             an automatic six-month filing extension. If you do not have 
 •           Make payments                                          a tax balance due but would like to file an extension, your 
 •           Upload supporting tax pages and documents              federal and/or state extension will serve as your extension. 
 •           View correspondence mailed to you                      When filing your return on the extended due date, check the 
 •           Provide Third-Party Access to your tax preparer        “Extension Filed” box on the return. If no extension payment 
                                                                    was made, please attach a copy of your federal extension 
For  more  information  and  to  create  your  account,  visit 
                                                                    or verification of your Oregon extension payment with your 
Pro.Portland.gov. 
                                                                    return.  
Publication OR-17.  Multnomah County  personal income 
                                                                     
tax closely follows Oregon personal income tax treatment. 

Page  1of  ,72022 MC-40 Instructions (Rev. 01/22/2023)

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                                                                       return. If you do not pay your tax by the original due date, 
Penalty Calculation 
                                                                       the following penalties will be applied: 
 
                                                                         •
You  may  be  subject  to  penalties  for  underpaying  your               5% of the amount of the unpaid tax if the failure to 
estimated tax, filing a late 2022 Form MC-40, and/or paying                pay is for a period less than four months. 
your income tax liability after the original due date of the             • An additional penalty of 20% of the unpaid tax if the 
return. Although there is a late penalty for both failing to file          failure to pay is for a period of four months or more. 
a personal tax return by the due date and failing to pay the             • An additional penalty of 100% of the unpaid tax of 
tax by the original due date of the return, only one of these              all tax years if the failure to pay is for three or more 
late penalties will be applied, even if there is a failure of both         consecutive tax years. 
requirements. In these cases, only the late filing penalty is 
applied. For the purposes of penalty calculations, unpaid tax          Interest Calculation 
                                                                        
is your tax liability reduced by  any  payment of tax  made 
                                                                       Interest is calculated at 10% per annum (.00833 multiplied 
before the original due date and any credit against tax that 
                                                                       by the number of months). Calculate your interest from the 
is claimed on the return.  
                                                                       original due date to the 15th day of the month following the 
 
                                                                       date of the payment.  
Underpayment            Penalty                                         
You may be subject to a penalty for underpaying your                   Quarterly Underpayment Interest 
                                                                        
estimated tax if, by the original due date of the return, 
                                                                       Quarterly underpayment  interest will be due if estimated 
timely prepayments are not made which are either:  
                                                                       payments were required  and were  underpaid. Estimated 
   •         At least 90% of the total tax balance due, or             payments  can  be  made  through  quarterly  estimated 
   •         100%  of the prior year’s tax liability  paid  by the     payments, employer-provided  withholding from a  filer’s 
             original due date.                                        wages, or a combination of both.  Calculate your quarterly 
                                                                       underpayment interest at a rate of 10% per annum from the 
If you did not satisfy either requirement, you will be charged         due date of each quarterly estimated payment to the original 
an underpayment penalty of 5% of the unpaid tax, but not               due date of the tax return to which the estimated payments 
less than $5.                                                          apply.  The  amount  of  underpayment  is  determined  by 
                                                                       comparing the 90% of the current total tax liability amount 
                                                                       to quarterly estimated payments made prior to the original 
Late Filing Penalty                                                    due date of the tax return.   
 
If you do not file your 2022 Form MC-40 by the original due              
date, file an extension with the Revenue Division by the               There is no interest on underpayment of quarterly estimated 
original due date, or include a copy of your federal extension         payments if: 
with your return when you file by the extended due date, the             • The total tax liability of the prior tax year was less 
following penalties will be applied:                                       than $1,000. 
                                                                         • An amount equal to at least 90% of the total tax 
   •         5% of the amount of the unpaid tax if the failure to          liability for the current tax year was paid  in 
             file is for a period less than four months.                   accordance with Section 11.548; or 
   •         An additional penalty of 20% of the unpaid tax if the       • An amount equal to at least 100% of the prior year's 
             failure to file is for a period of four months or more.       total tax liability was paid  in accordance with 
                                                                           Section 11.548. 
   •         An additional penalty of 100% of the unpaid tax of 
             all tax years if the failure to file is for three or more Federal, Oregon, and Multnomah County 
             consecutive tax years. 
                                                                       Business Tax Returns 
 
No late filing penalty is due if a timely extension is filed with 
                                                                       Please submit the following forms and schedules with your 
the Revenue Division and a 2022 Form MC-40 is filed by                 return. Without this information, we may disallow or adjust 
the extended due date, or a copy of the federal extension is           items claimed on your Multnomah County return. 
included  with the return and the  ‘Extension Filed’ box is             
checked. 
                                                                       Required Supporting Oregon Tax Pages 
                                                                        
Late Payment Penalty                                                   Be sure to include the following Oregon tax pages and any 
                                                                       associated statements when submitting your return: 
Your 2022 income tax must be paid by April 18, 2023, even                • Form OR-40, pages 1-3 
if you requested  an extension to file your  personal tax                • Schedule OR-ASC (if filed) 

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• Schedule OR-K-1(s) (if Multnomah County pass- Filing Status. Check the box next to your filing status. You
through income adjustment claimed) must use the filing status corresponding with the filing status
used on your Oregon tax return. Choose only one filing
status.
Required Supporting Federal Tax Pages

Be sure to include the following federal tax pages and any Taxpayer’s Last Name; First Name and Initial. If filing
associated statements when submitting your return: jointly, enter the last name, first name, and middle initial (if
applicable) of the taxpayer listed as the primary filer on the
• Federal Form 1040, pages 1-2
Form OR-40. If taxpayer died during the tax year, check the
• Federal Schedule 1
“deceased” box. A personal income tax return must be filed
• Schedule B (if filed)
for a person who died if the person would have been
• Schedule C (if filed) required to file. If you have been appointed personal
• Schedule D (if filed, including Form 4797, Form representative or you have filed a small estate affidavit, sign
6252, and Form 8824)) the return as “personal representative.” A surviving spouse
• Schedule E (if filed) must sign if it’s a joint return. If there is no personal
• Schedule F (if filed) representative for the deceased person, only the surviving
• Form 4868 (if federal extension filed) spouse needs to sign a joint return.
• Form(s) W-2 (if Multnomah County PFA tax
withheld) Spouse’s Last Name; First Name and Initial. If filing
• Form 1099-R (if PERS or federal retirement jointly or as married filing separately, enter the last name,
exemption claimed) first name, and middle initial (if applicable) of the individual
• Schedule(s) K-1 (Form 1065/Form 1120-S/Form listed as the spouse on Form OR-40. If taxpayer died during
1041) (if Multnomah County pass-through income the tax year, check the “deceased” box. A personal income
adjustment claimed) tax return must be filed for a person who died if the person
would have been required to file. If you have been
• Form 8582 if passive activity loss limitations apply
to Multnomah County pass-through loss adjustment appointed personal representative or you have filed a small
estate affidavit, sign the return as “personal representative.”
Required Multnomah County Business Tax A surviving spouse must sign if it’s a joint return. If there is
Pages no personal representative for the deceased person, only
the surviving spouse needs to sign a joint return.
• FORM SP-2022 Combined Tax Return for
Individuals – Multnomah County Business Income Social Security Number. Enter the Social Security Number
Tax/City of Portland Business License Tax (if (SSN) or Individual Tax Identification Number (ITIN) of the
Multnomah County pass-through income corresponding taxpayer and spouse. Refunds will not be
adjustment claimed for sole-proprietor or issued without a valid SSN or ITIN.
disregarded entity business income)
Residence Address. Enter the residential address. If the
primary taxpayer and spouse have different residential
Tax Return Filing Instructions addresses, list the address of the primary taxpayer. If the
residential address has changed, list the current address
Rounding. Round off cents to whole dollars on your return and mark the “check if changed” box. Unless a mailing
and schedules. To round, drop amounts under 50 cents and address is provided, correspondence will be sent to the
increase amounts from 50 to 99 cents to the next dollar. For residence address on file.
example, $1.39 becomes $1 and $2.50 becomes $3. If two
or more amounts must be added to figure the amount to Mailing Address. Only enter an address if the mailing
enter on a line, include cents when adding the amounts and address is different from the residential address. If the
round off only the total. mailing address has changed, list the current address and
mark the “check if changed” box.
General Return Information

Initial Return Box. Check this box if this is your initial
Multnomah County Preschool for All Personal Income return, if your filing status changed from the previous year,
Tax Account #. If you have already registered for an or if the person you are filing jointly with changed from the
account and know your account number, enter your full previous year.
Multnomah County PFA Tax Account number beginning
Final Return Box. Check this box if this is your final return.
with MCP followed by ten digits. If you do not know your
number, leave field blank. Amended Return Box. Check this box if you are filing an
amended return and have already submitted an original
return. You must include a copy of your original return with

Page 3of ,72022 MC-40 Instructions (Rev. 01/22/2023)

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your amended return. If you also filed amended federal and enter $125,000 on line 4. If you use the joint filing status of
state returns, please include a copy. Fill in all amounts on married filing jointly, head of household, or qualifying
your amended return, even if they are the same as originally surviving spouse, enter $200,000 on line 4. Enter as a
filed. If you are amending to make a change to additions, negative number.
subtractions, or credits, include detail of all items and
amounts as well as any carryovers. Line 5. Income Subject to Tax. Enter the sum of lines 1
through 4 on line 5. If the balance is less than $0, enter $0.
If you change taxable income by filing an amended federal If you have $0 income subject to tax, you are not required
or Oregon income tax return, you must file an amended to file, but may choose to do so if you have had tax withheld
Form MC-40 within 60 days of when the amended federal or made prepayments and you wish to request a refund.
or Oregon income tax return was filed. Include a copy of
your amended federal or Oregon income tax return and Line 5a. Tier 1 Taxable Income. Enter the balance of line
explain the adjustments made. 5. This is the total amount of income that exceeds the
Multnomah County income exemption.
On the prepayments line of your amended Form MC-40,
enter the net tax as reflected on the original return or as Line 5b. Tier 2 Taxable Income. Enter the balance of line
previously adjusted. Do not include any penalty or interest 5 minus $125,000 if filing single or married filing separately,
portions of payments already made. or line 5 minus $200,000 if filing married filing jointly, head
of household, or qualifying widower, on line 5b. This is the
Extension Filed Box. Check this box If you have filed a total amount of income that exceeds $250,000 if filing as
federal or state extension, or if you submitted an extension single or married filing separately and $400,000 if filing as
payment by the original due date of the return. Include married filing jointly, head of household, or qualifying
required copies of federal or state extensions as applicable widower.
(see “Extensions” under “General Information” for additional
information). Part II – Multnomah County Preschool for
All Tax
Part I – Multnomah County Taxable

Income Line 6. Tier 1 Tax. Multiply line 5a by 1.5% and enter on

line 6.
Line 1. Oregon Taxable Income. Enter your Oregon
Taxable Income from Form OR-40, line 19. You must attach Line 7. Tier 2 Tax. Multiply line 5b by 1.5% and enter on
copies of the required Oregon and federal tax forms listed line 7.
in the instructions to your Multnomah County return. Line 8. Total Tax. Add line 6 and line 7 and enter on line 8.
Line 2. Exempt Income. Oregon Public Employees This is your total Multnomah County personal income tax
Retirement (PERS) benefits and federal retirement benefits, liability.

including Federal Employees Retirement System (FERS) Line 9. Credit for Taxes Paid to Another State. A
benefits, Civil Service Retirement System (CSRS) benefits, Multnomah County resident is allowed a credit for taxes
and military retirement benefits, that are taxed by Oregon paid to another state on mutually taxed income if the other
are exempt from this tax. Submit a copy of Form 1099-R for state does not allow the credit. This credit can only be taken
each source claimed. You are only allowed a deduction for if the filer claims a credit for income taxes paid to another
income that was not already exempted on your federal or state on the filer’s Oregon income tax return or if a
Oregon return. Enter as a negative number. composite return was filed and there was no credit allowed
Line 3. Pass-through Income Modification. If you on the other state’s return. A Multnomah County resident
received a Schedule K-1 (Form 1065) or a Schedule K-1 figures the credit as the lesser of the Multnomah County tax
(Form 1120-S) from a pass-through entity (PTE) that was based on mutually taxed income or the tax actually paid to
subject to the Multnomah County Business Income Tax the other state. To calculate the Multnomah County tax
(MCBIT), or if you have business income on your personal based on mutually taxed income, use the following formula:
income tax return that was subject to the MCBIT, complete
Mutually taxed income
Schedule PTI on page 2 and report your modification from ÷
line B-2 on line 3. Net pass-through gains will be reported Multnomah County income subject to tax from line 5
on this line as a negative value, and a net operating loss x
deduction will be reported on this line as a positive value. Multnomah County Tax
=
See instructions for Schedule PTI for additional guidance. Multnomah County tax based on mutually taxed income

Line 4. Multnomah County Income Exemption. If you use
the single filing status of single or married filing separately,

Page 4of ,72022 MC-40 Instructions (Rev. 01/22/2023)

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Enter the lesser of the Multnomah County tax based on
Part IV – Signature
mutually taxed income or the tax actually paid to the other
state on line 9. Enter as a negative number.
Signature(s). Be sure to sign and date your return. If you
Line 10. Employer Withholding. If you had Multnomah are filing a joint return, both taxpayers must sign. By signing
County PFA tax withheld from your wages by your the return, you acknowledge, under penalty of false
employer, complete Schedule WH on page 2 and enter the swearing, that the information on the return is true, correct,
total tax withheld from line A-2 on line 8 as a negative and complete.
number. If you have tax to pay, consider submitting a FORM
OPT to your employer to increase the amount your Preparer Signature. Anyone who prepares, advises, or
assists in preparing personal income tax returns in
employer holds from your wages. For withholding
exchange for compensation of any kind must be licensed to
information, go to: www.multco.us/finance/preschool-all-
prepare Oregon returns and must sign the return.
personal-income-tax.

Line 11. Prepayments. Enter the total amount of Mailing Instructions

prepayments as a negative number. Include all quarterly
estimated payments, extension payments, and any credits If you are including a payment with your return, send your
carried forward from prior years. completed return, payment, and all required supporting tax
pages to:
Line 12. Penalty. Enter all late and/or underpayment
penalties that apply, if known. Leave blank if unknown or not Revenue Division – Multnomah County PFA Tax
applicable. If additional penalty is owed but was not PO Box 9250
calculated at the time of return submission, you will receive Portland, OR 97207-9250
a bill by mail.
Make the check payable to ‘Multnomah County PFA Tax.’
Line 13. Interest. Enter any quarterly underpayment
For fastest payment processing, pay online by logging into
interest and/or interest due on taxes not paid by their due
your PRO account at Pro.Portland.gov.
dates, if known. Leave blank if unknown or not applicable.

If additional interest is owed but was not calculated at the
If a payment is not included with your return, send your
time of return submission, you will receive a bill by mail.
completed return and all required supporting tax pages to:
Line 14. Balance Due or (Overpayment). Add lines 8
through 13 and enter sum on line 14. If sum is positive, you Processing – Multnomah County PFA Tax
have a balance due. If sum is negative, you have an 111 SW Columbia St, Suite 600
overpayment for the year. Portland, OR 97201-5840

Part III – Tax Due / Refund
Schedule WH – W-2 Withholding Summary
Line 15. Overpayment. If line 14 is negative, this is the for Multnomah County PFA Tax

amount you have overpaid. If you have an overpayment,
you may choose to have the balance refunded to you or Use this schedule to calculate the total amount of
credited forward to the next year. If no election is made, any Multnomah County PFA tax that was withheld by your
overpayment will be refunded to you. employer. If your employer withheld the Multnomah County
PFA tax, information regarding the withholding will be
Line 15a. Refund. Enter the amount of the overpayment shown in boxes 18, 19, and 20 of your W-2. Round off cents
you would like refunded to you on this line. If you would like to whole dollars. If you have to add two or more amounts to
direct deposit of your refund, you must file your return online figure the amount to enter on a line, include cents when
at Pro.Portland.gov. If your return is filed on paper, you will adding the amounts and round off only the total. If you file a
joint Multnomah County tax return, include information for
receive your refund in the mail by check.
both the primary filer and spouse on Schedule WH.
Line 15b. Credit Carryforward. Enter the amount of the
overpayment you would like to apply as an estimated Only include box 18 and box 19 information if the locality in
box 20 says “MULT”, “MultCo”, or “Multnomah County”. Do
payment for tax year 2023 on this line. This election is
not include information for the locality of “Metro” or “Metro
irrevocable.
SHS”. Information for Metro withholdings will be reported on
Line 16. Amount Due. If line 14 is positive, a balance is the Metro Personal Income Tax return, which is a separate
due. Pay by April 18, 2023, to avoid late payment penalties form. If no Multnomah County PFA tax was withheld on your
behalf (or your spouse’s behalf, if filing jointly) by your
and interest. You may pay by check or online at
employer(s), you do not need to complete this schedule.
Pro.Portland.gov.

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business filed the MCBIT return for the tax year of the
Report each W-2 on a separate line. Round off cents to Schedule K-1; and 3) the PTE’s Multnomah County “income
whole dollars. If two or more amounts must be added to subject to tax” reported on the MCBIT return. Your
figure the amount to enter on a line, include cents when deduction should be the amount of your distributive share
adding the amounts and round off only the total. of the PTE’s income subject to tax reported to you with
Schedule K-1 or as filed on Form SP-2022. The deduction
Column (a). Employee SSN. Enter the social security is limited to the amount of pass-through income, from the
number of the filer shown in box a of the W-2. entity that paid the MCBIT, that is included in your federal
Form 1040.
Column (b). Employer Name. Enter the name of the
employer shown in box c of the W-2. Net operating losses generated in the current tax year at the
PTE level are allowed to be claimed at the individual level
Column (c). Employer FEIN. Enter the employer to the extent that the loss is allowed on the federal and
identification number (EIN) shown in box b of the W-2. Oregon return. A pass-through modification cannot exceed
the amount of pass-through income included in Oregon
Column (d). Local Wages, Tips, Etc. Enter the amount
taxable income and cannot reduce your Multnomah County
shown in box 18 of the W-2. Make sure that the locality taxable income to an amount below zero.
name shown in box 20 indicates that the value in box 18 is
for the Multnomah County PFA tax. If you claimed a net operating loss deduction on your federal
Form 1040 that was from a carryforward of passive activity
Column (e). Local Income Tax Withheld. Enter the loss or net operating loss from a PTE that was subject to the
amount shown in box 19 of the W-2. Make sure that the MCBIT in a prior year, the deduction is disallowed for
locality name shown in box 20 indicates that the value in purposes of the Multnomah County PFA Personal Income
box 19 is for the Multnomah County PFA tax. Tax and must be added back to your Multnomah County
taxable income as a pass-through modification. Include a
Check box if you have additional employer statement explaining the adjustment.
withholdings, and submit statement. If you have more
than four W-2s that show Multnomah County Tax Report each PTE on a separate line. If income or loss flows
withholdings, check the box, and attach a statement with the through one or more pass-through entities between the
employee SSN, employer name, employer FEIN, local entity that paid tax and your federal return, adjustments may
wages, tips, etc. and local income tax withheld for each be required. Submit a copy of the corresponding Schedule
additional W-2. Include the total amount from the statement K-1 or SP-2022 for each modification claimed.
on line A-2.

Line A-2. Total sum from column (e). Enter sum of all Column (a). Tax ID of Pass-Through Entity. Enter the S
Multnomah County Tax withheld from column (e) and the corporation or partnership employer identification number
supplemental statement (if applicable). Enter the amount from box A of the Schedule K-1 or the social security
from line A-2 on line 10, page 1 of the return. number of the sole proprietor who was liable for the MCBIT
on business income tax reported on the personal income
Schedule PTI – Pass-Through Income tax return.

Modification Column (b). Name of Pass-Through Entity. Enter the

name of the S corporation or partnership from box B of the
Use this schedule to determine the amount of pass-through Schedule K-1 or the name of the sole proprietor.
income modification to report for pass-through income/loss
that was already subject to the Multnomah County Business Column (c). Income Subject to Tax from Pass-Through
Income Tax (MCBIT). This schedule must be completed to Entity. For the deduction for pass-through income from a
determine the value for line 3 in Part I of the return. If your PTE’s income subject to tax, enter Multnomah County
pass-through income was not subject to tax under the “income subject to tax” from the S corporation or partnership
MCBIT for any reason, you are not eligible to claim a pass- return that was reported to you by the PTE with Schedule
through income modification. K-1 or that is reported on line 20 of Form SP-2022
(Combined Tax Return for Individuals – Multnomah County
You are allowed a deduction from personal taxable income Business Income Tax/City of Portland Business License
for pass-through income derived from a pas-through entity Tax).
(PTE) subject to the MCBIT. To take this deduction, you
must have documentation from the PTE showing your share For net operating loss deductions (NOLD) that must be
of income that was subject to tax on the business’s MCBIT added back, enter the amount of net operating loss
return. PTEs subject to the MCBIT who file on a return other deduction allowed on your federal return from a pass-
than the SP-2022 must provide their owners or partners through entity or sole proprietor subject to the MCBIT. Enter
information along with Schedule K-1 that indicates: 1) a loss as a negative number. Only include the allowable
whether the business is subject to the MCBIT; 2) that the loss.
Page 6of ,72022 MC-40 Instructions (Rev. 01/22/2023)

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Column (d).  Ownership  Percentage.  Enter your 
distributive share of the PTE’s business income subject to 
tax.  For a partnership  this would  be the profit/loss 
percentage reported on the K-1. For an S corporation, this 
would be the current year allocation reported on the K-1. 
For a sole proprietor, enter 100%. 
 
Column  (e).  Modification  Claimed  for  Pass-Through 
Income.      Multiply column (c) by column (d) and enter the 
result. Enter deductions for income from a PTE’s income 
subject to tax as a positive number. Enter losses as a 
negative number.  
 
Check  box  for  additional  pass-through  income 
modifications and statement.  If you have pass-through                        
income/loss from more than five PTEs to deduct                  or  add-
back, check the box, and attach a statement                     which includes 
the following information for each additional PTE: the tax ID 
of the  PTE; the name  of the PTE;  of the PTE’s  “income 
subject  to  tax”  reported  on  the  MCBIT  return  or  your 
required add-back of loss incurred by the PTE; and the total 
modification claimed related to the PTE. Include the total 
amount of additional modifications                     from the statement on 
line B-2.  
 
Line B-2. Total sum from column  (e).                       Enter sum of all 
eligible pass-through income/loss from column (e) and the 
supplemental statement (if applicable).  Enter the amount 
from line B-2 on line 3, Part I of the return. If you have a net 
loss, enter this as a positive number on line 3. If you have a 
net  gain,  enter  this  as  a  negative  number  on  
line 3. 

Page  7of  ,72022 MC-40 Instructions (Rev. 01/22/2023)

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