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INSTRUCTIONS FOR FILING FORM GR-1065, PARTNERSHIP INCOME TAX RETURN
resident to a nonresident or from a nonresident to a resident of Grand
Rapids during the taxable year are first applied against income while a Other Income. Determine the excludible and taxable portions of other
resident, with the balance, if any, applied to Grand Rapids income while a income. Enter the excluded and taxable income totals on Schedule B.
nonresident. A partner’s personal and dependency exemptions may not be Ordinary Income from Other Partnerships. Determine the excludible and
claimed on more than one partnership return. Partners who are estates or taxable portions of ordinary income (or loss) from other partnerships.
trusts are allowed one exemption. Exemptions are not allowed to any other Attach a worksheet for each partnership, estate or trust that details the
partners (i.e., corporations, partnerships, etc.). The value of each Grand name, address, FEIN and the apportionment of this income. The ordinary
Rapids exemption is $600. business income of another partnership is allocated based upon the other
partnership’s Grand Rapids business allocation percentage and/or the
Column 7. Enter the taxable income, column 4 less columns 5 and 6. entity type of partner. Enter the excluded and taxable income totals on
Column 8. Enter tax due at the resident or corporation tax rate of 1.5% Schedule B.
(0.015) all taxpayers except nonresident individuals, estates or trusts. Total Apportioned Income. The totals from Schedule C, columns 5 and
Column 9. Enter tax due at the nonresident tax rate of 0.75% (0.0075), 6 must equal the total reported on Schedule B, columns 6 and 7,
nonresident individuals, estates or trusts only. respectively.
Column 10. The tax paid for each partner is equal to the tax due (column 8 SCHEDULE C – DISTRIBUTION TO PARTNERS
or 9) less, for resident individual partners only, any credit for tax paid to The totals reported in Schedule C, columns 1, 4, 5 and 6, the income
another city (Schedule G, column 6, for the partner). distribution to partners of adjusted ordinary business income, apportioned
The total of column 10 should equal the actual amount of tax paid by the income, and guaranteed payments to partners, must agree with the totals
partnership; the sum of the amounts reported on page 1 lines 2a, 2b, 2c, transferred from Schedule A, line 6, Schedule F, column 4 and Schedule B,
line 11 of columns 6 and 7, respectively.
2d and 3 less line 4, the tax overpayment.
SCHEDULE 2A – TAX CALCULATION SCHEDULE FOR Column 1. Enter in column 1 each individual partner's share of ordinary
adjusted business income from Schedule A, line 6. If Sec. 179 depreciation
DOWNSTREAM PARTNERSHIP (Disregard if information is included in Schedule A, and the partners have unequal credits for such
return) additional depreciation (e.g., if one partner is single and one is married
When partnership is a partner (downstream partnership) Schedule 2A, Tax filing jointly for federal income tax purposes), the apportionment of income
Calculation Schedule for Downstream Partnership, must be completed in to partners may require a special computation.
the same manner as Schedule 2. On the Schedule 2 line for the
downstream partnership, enter the downstream partnership name, Column 2. Enter the appropriate business allocation percentage based
employer identification number and the totals from Schedule 2A, columns 4 upon partner entity type. Individual resident and partnership partners (Sch
through 10. Schedule 2A is to be placed directly behind Schedule 2 when 2A not provided) use a 100% allocation. Individual nonresident, estate,
trust, corporation, exempt entity and foreign government partners enter the
filed. A separate Schedule 2A is required for each downstream partnership. business allocation percentage from Schedule D, line 5, or the special
SCHEDULE A – ALLOCABLE ORDINARY BUSINESS INCOME allocation percentage authorized. Disregarded entity and nominee partners
(LOSS) enter the appropriate allocation percentage based upon the entity type of
Schedule A is used to report and adjust the ordinary business income of the actual owner of the partnership interest.
the partnership. The ordinary business income as reported on federal Form Column 4. Enter the taxable portion of the guaranteed payments to
1065, page 1, line 22, must be adjusted for the following; Grand Rapids partners receiving them. If any portion of any guaranteed payment is
income tax deducted on the federal return must be added back; interest nontaxable Schedule F must be completed. The total of Column 4 must
must be added back; the federal Section 179 deduction and other
and any other costs incurred with the production of tax exempt income equal the total of Schedule F, column 4.
deductions allowed must be deducted; and ordinary income (loss) from Column 5. Enter taxable portion of the individual resident, corporation or
another partnership must be removed (as it is reported in Schedule B). other partners Schedule B income from Schedule B11, column 11.
The total adjusted ordinary business income reported on Schedule A, line Column 6. Enter the taxable portion of the individual nonresident, Estate or
6, is allocated to the partners in Schedule C. The total reported on trust partners Schedule B income from Schedule B11, column 11.
Schedule C, column 1, must equal the amount listed on Schedule A, line 6.
Income not included in Schedule A is reported in Schedule B, Apportioned Column 7. Add the amounts reported for each partner in columns 3, 4, 5,
Income, or Schedule F, Allocated or Apportioned Guaranteed Payments to and 6 and enter the total for the column. Also enter the amount for each
Partners. Instructions for the Schedules indicate how amounts are partner and the column total in column 1, page 1 of the return.
allocated to the individual partners. SCHEDULE D – BUSINESS ALLOCATION PERCENTAGE
SCHEDULE B – APPORTIONED INCOME (INCOME NOT The business allocation percentage is to be applied to the distributive share
of business income of CORPORATE AND NONRESIDENT partners if
INCLUDED IN SCHEDULE A OR SCHEDULE F) business activity of the partnership is conducted both within and outside
Schedule B is used to report income not included in Schedule A (Adjusted the City of Grand Rapids.
Ordinary Business Income) or Schedule F, (Allocated or Apportioned
Guaranteed Payments to Partners) and apportion this income between Elective use of the Multistate Tax Compact apportionment provisions is no
partners taxed at the individual resident, corporation or individual longer allowed. On 09/14/2014 the Multistate Tax Compact provisions of
nonresident tax rates. After determining the total taxable apportioned Michigan law were retroactively repealed effective 01/01/2008.
income for the various partners, the totals are transferred to Schedule C,
columns 5 or 6 to report the amount of this income apportioned to each Line 1a. Enter in column 1 the average net book value of all real and
partner. Enter the income by category as reported on the federal Form tangible personal property owned by the business, regardless of location;
and in column 2 report the net book value of the real and tangible personal
1065, Schedule K or page 1, on Schedule B, column 1. property owned and located or used in the City of Grand Rapids. The
The various types in partnership income are taxed differently based upon average net book value of real and tangible personal property may be
the partner entity type. Refer to the chart page 8 of these instructions for determined by adding the net book values at the beginning and end of the
information on the taxability of the various types of partnership income for year and dividing the sum by two.
the various types of partner entities. Also refer to the instructions below for Line 1b. Enter in column 1 the gross annual rent multiplied by 8 for all
additional information on exclusion or taxability of the various types of rented real property regardless of location. In column 2 show the gross
partnership income. annual rent multiplied by 8 for rented real property located in the City of
Interest and Dividend Income. All partners may exclude interest and Grand Rapids. Gross annual rent refers to real property only, rented or
dividend income from obligations of the United States, the states or leased during the taxable period, and should include the actual sums of
subordinate units of government. Interest and dividend income is totally money or other consideration payable, directly or indirectly, by the taxpayer
excluded for individual nonresident, estate and trust partners. Compute the for the use or possession of such property.
excludible and taxable portions of interest or dividend income. Enter the Line 2. Enter in column 1 the total compensation paid to all employees
excluded and taxable income totals on Schedule B. during the year and in column 2 show the amount of compensation paid to
Sales or Exchange of Property. This category included sales and employees for work or services performed within the City of Grand Rapids.
exchanges of short-term, long-term and Section 1231 property. The portion Line 3. Enter in column 1 the total gross revenue from all sales or services
of the gain or loss attributable to the period prior to July 1, 1967 is rendered during the year, and in column 2 show the amount of revenue
excludible for all partner entity types. Compute the excludible and taxable derived from sales made or services rendered in the City of Grand Rapids
portions of short-term, long-term and Section 1231 gains or losses. Enter during the year. To allocate net profit (or loss), a partnership must have
the excluded and taxable income totals on Schedule B. business activity outside of Grand Rapids.
Rent and Royalty Income. Compute the excludible and taxable portions of SCHEDULE E – RENTAL REAL ESTATE
rental income from rental real estate activities, rental income from other
rental activities or royalty income. Enter the excluded and taxable income
totals on Schedule B.
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