2019 Schedule M1AR Instrucons
You must complete a separate Schedule M1AR for each installment gain you are reporting.
Who should complete this schedule?
You may be required to complete this schedule to report one of the following:
• Installment sale income from the sale of S corporation stock, a partnership interest, or the assets of an S corporation or partnership
• Income from an S corporation, partnership, or trust that is reporting income from any installment sale of S corporation stock, a partnership
interest, or the assets of an S corporation or partnership
If you report income from either situation above, complete Schedule M1AR if all of the following apply:
• The installment sale was executed after December 31, 2016.
• You were a nonresident or become a nonresident while recognizing income from the installment sale gains.
• The S corporation or partnership had a Minnesota ling requirement, or you were a Minnesota resident, during the year that the sale oc-
curred.
Do not complete this schedule if you are a full-year Minnesota resident. You are not required to complete this schedule to report the install-
ment sale of property not connected to the sale of an S corporation or partnership.
What informaon will I need to complete this schedule?
If you completed an installment sale and reported it (or should have reported it) on federal Form 6252 with your federal individual income
tax return, you must include information from Form 6252 on this schedule.
If you own an interest in an S corporation, partnership, or trust that completed an installment sale, you will need information reported to you
on one of the following schedules:
• Schedule KS for S corporation shareholders
• Schedule KPI for partners in partnerships
• Schedule KF for trust beneciaries
What if installment gains from the sale are undetermined in the year of sale?
Complete and le Schedule M1AR even if the income from an installment sale is undetermined. This includes sales with no stated maximum
selling price, such as a contingent payment sale. See Internal Revenue Service Publication 537, Installment Sales, for more information.
How do I allocate nonbusiness income?
Partnership Interests
If you are declaring nonbusiness income from the sale of a partnership interest, use one of the following ratios.
• If the assets of the partnership consist of more than 50 percent tangible property at the time of sale, the ratio is equal to the original cost of
tangible property in Minnesota divided by the original cost of all tangible property of the partnership.
• If the assets of the partnership consist of more than 50 percent intangible property at the time of sale, use the partnership’s sales factor for
the full tax period immediately before the tax period during which the partnership interest was sold.
Single Member Limited Liability Companies (LLC)
If you are declaring nonbusiness income from the sale of an interest in a company that is disregarded for federal income tax purposes, al-
locate it to Minnesota as if the company did not exist and the assets of the company are personally owned by the sole member.
Goodwill and Noncompete Covenants
If you are declaring nonbusiness income from the sale of goodwill or a covenant not to compete, allocate it to Minnesota using the entity’s
prior year sales factor. This includes federal allocations of purchase price to goodwill following the sale of an S corporation or single member
LLC.
Other Income
If the nonbusiness income is not assignable to Minnesota under the methods in this section, assign it to your state of domicile.
Mulple Methods
If multiple methods of nonbusiness allocation are required, include additional information with your return detailing how you applied each
percentage to the separate parts of the purchase price and how the percentages result in the amount listed on line 5.
Line Instrucons
Line 2
Include installment sale gains you received in 2017 and 2018 for the sale reported on Schedule KPI, Schedule KS, Schedule KF, and federal
Form 6252.
