How do I elect North Carolina to be a taxed partnership with a 1065 return using CCH® ProSystem fx® Tax and CCH Axcess™ Tax?

  • Article Type:
  • How To
  • Last Modified:
  • 04/25/2023

Objectives

Prepare and calculate tax for a North Carolina partnership return.

Environment

  • CCH® ProSystem fx® Tax
  • CCH Axcess™ Tax
  • Partnership - 1065
  • North Carolina - NC
  • Worksheet View - WSV

Procedure

Elect to be Taxed

  1. Go to North Carolina > General Information worksheet.
  2. In line 16 - Partnership elected to be a Taxed Partnership - override, select the checkbox.
  3. Calculate the return. 
Or 
  1. Go to Common State > State PTE Generation worksheet.
  2. In Line 11 - North Carolina, select the checkbox.
  3. Calculate the return.
North Carolina Session Law 2023-12 changed the Taxed Partnership election to include entity owner types partnership (P, A, N) and S Corporation (S). An input must be made to implement this change:
  1. Go to North Carolina > General worksheet.
  2. In line 17 - Calculate Taxed Partnership based on Session Law 2023-12, select the checkbox.
    • Interview North Carolina > NC1, box 41.
  3. Calculate the return.

Notes

  • Eligible Partner Entity Types (Release 2022.03040 and after)
    • Individual, Partnership (limited), Partnership (general), Limited liability partnership, S corporation, Estate, Grantor Trust, Exempt Org, LLC, IRA, Keogh, SEP.
  • D-403, page 1, lines 11-23 moved to page 2. Lines 24-27 added for application of overpayment to estimates or charitable donations.
    • Lines 25 and 26 are populated with NC > Inc/Ded wskt > lines 1 and 2
  • D-403, page 3, part 4, sections E and F added to break out Nonresidents and Residents income.
  • NC K-1, Item C, lines 10 and 11 added. Line 11 can come from either D-403, part 4, line 24 or line 28 depending on residency status.
    • Nonresident partners line 24 is determined by apportionment
    • Resident partners, line 28 is determined by D-403, part 1, line 7 against P/L percentage in part 4, line 4, and D-403, part 4, line 27.
      • Line 27 can be input at NC > Inc/Ded > line 3 (positive or negative) and specially allocated using code 35541
  • NC-PE, lines 14, 38 and 39 added. 
  • NC-40 PTE Estimates added.
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