Taxability of Partnership Income under the Michigan 
                                                                                   Uniform City Income Tax Ordinance
                                                                      Partnerships Required to File a Return 
                                                                      Every partnership with business activity in the city, whether or not 
                                                                      an office or place of business was maintained in the city, is 
                                                                      required to file an annual return. Syndicates, joint ventures, pools 
                                                                      and like organizations and Limited
City of Grayling                                                      Liability Companies (LLC's) electing to be taxed as partnerships at 
                                                                      the federal level will also use Form GR-1065. 
1020 City Boulevard, Grayling, MI  49738
                                                                      Partners who are individual RESIDENTS are taxed on their 
                                                                      entire distributive share of the net profits of the partnership, 
                                                                      including that arising from business activities outside the city: 
                                                                      ordinary business income, interest income, dividend income, 
                                                                      rents, royalties, other income, and gains from the sale or 
                                                                      exchange of property, either tangible or intangible, regardless of  
                                                                      where the property is located. 
                                                                      Partners who          are individual      NONRESIDENTS           including 
                                                                      estates  and trusts  are  taxed  on  their  distributive  share  of  the 
201 9Partnership                                                      partnership’s  ordinary  business income which is attributable to 
                                                                      business activity in the city, plus net rentals of tangible property 
                                                                      located in the city and gains from the sale or exchange of tangible 
Income Tax Return                                                     property in the city. Nonresidents are not taxed on their share of 
                                                                      net rentals of property located outside the city, gains from the sale 
                                                                      or exchange of tangible property located outside the city, gains 
           FORM GR-1065                                               from the sale or exchange of securities or other intangible 
                                                                      property, or non-business interest and dividend income. 
                                                                      When the receipt of interest and other intangible income is directly 
                                                                      related to  the  nature  of  the  business,  such  interest,  etc.,  is 
                                                                      business income taxable to a nonresident, and is to be included in 
                                                                      ordinary business income in Schedule A.
                                                                      Partners who are CORPORATIONS are taxed at the corporate 
                                                                      tax rate on their distributive share of the partnership’s: ordinary 
           MAILING ADDRESS:                                           business  income  attributable to business activity in the city; net 
                                                                      rentals of tangible property; and gains from the sale or exchange 
           CITY OF GRAYLING                                           of  tangible  property  attributable  to  business activity in the city. 
INCOME TAX DEPARTMENT                                                 Thus, all taxable income of a corporate partner (net  profits  of  a 
                                                                      corporation)      is  determined   by        the business        allocation  
           PO BOX 549                                                 percentage of the partnership. 
           GRAYLING, MI  49738                                        Partners  who  are  PARTNERSHIPS,  LLC’s  electing  to  be  taxed 
                                                                      as   a  partnership,      JOINT    VENTURES,     ETC.    (downstream 
                                                                      partnership)      are taxed based         upon   their   partner’s     entity 
                                                                      classification and share of partnership income. 

           CITY WEBSITE:                                              DUE DATE OF PARTNERSHIP RETURN 
                                                                      Calendar  year  taxpayers  must  file  by        April  30,  2020.  Fiscal 
WWW.CITYOFGRAYLING.ORG                                                year taxpayers  must  file  by  the  last  day  of  the  fourth  month 
                                                                      after the end of their fiscal year  or short period return. 
                                                                      EXTENSION OF TIME TO FILE A PARTNERSHIP RETURN For 
                                                                      partnerships  electing  to  pay  tax,  Form  GR-7004,  Automatic 
           We encourage questions.                                    Extension of Time to File Certain Business Income Tax, Information 
                                                                      and Other Returns, must be filed on or before the due date for filing 
Email:  incometax@cityofgrayling.org                                  the  partnership  return.  An  extension  is  automatically  granted  upon 
                                                                      filing  of  Form  GR-7004  and  payment  of  the  tentative  tax  balance 
Phone:  (989) 348-2131 x108                                           due  (Form  GR-7004,  line  3).  Failure  to  pay  the  balance  due 
                                                                      invalidates  the  extension  request.  Interest  and  penalty  will 
           Fax:  (989) 348-6752                                       be assessed on taxes paid late even if an extension of time to 
                                                                      file is granted.  For partnerships filing an information return, a six 
                                                                      month extension of time to file is automatically granted. Do not 
                                                                      file Form GR-7004, Application for Automatic Extension of Time to 
                                                                      File Certain Business Income Tax, information and Other Returns. 
                                                                      REQUIRED RETURN ATTACHMENTS 
                                                                      When  filing  a  city’s  partnership  return,  Form  GR-1065,  certain 
                                                                      schedules  and  copies  of  federal  forms  are  required  to  be 
                                                                      attached. See page 6, Appendix A for a listing of attachments 
GENERAL INFORMATION                                                   and attachment order.
Disclaimer                                                            OBTAINING PARTNERSHIP RETURN FORMS 
These instructions are interpretations of the Uniform City Income Tax 
Ordinance, MCLA 141.601 et seq. The Ordinance will prevail in any     Partnership  return  forms  are  not  mailed  to  partnerships.  The 
disagreement between these instructions and the Ordinance.            forms are available for download on the city's website.

                                                           Page 1

ALLOCATE AND APPORTION - DEFINED                                               PAGE 1 INSTRUCTIONS 
The word allocate in these instructions means to determine partner’s           A partnership filing an information return is required to complete 
taxable portion of the type of partnership income using: the partner’s         the Identification and Information section and  the Signature section 
classification and the Business Allocation Percentage calculated on            of Form GR-1065. Also  in the Disclosure of Return Information 
Schedule D, Business Allocation Percentage, line 5; or in the case of a        section, the partnership may elect to allow disclosure of return 
taxpayer authorized by the Income Tax Administrator of the city, the           information between a  designated individual or firm and the city’s 
special allocation formula percentage calculated on Schedule D, line c.        income tax department. 
The meaning of the word apportion as used in these instructions                A partnership electing to pay tax is required to complete all of 
means to: directly determine the partner’s taxable income based upon           Form GR-1065 and specifically to mark (X) the box on line F. 
the  partner’s  classification;  or  the  partner’s  classification  and  the 
location of the source of the income.
                                                                               IDENTIFICATION AND INFORMATION 
PARTNERSHIPS FILING AN INFORMATION RETURN                                      All partnerships are to provide the information requested and answer 
A partnership is required to file an information return unless the             all  questions in this section.  
partnership  elects to compute and pay the tax due on behalf of all 
partners. Partnerships  filing  information  returns  are  required  to        TAX 
complete:  Form GR-1040       (Identification and       Information     and    Line 1. Add the totals from Schedule 2, Tax Calculation 
Signature     sections), Schedule    1,  Schedule       A,     Schedule B,     Schedule,  columns 8 and 9, and enter on line 1. 
Schedule C and if appropriate Schedule D and Schedule E.
                                                                               PAYMENTS AND CREDITS 
The Partnership Return, Form GR-1065, is designed to distinguish               Line 2. Enter the total payments and credits for each type of 
between income  taxed  at  the  resident,  nonresident  or  corporation        tax payment listed on lines 2a through 2d and, for resident individual 
tax  rates.  The  purpose of the return is to set forth the entire net         partners, the total of any credits for tax paid to another city on line 2e. 
profit for the tax period and  to  show  the  distributive share of each       Enter the total  of the payments and credits on line 2f. 
partner and indicate the entity type of the partner and, if an individual, 
the residency status of the partner. If  residency  changes  during  the       BALANCE DUE 
year for any individual partner, use two lines to indicate allocation of       Line 3. If total tax (line 1) is greater than the total tax payments (line 
income by residency status.  On Schedule 1, Partner  Information               2f) subtract line 2f from line 1 and enter balance of tax due. The 
Schedule,  enter  the  start  date  of  residency  on  the  resident line      balance due  must be paid when filing the return. 
and the end date of residency on the nonresident line. 
                                                                               To pay with a check or money order make the check or money 
Ordinary  business  income    of    the  partnership        is reported in     order payable to the City of Grayling, place the payment in front of the 
Schedule  A.  Each  partner’s distributable  share  of  the  ordinary          return and mail the  payment and return to the address listed.
business income is  reported on Schedule C, column 1. 
                                                                               OVERPAYMENT 
Partnership income not reported in Schedule A is reported in                   Line 4. If the total payments and credits (line 2f) is greater than the 
Schedule B, by  type  of  income  and  the  taxable  and  nontaxable           tax  due (line 1) subtract line 1 from line 2f and enter the overpayment 
portions  for partners taxed     at  the      resident,     nonresident or     amount. 
corporation   tax rate.  The  taxable income         from      Schedule B, 
columns 6 and 7 is reported by partner in  Schedule C, columns                 CREDIT FORWARD 
6 or 7.                                                                        Line 5. Enter all or the portion of the overpayment to be 
                                                                               credited  forward. 
Schedule K-1 (Form GR-1065), Partners Share of Income, Exclusions, 
Deductions, Credits and Tax Paid, is to be provided to each partner to         DONATIONS 
assist them in filing their city income tax return.                            Line 6. Donate all or any portion of overpayment. 
PARTNERSHIPS ELECTING TO PAY TAX                                               REFUND 
A partnership may elect to pay tax on behalf of all of its partners. When      Line 7. Enter the amount overpayment to be refunded. A refund will be 
the partnership pays the tax, the individual partners are not required to      issued via a paper refund check.
file a return. However, a city’s income tax return is required from any        DISCLOSURE OF RETURN INFORMATION 
partner having city taxable income other than the distributive share of        Line 9. By marking (X) the “Yes” box (line 9a) and completing lines 10a 
the net profits of the partnership. In such instances, a partner required      and 10b in the Disclosure of Return Information section, the partnership 
to file a return should refer to the city’s income tax return instructions for is authorizing the city’s Income Tax Department to contact the preparer 
reporting  partnership income and claiming credit for tax paid by the          for answers to any questions that may arise relating to its return and to 
partnership.  Partnerships  electing  to  pay  the  tax  on  behalf  of  the   answer any questions from the preparer about the return. Also, by 
partners assume the status of taxpayer to the following extent: (1)            marking (X) the “Yes” box (line 9a) and completing lines 10a and 10b, 
timely payment must be made; and (2) estimated income tax payments,            the partnership is authorizing the preparer to: provide the city’s Income 
                                                                               Tax Department with any information about or missing from the return; 
Form GR-1065ES, are required if the total 2020 estimated tax for the           respond to notices about math errors, offsets and return preparation; and 
partnership is expected to exceed $100. The calendar or fiscal year of         contact the Income Tax Department for information about the return or 
the partnership will govern in  establishing the due dates for making          the status of any related  refund or payments. 
estimated tax payments. Partnerships electing to pay tax must prepare          All cities accepting returns following the partnership common form format 
and file all the forms and schedules required for an information return        allow the check box for authorization for disclosure of return information. 
and  complete  Schedule  2,  Tax  Calculation  Schedule,  and  Form 
GR-1065, lines 1 through 8. Schedule 2 details each partner’s share of         SIGNATURE 
                                                                               Line 11. In the Signature section the partner or member representing the 
the city’s taxable income, deductions, exemptions, tax at the resident,        entity must sign the return (line 11b), and enter the following data: the 
nonresident  or  corporation  tax  rate  and  any  credit  for  tax  paid  to  date the returned was signed (line 11a); the printed name of the partner 
another city. Form GR-1065, lines 1 through 8, reports: the tax; all           or member signing the return (line 11c); and a day time phone number 
payment and credits; any balance due or overpayment; and  how any              for the  partner or member. 
overpayment   is    to be     credited,       donated       or refunded.       Line 12. The preparer must sign the return (line 12a) and enter the 
Payment  of  tax  for  partnership  partners  (downstream  partnership)        following data: the printed name of the preparer (line 12b); the name and 
requires a supplementary schedule showing the detail of the calculation        address of the preparer’s firm (line 12c through 12f); the date prepared  
                                                                               (line 12g); and the preparer’s telephone number (line 12h)  
of tax due. An alternative to filing a detailed schedule is calculation of     Line 13. The NACTP number of the software used to prepare the return 
taxable income for the downstream partnership as a resident partner            must be entered on line 13. 
and calculation of the tax at the city’s resident tax rate. 

                                                                        Page 2

INSTRUCTIONS FOR OTHER SCHEDULES                                                The total adjusted ordinary business income reported on Schedule A, line 
SCHEDULE 1 – PARTNER INFORMATION SCHEDULE                                       6,  is allocated  to the partners in Schedule C.  The total reported on  
                                                                                Schedule C, column 1, must equal the amount listed on Schedule A, line 6. 
All partnerships must complete  the Partner Information Schedule.  See          Income not included in Schedule A is reported in Schedule B, Partnership 
Appendix P,  Partner Classification Table,  for information to complete         Income not reported in Schedule A. Instructions for the Schedules indicate  
columns 3, 4 and 5. Column 3 data entry is based upon federal Schedule          how amounts are allocated or apportioned to the partners. 
K-1 (Form 1065) instructions for Item I.
If column 3 for the partner equals individual, nominee for an individual or a 
disregarded entity owned by an individual,          enter the residency         SCHEDULE B – PARTNERSHIP INCOME NOT INCLUDED IN 
classification in column 4  (R, N, PR or PN). If column 4  for  the  partner    SCHEDULE A  
equals part-year resident (PR or PN), report the resident portion (PR) and      Schedule B is used to report income not included in Schedule A (Adjusted 
nonresident portion (PN) on separate partner lines and in column 5 enter        Ordinary Business Income) and allocate or apportion this income between 
the residency start date (mm/dd/yyyy) for the tax year on the resident (PR)     partners  taxed at the individual  resident,  corporation  or  individual 
line and the residency end date for the year on the nonresident (PN) line.      nonresident tax rates.  Enter the income by category as reported on the 
SCHEDULE 2 – TAX CALCULATION SCHEDULE (Disregard if                             federal Form 1065, Schedule K or page 1, on Schedule B, column 1. 
information return)                                                             The various types in partnership income are taxed differently based upon 
Partnerships electing to pay  tax for partners must complete  Schedule 2,       the partner entity classification. Refer to Appendix  Bfor information on the 
Tax  Calculation  Schedule.  Partnerships filing an information return          tax-ability of the various types of partnership income for the various types 
disregard this schedule.                                                        of  partner  entities.   Also  refer  to  the  instructions  below  for 
Columns  1, 2 and 3. Enter partner’s name, entity type and tax                  additional information on exclusion or      tax-ability of the various types of 
identification number as listed on Partner Information Schedule.                partnership income. 
Column 4.  Enter partner’s total city income as reported on Schedule C,         Interest Income and Dividend Income. All partners may exclude interest 
column 7.                                                                       and dividend  income  from obligations of the United States, the states or 
                                                                                subordinate units of government. Interest  and dividend income is totally  
Column 5.     Allowable partner deductions which relate to the partnership      excluded for nonresident individuals, estate and trust partners.  
are deducted in column 5. These deductions include the self-employed 
pension plan deduction  and any other deduction allowed the partner             Sale  or Exchange of Property.  This  category includes  sales and 
under the city’s income tax ordinance. This column is also used to adjust       exchanges of short-term, long-term and Section 1231 property. The portion 
(add back) for a net capital loss realized by any of the partners, in excess    of the gain or loss attributable to the period prior to the applicable effective 
of  the  partner's  maximum  allowable  ($3,000)  capital  loss  deduction.     date of the ordinance is excludblei for all partner entity types.  
Therefore, a net capital loss realized by any of the partners, in excess of     Rent and Royalty Income.     Enter the excludible and taxable portions 
the partner's allowable capital loss deduction must be added back in            of rental income from rental real estate activities, rental  income  from 
column 5. The allowable capital loss deduction for each partner is the          other rental activities or royalty income.  
lesser of (1) the net capital loss, (2) the amount in column 4, computed        Other Income. Enter the excludible and taxable portions of other income. 
without regard to capital gains and losses, or (3) $3,000. Capital loss          
                                                                                Ordinary Income from Other Partnerships.               Enter  each partner’s 
carryovers may be carried forward to the same extent allowed in the             excludible and taxable portions of ordinary income  (or loss) from other 
Internal Revenue Code, but may not be carried back to prior years.   Attach     partnerships. Attach a worksheet for each partnership, estate or trust that 
a schedule detailing computation of amounts reported in column 5.               details  the  name, address, FEIN and the apportionment of this  income. 
Column 6. Personal and dependency exemptions are  allowed  to be                The ordinary business income of another partnership is allocated based 
claimed for each partner who is an individual resident or nonresident,          upon the other partnership’s  business allocation percentage  for the city 
to the same extent allowed on the partner’s federal income tax return.          and/or the entity type of partner.  
                                                                                Total Apportioned Income.    Summarize the taxable portion of  income 
Additional exemptions are allowed if the taxpayer or spouse is 65 years of      from the categories reported on Schedule B. The totals from Schedule C, 
age or older, or is blind. In general, the same rules apply in determining      columns 6 and 7 must equal the totals reported on Schedule B, columns 6  
dependents as under the federal Internal Revenue Code. A spouse may             and 7 respectively. 
be taken as an exemption on the partnership return only if such spouse 
has no income subject to the city’s income tax. Exemptions for a partner        SCHEDULE C – DISTRIBUTION TO PARTNERS 
whose residence status has changed from a resident to a nonresident or          Column 1. Enter in column 1 each individual partner's share of ordinary 
from a nonresident to a resident of the city during the taxable year are first  adjusted business income from Schedule A, line 6. If Sec. 179 depreciation 
applied against income while a resident, with the balance, if any, applied to   is included in Schedule A and the partners have unequal credits for such 
the  city’s  income  while  a  nonresident.  A  partner’s  personal  and        additional depreciation (e.g., if one partner is single and one is married 
dependency  exemptions  may  not  be  claimed  on  more  than  one              filing jointly for federal income tax purposes), the apportionment of income 
partnership return. Partners who are estates or trusts                          to partners may require a special computation. 
are allowed one exemption.  Exemptions are not allowed to any other             Column 2. Enter the amount of guaranteed payments to partners receiving 
partners (i.e., corporations, partnerships, etc.)                               them.    Guaranteed  payments  are  taxable  in  the  same  manner  as  a  
                                                                                distributive share of the partnership’s profits.  
Column 7. Enter the taxable income, column 4 less columns 5 and 6.              Column 4. Enter the appropriate business allocation percentage based 
Column 8. Enter tax due at the resident or corporation tax rate applicable      upon partner entity type. Individual resident and partnership partners use a 
for all taxpayers except nonresident individuals, estates or trusts.            100% allocation. Individual nonresident, estate, trust, corporation, exempt 
Column 9. Enter tax due at the nonresident tax rate applicable from             entity  and  foreign  government  partners  enter  the  business  allocation 
Appendix A for nonresident individuals, estates or trusts only.                 percentage from Schedule D, line 5, or the special allocation percentage 
Column 10. The tax paid for each partner is equal to the tax due (column        authorized. Disregarded entity and nominee partners enter the appropriate 
8 or 9) less, for resident individual partners only, any credit for tax paid to allocation percentage based upon the entity type of the actual owner of the  
another city (Schedule G, column 6, for the partner). The total of column       partnership interest. 
10 should equal the actual amount of tax paid by the partnership; the sum       Column 6. Enter taxable portion of the individual resident, corporation or  
of the amounts reported on page 1 lines 2a, 2b, 2c, 2d and 3 less line 4,       other partners Schedule B income. 
the tax overpayment.                                                            Column 7. Enter the taxable portion of the individual nonresident, Estate  
                                                                                or trust partners Schedule B income. 
SCHEDULE A - ALLOCABLE ORDINARY BUSINESS INCOME (LOSS)                          Column 8. Add the amounts reported for each partner in columns 5, 6 and 
                                                                                8 and enter the total for the column. Also enter the amount for each partner  
Schedule A is used to report and adjust the ordinary business income of         and the column total in column 1, page 1 of the return. 
the partnership. The ordinary business income as reported on federal 
Form 1065, page 1, line 22, must be adjusted for the following; city income 
tax deducted on the federal return must be added back; interest and any         SCHEDULE D – BUSINESS ALLOCATION PERCENTAGE 
other costs incurred with the production of tax exempt income must be           The business allocation percentage is to be applied to the distributive 
added  back;  the  federal  Section  179  deduction  and  other  deductions     share of business income of CORPORATE AND NONRESIDENT partners 
allowed  must  be  deducted;  and  ordinary  income  (loss)  from  another      if business activity of the partnership is conducted both within and outside 
partnership  must be removed (as it is reported in Schedule B).                 the city. 
                                                                            Page 3

Elective use of the   Multi-state Tax Compact apportionment provisions is          Part II. Information About the Partner 
no  longer  allowed.  On  09/14/2014  the  Multi-state  Tax   Compact              On each Schedule K-1 complete the information for the partner for items E 
provisions  of  Michigan  law  were  retroactively  repealed  effective            through  I1  and  J  through  M  as  it  was  completed on  the  partner’s  federal 
01/01/2008.                                                                        Schedule K-1 (Form 1065). For item I2, if the partner code for item I1 is a 
                                                                                   code  that  represents  an  individual,  estate  or  trust,  enter  in  item  I2  the 
Line 1a. Enter in column 1 the average net book value of all real and              following code for the partner: R for resident partner, N for a nonresident 
tangible personal property owned by the business, regardless of location;          partner, PR for the resident portion and PN for the nonresident portion of 
and in column 2 report the net book value of the real and tangible personal        the  year  for  a  part-year  resident  partner.  See Partner Classification 
property owned and located or used in the city. The average net book               Table  for  additional  information.  For  Item  I3,  mark  (X)  the  box  if  the 
value of real and tangible personal property may be determined by adding           partner  is  a  retirement  plan.  For  item  N  enter  the  partner’s  partner 
the net book values at the beginning and end of the year and dividing the          number as reported on Form GR-1065, Schedule 1.  When a partner is 
sum by two.                                                                        a part-year resident, two Schedule K1’s (Form GR-1065) are to be issued, 
                                                                                   one for the resident portion of the year and one for the  nonresident 
Line 1b. Enter in column 1 the gross annual rent multiplied by 8 for all           portion of the year as two lines are required for reporting the partner’s 
rented real property regardless of location. In column 2 show the gross            income. 
annual rent multiplied by 8 for rented real property located in the city. 
Gross annual rent refers to real property only, rented or leased during the        If the partnership elects to pay tax and the partner is a partnership, mark 
taxable period, and should include the actual sums of money or other               (X) the  item  D  box  and  enter  the  partnership  partner’s  identification
consideration payable, directly or indirectly, by the taxpayer for the use or      number. Complete the other items for this partnership partner. Parts III and
possession of such property.                                                       Part IV for this downstream partnership is a compilation of their partner’s
                                                                                   Schedules K-1.  Also,  complete  a  Schedule K-1 (Form CF-1065) for each
Line 2. Enter in column 1 the total compensation paid to all employees             partner  of  the  downstream  partnership  completing  item  D  for  the
during the year and in column 2 show the amount of compensation paid to            downstream  partnership  and  completing  Part  II,  Part  III  and  Part  IV  for
employees for work or services performed within the city.                          each downstream partnership partner.
Line 3. Enter in column 1 the total gross revenue from all sales or services       Part III. Partner’s share of Current Year Income, 
rendered during the year, and in column 2 show the amount of revenue               Exclusions/Adjustments and City Income 
derived from sales made or services rendered in the city during the year.          This  part  of  the  Schedule  K-1  (Form GR-1065)  is  divided  into  three 
To allocate net profit (or loss), a partnership must have business activity        columns: Column      A, Federal Partnership       Return Data;     column    B, 
outside of the city.                                                               Exclusions and Adjustments; and column C, City Taxable Income.  

SCHEDULE E – RENTAL REAL ESTATE                                                    Column A, Federal Partnership Return Data 
If the business activity of the partnership includes rental of real estate, list   Column  A,  line  1,  lines  2  through  13  and  line  20  are  used  for  reporting 
                                                                                   income,  deductions  and  other  information  as  reported  on  the  federal 
the complete address and the gain or loss from each separate piece of              Schedule K-1 (Form 1065) for the partner. In each line of column A enter 
rental real estate in Schedule E.                                                  the data as reported in the federal Schedule K-1 except for lines 1a, 11, 13 
                                                                                   and 20 follow the instructions below. 
SCHEDULE G – CREDIT FOR TAX PAID TO ANOTHER CITY                                   Line 1a. Ordinary  income  from  other  partnerships.        This  line  on  the 
ON BEHALF OF RESIDENT PARTNERS                                                     city  Schedule K-1  (GR-1065)  is  used  to  properly report  ordinary business 
                                                                                   income from other partnerships, estates and trusts. Column A of this line is 
If the partnership incurs an income tax liability to any other city in addition    blank or zero (0) as this line is not on the federal Schedule K-1. 
to this city, a credit is allowed for tax paid to the other city on income of a    Codes for lines 11, 13 and 20. In boxes 11, 13 and 20, identify each item 
resident individual that is taxable by both cities. The credit is limited to the   by entering the federal code in the column to the left of Column A.  
smaller of: (1) the income tax paid to the other city on behalf of the resident 
partner; or (2) the amount of tax that would be due on the same amount of          Line 13. Other deductions. In box 13 report only the federal coded items 
income of a nonresident of this city after deducting the value of the              that affect city income of the partner. There are only a few (line 13) other 
exemptions  claimed  by  the  partner  for  this  city  (Form GR-1065,             deductions that affect a partner’s city income. Deductions that are claimed on 
Schedule 2, column 6). DO NOT take credit for income taxes paid to any             the  partner’s  federal  return  Form  1040  as  adjustments  to  income  or 
                                                                                   itemized  deductions  are  not  reported  on  line  13.  If  you  have  a  question 
other city on behalf of nonresident, corporate or partnership partners.            about  reporting  a  line  13  item,  please  contact  the  city  for  an  answer.  An 
                                                                                   example of a line 13 is item I, deductions – royalty income. 
SCHEDULE K-1 (Form GR-1065) – PARTNER’S SHARE OF                                   Line 20. Other information. In box 20 report only the federal coded items 
INCOME, EXCLUSIONS, DEDUCTIONS, CREDITS AND TAX                                    that affect city income. There are few items of (line 20) other information 
                                                                                   that affect the partner’s city income. If you have a question about reporting a 
PAID                                                                               line 20 item, please contact the city for an answer. An example of a line 20 
                                                                                   item is M, recapture of section 179 deduction. 
Partnership Instructions for Schedule K-1 (Form CF-1065) 
A partnership is required to prepare and give  Schedule K-1 (Form                  Column B, Exclusions and Adjustments 
GR-1065) to each person who was a partner in the partnership at any                Complete  column  C,  City  Taxable  Income,  lines  1  through  13,  before 
                                                                                   completing column B. Once the column C amount for a line is determined 
time during the year. Schedule K-1 (Form GR-1065) must be provided to              and entered, the column B amount for the line is calculated by subtracting 
each partner on or before the day on which the partnership return is               the  amount  in  column  C  from  the  amount  in  column  A.  Enter  in  the 
required to be filed.                                                              calculated amount in Column B for the line. If a line in any column is blank, it 
Partnerships  electing  to  pay  tax  that  have  a  partnership  partner          is to be read as a zero (0). 
(downstream partnership) are also required to provide Schedule K-1 (Form 
GR-1065) to each partner of the downstream partnership (or chain of 
downstream partnerships) if the tax for the downstream partnership is              Column C, City Taxable Income 
calculated  based  upon  the  downstream  partnership’s  partner’s                 The amount of city taxable income for each partner is calculated in schedules 
classification.                                                                    attached to the partnership return. Enter the data for each line of Column C 
                                                                                   as determined in the schedule noted for the line. 
If the return is for a fiscal year or a short tax year fill in the fiscal tax year 
spaces at the top of each Schedule K-1. If this is a final or an amended           Line 1. Ordinary business income. Enter the amount of the partner’s ordinary 
K-1, mark (X) the appropriate box at the top of each Schedule K-1.                 business income as reported on Form GR-1065, Sch. C, col. 4. 
On each Schedule K-1, enter the information about the partnership and the          Line 1a. Ordinary income from other partnerships. Enter the amount of the 
partner in Parts I and II (items A through M). In Part III, enter: in column A     partner’s  taxable  share  of  ordinary  income  from  other  partnerships  as 
                                                                                   reported on Form GR-1065. 
the  amounts  from  the  partners  federal  Schedule  K-1  (Form  1065);  in 
column B the amounts of exclusions or adjustments to the amounts in                Line 2. Net rental real estate income (loss). Enter the amount of the partner’s 
column A; and in Column C the partner’s city taxable share of each item of         share of net rental real estate income (loss) as reported on Form GR-1065. 
income, deduction or information.                                                  Line 3. Other rental income (loss). Enter the amount of the partner’s taxable 
                                                                                   share of other rental income (loss) as reported on Form GR-1065. 
                                                                                   Line 4. Guaranteed payments to partners. Enter the amount of the partner’s 
Part I. Information About the Partnership                                          guaranteed payments as reported on Form GR-1065, Schedule C, column 2. 
On each Schedule K-1, enter (A) the identifying number of the partnership,         Line 5. Interest income. Enter the amount of the partner’s taxable share of 
and its (B) name and address. Also enter the (C) partnership’s business            interest income as reported on Form GR-1065. 
allocation  percentage  (Form  GR-1065,  Schedule  D,  line  5  or  special 
formula line d).  
                                                                        Page 4

Line 6. Dividend income. Enter the amount of the partner’s taxable                             PARTNER CLASSIFICATION TABLE 
share of dividend income as reported on Form GR-1065.                           Information for completing Partner Information section on Form GR-1065, page 1 
Line 7. Royalties. Enter the amount of the partner’s taxable share of          Enter federal classification in column 3; if column 3 equals individual owner, enter 
royalties as reported on Form GR-1065.                                         residency classification in column 4; and if column 4 equals part-year resident, enter 
                                                                               residency start and end dates in column 5 
Line 8. Net short term capital gain (loss).  Enter the amount of the                                                        Column 4            Column 5 
partner’s taxable share of net short term capital gain (loss) as reported on                Column 3                     Individual Partner     Residency 
Form GR-1065, Schedule B11, column 3.                                                 Federal Classification             Residency Status       Dates 
Line 9. Net long term capital gain (loss).  Enter the amount of the                   Description            Entry       Description     Entry  Description 
partner’s taxable share of net long term capital gain (loss) as reported on 
Form GR-1065.                                                                  Individual                    I     Resident               R 
Line 10. Net section 1231 gain (loss). Enter the amount of the partner’s                                           Nonresident            N 
taxable  share  of  net section  1231  gain  (loss)  as  reported  on  Form                                        Part-year resident,    PR    Residency 
GR-1065.                                                                                                           resident portion             start date 
Line 11. Other income. Enter the amount of the partner’s taxable share of                                          Part-year resident,    PN    Residency 
other income as reported on Form GR-1065.                                                                          nonresident portion          end date 
                                                                               Corporation                   C 
Line 12. Section 179 deduction. Enter a zero (0) or leave blank as this        Estate                        F     Nonresident            N 
deduction is already included in the amount reported in column C, line 1.      Trust                         F     Nonresident            N 
Line 13. Other deductions.  The amount to enter on this line must be           Partnership                   P 
calculated based upon the type of other deduction and the taxability of the    Disregarded Entity            DE    If DE owner is an individual 
city income related to the deduction. Example: Item I, deductions – royalty 
income, would be deductible at the same percentage the related royalty                                             Resident               R 
income is taxable by the city. There are very few other deduction items that                                       Nonresident            N 
relate to city income.                                                                                             Part-year resident,    PR    Residency 
Line 20. Other Information.  The amount to enter on this  line must be                                             resident portion             start date 
calculated based upon whether the other information is city income or a                                            Part-year resident,    PN    Residency 
deduction allowed to determine city income. Example: Item M, recapture of                                          nonresident portion          end date 
section 179 deduction, would be taxable at the same percentage the             Exempt Organization           E 
related property was taxable by the city. There are very few other             Foreign Government            FGOV 
information items that relate to city income.                                  Nominee Type 
                                                                               Nominee Individual            NI    If actual owner is an 
                                                                                                                   individual: 
Part IV. Partner’s City Deductions, Credits and Tax Paid                                                           Resident               R 
Part IV is divided into three sections. Refer to the following instructions to                                     Nonresident            N 
complete this section.                                                                                             Part-year resident,    PR    Residency 
D – Partner’s deductions for items paid by the partnership. Report the                                             resident portion             start date 
partner’s share of deductions allowed under the city’s income tax                                                  Part-year resident,    PN    Residency 
ordinance                                                                                                          nonresident portion          end date 
that were paid by the partnership. These deductions are the partner’s: IRA     Nominee Corporation           NC 
deduction; Self-employed, SEP, SIMPLE and qualified plans deduction;           Nominee Estate or Trust       NF    Nonresident            N 
Renaissance Zone deduction; etc.                                               Nominee Partnership           NP 
C  – Credit  for  tax  paid  by  partnership  to  another  city.  Report  the  Nominee Disregarded           NDE   If actual owner of the DE is 
tax  paid to other cities by partnership on behalf of partner who is a         Entity                              an individual: 
resident of the city named at the top of the Schedule K-1.                                                         Resident               R 
                                                                                                                   Nonresident            N 
T  – Income  tax  paid  by  the  partnership.  Report  the  actual  tax  paid                                      Part-year resident,    PR    Residency 
by partnership on behalf of partner to the city named at the top of                                                resident portion             start date 
the  Schedule  K-1.  This  is  the  amount  reported  on  Form                                                     Part-year resident,    PN    Residency 
GR-1065, Schedule 2, column 10, for the partner.                                                                   nonresident portion          end date 
                                                                               Nominee Exempt                NE 
                                                                               Organization 
                                                                               Nominee Individual            NIRA 
                                                                               Retirement Arrangement 
Partner Instructions for Schedule K-1 (Form GR-1065)                           Nominee Foreign             NFGOV 
Instructions for partner’s reporting their partnership income on their         Government 
individual return       (Form GR-1040),       corporate    return (Form 
GR-1120) or partnership return (GR-1065) are part of Schedule K-1 (Form 
GR-1040). 

SCHEDULE N – SUPPORTING NOTED AND SCHEDULES 
If supporting notes or schedules are needed to explain items reported 
elsewhere on the partnership return, use this attachment for those notes, 
calculation or explanations. 

SCHEDULE RZ OF (Form GR-1065) – Partnership 
Renaissance Zone Deduction 
NOT APPLICABLE

                                                                          Page 5

COMMON CITY PARTNERSHIP INCOME TAX FORM, GR-1065 
APPENDIX A
Required Return Attachments and Attachment Order
Returns should be filed with schedules and attachments in the order noted below. If a form, schedule or worksheet is not 
used do not attach it; skip the number and keep the remaining pages in attachment order

             Required Forms and Attachments                    Attachment Order    When Forms, Schedules or Attachments are Required 
Form GR-1065, page 1                                               Top page     All returns
Schedule 1 – Partner Information Schedule                      Attachment 1     All returns
Schedule 2 – Partner Income and Tax Calculation Schedule       Attachment 2     Partnerships filing information returns complete columns 1 - 4. 
                                                                                Partnerships electing to pay tax must complete entire schedule.
Schedule A – Allocable Partnership Ordinary Business Income    Attachment 3     All returns
Schedule B – Apportioned Income (Income not Included in   
Schedule B – Schedules A or F)                                 Attachment 4     All returns (including returns where Schedule B is blank)
Schedule C – Distribution to Partners                          Attachment 5     All returns
Schedule D – Business Allocation Percentage                    Attachment 6     Returns with a business allocation percentage of less than 100%
Schedule E – Rental Real Estate                                Attachment 7     Returns reporting rental real estate activities
Schedule G – Credit for Tax Paid to Another City in Behalf of  Attachment 8     Returns for partnerships electing to pay tax who are claiming 
Schedule G – Resident Partners                                                  credit for tax paid to another city
Schedule K-1 (Form GR-1065)                                    Attachment 9     Partner's Share of Income, Exclusions, Deductions, Credits and Tax Paid
Schedule N – Supporting Notes and Statements                   Attachment 10    If Supporting notes or schedules attached
Federal Schedule F (Form 1040)                                 Fed form # order If included in federal return
Federal Form 1065, Page 1                                      Fed form # order All returns
Federal Schedule D, (Form 1065)                                Fed form # order If included in federal return
Federal Schedule K, (Form 1065)                                Fed form # order All returns
Federal Form 1125-A, Cost of Goods Sold                        Fed form # order If included in federal return
Federal Form 4562, Depreciation and Amortization               Fed form # order If included in federal return
Federal Form 4797, Sales of Business Property                  Fed form # order If included in federal return
Federal Form 6252, Installment Sale Income                     Fed form # order If included in federal return
Federal Form 8582, Passive Activity Loss Limitations           Fed form # order If included in federal return
Federal Form 8824, Like-Kind Exchanges                         Fed form # order If included in federal return
Federal Form 8825, Rental Real Estate Income and Expenses of a 
Federal Form 8825, Partnership oran S Corporation              Fed form # order If included in federal return
Supplementary schedules to federal forms and schedules         Schedule order   If included in federal return
All supplementary schedules to federal forms and schedules must be attached.
Failure to attach forms, schedules or worksheets noted above to a return may delay the processing of the return. 

                                                               Page 6

COMMON PARTNERSHIP INCOME TAX FORMS, GR-1065
APPENDIX B                                      TAXABILITY OF PARTNERSHIP INCOME UNDER THE MICHIGAN UNIFORM CITY INCOME TAX ORDINANCE
TYPE OF       ORDINARY         GUARANTEED       INTEREST         DIVIDEND         NET SHORT-       NET LONG-        SECTION 1231  NET INCOME          NET INCOME       ROYALTY            OTHER            ORDINARY 
INCOME →      BUSINESS         PAYMENTS TO      INCOME           INCOME           TERM GAIN        TERM GAIN        GAIN OR LOSS (LOSS) FROM  (LOSS) FROM              INCOME             INCOME           INCOME FROM 
              INCOME OF        PARTNER                                                (LOSS)           (LOSS)                        RENTAL REAL      OTHER                                                OTHER 
PARTNER       PARTNERSHIP                                                                                                            ESTATE           RENTAL                                               PARTNERSHIPS
ENTITY   ↓                                                                                                                           ACTIVITIES       ACTIVITIES
Individual    100% taxable     100% taxable     100% taxable     100% taxable     100% taxable     100% taxable     100% taxable     100% taxable     100% taxable     100% taxable       100% taxable     100% taxable
Resident 
Partner
Individual    Taxable on the   Taxable on the   Not taxable      Not taxable      Taxable if       Taxable if       Taxable if       Taxable if       Taxable if       Taxable on the   Taxable on the   Taxable on the 
Nonresident   partnership's    partnership's                                      property located  property located  property located  property located  property located  partnership's partnership's    originating 
Partner       business         business                                           in city Not      in city Not      in city Not      in city Not      in city Not      business           business         partnership's 
              allocation       allocation                                         taxable if       taxable if       taxable if       taxable if       taxable if       allocation         allocation       business allocation 
              percentage       percentage                                         property located  property located  property located  property located  property located  percentage    percentage       percentage portion
              portion          portion                                            outside of city  outside of city  outside of city  outside of city  outside of city  portion            portion
Corporate     Taxable on       Taxable on the   Taxable on       Taxable on       Taxable on       Taxable on       Taxable on       Taxable on       Taxable on       Taxable on         Taxable on       Taxable on the 
Partner       partnership's    partnership's    partnership's    partnership's    partnership's    partnership's    partnership's    partnership's    partnership's    partnership's      partnership's    originating 
              business         business         business         business         business         business         business         business         business         business           business         partnership's 
              allocation       allocation       allocation       allocation       allocation       allocation       allocation       allocation       allocation       allocation         allocation       business allocation 
              percentage       percentage       percentage       percentage       percentage       percentage       percentage       percentage       percentage       percentage         percentage       percentage portion
              portion          portion          portion          portion          portion          portion          portion          portion          portion          portion            portion
Estate or     Taxed on the     Taxed on the     Taxed on the     Taxed on the     Taxed on the     Taxed on the     Taxed on the     Taxed on the     Taxed on the     Taxed on the       Taxed on the     Taxed on the same 
Trust Partner same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as      same basis as    basis as an 
              an individual    an individual    an individual    an individual    an individual    an individual    an individual    an individual    an individual    an individual      an individual    individual 
              nonresident      nonresident      nonresident      nonresident      nonresident      nonresident      nonresident      nonresident      nonresident      nonresident        nonresident      nonresident 
              partner          partner          partner          partner          partner          partner          partner          partner          partner          partner            partner          partner
Partnership   DSP Income       DSP Income       DSP Income       DSP Income       DSP Income       DSP Income       DSP Income       DSP Income       DSP Income       DSP Income         DSP Income       DSP Income split 
Partner       split per DSP    split per DSP    split per DSP    split per DSP    split per DSP    split per DSP    split per DSP    split per DSP    split per DSP    split per DSP      split per DSP    per DSP 
(Downstream  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and  agreement and 
Partnership - taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on  taxed based on 
DSP)          DSP partner's    DSP partner's    DSP partner's    DSP partner's    DSP partner's    DSP partner's    DSP partner's    DSP partner's    DSP partner's    DSP partner's      DSP partner's    DSP partner's 
              entity           entity           entity           entity           entity           entity           entity           entity           entity           entity             entity           entity classification
              classification   classification   classification   classification   classification   classification   classification   classification   classification   classification     classification
Disregarded   Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the 
Entity Partner same basis as   same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as      same basis as    same basis as the 
              the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  the owner of the  owner of the 
              disregarded      disregarded      disregarded      disregarded      disregarded      disregarded      disregarded      disregarded      disregarded      disregarded        disregarded      disregarded entity
              entity           entity           entity           entity           entity           entity           entity           entity           entity           entity             entity
Exempt        Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the 
Organization  same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a 
Partner       corporate        corporate        corporate        corporate        corporate        corporate        corporate        corporate        corporate        corporate          corporate        corporate partner 
              partner unless   partner unless   partner unless   partner unless   partner unless   partner unless   partner unless   partner unless   partner unless   partner unless     partner unless   unless the 
              the partnership  the partnership  the partnership  the partnership  the partnership  the partnership  the partnership  the partnership  the partnership  the partnership  the partnership  partnership income 
              income of the    income of the    income of the    income of the    income of the    income of the    income of the    income of the    income of the    income of the      income of the    of the partnership 
              partnership is   partnership is   partnership is   partnership is   partnership is   partnership is   partnership is   partnership is   partnership is   partnership is     partnership is   is not taxable 
              not taxable      not taxable      not taxable      not taxable      not taxable      not taxable      not taxable      not taxable      not taxable      not taxable        not taxable      under the IRC
              under the IRC    under the IRC    under the IRC    under the IRC    under the IRC    under the IRC    under the IRC    under the IRC    under the IRC    under the IRC      under the IRC
Foreign       Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the 
Government    same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a same basis as a 
              corporate        corporate        corporate        corporate        corporate        corporate        corporate        corporate        corporate        corporate          corporate        corporate partner
              partner          partner          partner          partner          partner          partner          partner          partner          partner          partner            partner
Nominee       Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the  Taxable on the 
Partner       same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as    same basis as      same basis as    same basis as the 
              the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner the actual owner actual owner 
              (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an (partner); If an   (partner); If an (partner); If an IRA 
              IRA arrange-     IRA arrange-     IRA arrange-     IRA              IRA              IRA              IRA              IRA              IRA              IRA arrange-       IRA              arrangement, not 
              ment, not        ment, not        ment, not        arrangement,     arrangement,     arrangement,     arrangement,     arrangement,     arrangement,     ment, not          arrangement,     taxable
              taxable          taxable          taxable          not taxable      not taxable      not taxable      not taxable      not taxable      not taxable      taxable            not taxable
                                                                                                           Page 7