Fill - Free fillable SCHEDULE P-S KOZ CALCULATION OF PA KEYSTONE OPPORTUNITY (Pennsylvania) PDF form

Line 1 – Total Adjusted Business Income or Loss from the

Operation of a Business, Profession or Farm

Line 2 – Total Adjusted/Apportioned Net Operating Income or Loss

Line 3 – PA Taxable Interest Income

Line 4 – PA Taxable Dividend Income

Line 5 – Net Gain or Loss from the Sale, Exchange or Disposition

of Property

Line 6 – Allocable Net Gain or Loss from the Sale, Exchange or

Disposition of Tangible Personal or Real Property

Line 7 – Net Income or Loss from Rents,

Royalties, Patents and Copyrights

Line 8 – Allocable Net Income from Rents, Royalties, Patents and

Copyrights in PA

Line 9 – Estate or Trust Income

Line 10 – Allocable Estate or Trust Income

Line 11 – Gambling and Lottery Winnings

Line 12 – Allocable Gambling and Lottery Winnings

Line 13 – Guaranteed Payments for Capital or Other Services

Line 14 – All Other Guaranteed Payments for Services Rendered

(Resident Partners)

Line 15 – Allocable All Other Guaranteed Payments for Services

Rendered (Nonresident Partners)

Line 16 – Distributions of Cash, Marketable Securities and Property

Column E

PA Nonresident Owner

Taxable Income

Column D

PA Resident Owner

Taxable Income

Column C

PA-Taxable Income

(Col. A – Col. B)

Column B

KOZ/SDA-

Exempt Income

Column A

PA-Reportable

Income

FEIN

REVENUE ID (PA S CORP)

20___

SCHEDULE P-S KOZ

Generally, partners and shareholders do not claim exemptions for the

partnership’s or PA S corporation’s KOZ source income on individual

income tax returns. Exceptions may apply if a partner or shareholder is a

resident of a KOZ, in which case the individual should call 717-787-1064

to inquire about Schedule KOZ Supplemental Instructions. The partnership

or PA S corporation (entity) must use Schedule P-S KOZ to calculate

KOZ-exempt income. The entity then excludes each partner or share-

holder’s (owner’s) share of the KOZ-exempt income from the income

reported on each owner’s PA Schedule RK-1 or NRK-1.

Enter the classified income from the PA-20S/PA-65 information return in

Column A. Enter the KOZ-exempt income in Column B. Use the appropriate

instructions and worksheets on the following pages to determine KOZ-

exempt income in each PA class of income. Subtract Column B from

Column A for each line and enter the amounts in Column C.

For Column D, carry over the amounts from Column C that are taxable

to PA resident owners. For Column E, carry over the amounts from

Column C that are taxable to nonresident owners.

Attach the completed PA Schedule P-S KOZ (with supporting worksheets)

to the entity’s PA 20-S/PA-65 Information Return.

IMPORTANT: If the entity does not have nonresident owners, comple-

tion of Lines 2, 6, 8, 10, 12 and 15 is not required, nor are

corresponding worksheets.

PA P-S KOZ (DR) 10-21

COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF REVENUE

CALCULATION OF PA KEYSTONE OPPORTUNITY ZONE (KOZ) AND STRATEGIC DEVELOPMENT AREA (SDA)-

EXEMPT INCOME FOR PARTNERS AND SHAREHOLDERS

Partnership/PA S Corporation Name

NOTE: Check the appropriate box for the type of income exemption. The SDA-exempt income calculation is the same as the KOZ-exempt

income calculation unless otherwise indicated in the instructions. An SDA entity should substitute SDA whenever/wherever KOZ is referenced

in these instructions for the calculation of its exempt income, unless separate SDA instructions are included. Additionally, all references to

Keystone Opportunity Zones (KOZ) in this document encompass and are synonymous with Keystone Opportunity Expansion Zones (KOEZ),

Keystone Opportunity Improvement Zones (KOIZ) and Additional Keystone Opportunity Expansion Zones (AKOEZ). Unless otherwise

noted in these instructions, all singular references to KOZ include KOEZ, KOIZ and AKOEZ. The KOZ income exemption also encompasses the

extension of the expiration dates for unused parcels within each of the previously mentioned zones as well as the expansion and/or addition

of Keystone Opportunity Expansion Zones as per Act 16 of 2012.

KOZ EXEMPTION OF INCOME CALCULATION SDA EXEMPTION OF INCOME CALCULATION

DO NOT ENTER AMOUNTS IN SHADED AREAS.

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Line 1. Total Adjusted Business Income or Loss from the

Operation of a Business, Profession or Farm – Enter

the amount from Line 1e on Form PA-20S/PA-65.

Line 2. Total Adjusted/Apportioned Net Operating Income

or Loss – Enter the amount from Line 2h on Form

PA-20S/PA-65.

Line 3. PA Taxable Interest Income – Enter the amount from

Line 3 on Form PA-20S/PA-65.

Line 4. PA Taxable Dividend Income – Enter the amount from

Line 4 on Form PA-20S/PA-65.

Line 5. Net Gain or Loss from the Sale, Exchange or

Disposition of Property – Add the amounts from Lines 5a

and 5b on Form PA-20S/PA-65 and enter the total here.

Line 6. Allocable Net Gain or Loss from the Sale, Exchange

or Disposition of Tangible Personal or Real Property

– Enter the amount from Part I, Line 18 on PA-20S/PA-65

Schedule D-I.

Line 7. Net Income or Loss from Rents, Royalties, Patents

and Copyrights – Add the amounts from Lines 6a and 6b

on Form PA-20S/PA-65 and enter the total here.

Line 8. Allocable Net Income from Rents, Royalties,

Patents and Copyrights in PA – Enter the amount

from Line 6b on Form PA-20S/PA-65.

Line 9. Estate or Trust Income – Add the amounts from Lines

7a and 7b on Form PA-20S/PA-65 and enter the total here.

Line 10. Allocable Estate and Trust Income – Enter the amount

from Line 7b on Form PA-20S/PA-65.

Line 11. Gambling and Lottery Winnings – Add the amounts

from Lines 8a and 8b on Form PA-20S/PA-65 and enter the

total here.

Line 12. Allocable Gambling and Lottery Winnings – Enter the

amount from Line 8b on Form PA-20S/PA-65.

Line 13. Guaranteed Payments for Capital or Other Services –

Enter the amount from Line 16 of PA-20S/PA-65.

Line 14. All Other Guaranteed Payments for Services

Rendered (Resident Partners) – Enter the amount from

Line 17 of PA-20S/PA-65.

Line 15. Allocable All Other Guaranteed Payments for

Services Rendered (Nonresident Partners) – Enter the

total amount of the nonresident partners guaranteed pay-

ments included in Line 17 of the PA-20S/PA-65.

Line 16. Distributions of Cash, Marketable Securities and

Property – Enter the amount from Line 15 or 20 on Form

PA-20S/PA-65 for partnership and S corporations,

respectively.

COLUMN B INSTRUCTIONS

Line 1. Total Adjusted Business Income or Loss from the

Operation of a Business, Profession or Farm – Determine the

amount of income exempt from taxation. If an entity realizes a net

loss, do not calculate KOZ-exempt income. Enter a zero in Column B,

Line 1. If the entity has no guaranteed payments reportable in

Column A, Lines 14 and 15, proceed to the instructions for Column B,

Line 2. Partnerships with guaranteed payments may be required to

complete Worksheet 1. See the instructions for Column B, Lines 14

and 15, for additional information.

Also determine if the entity operates wholly within a KOZ, wholly

outside a KOZ or partly within a KOZ. In addition, determine if the

entity’s business income is derived only from sources inside PA or

from sources inside and outside PA. If the entity owned and operated

a qualified business profession or farm inside a KOZ, you must apply

the rules under sections A, B or C below to determine the portion

of the business operation inside the KOZ and to calculate the

KOZ-exempt income.

A. Operation Wholly Inside a KOZ. If the operation of a qualified

business is wholly inside the KOZ, the entity allocates its net

profit or loss exclusively to the KOZ. The operation of a business

is wholly inside the KOZ if during the entire taxable year:

1. The entity or its representative maintained or operated

inside the KOZ an office, shop, store, warehouse, factory,

agency or commercial establishment where it systematically

and regularly conducted or managed such business; and

2. The entity or its representative did not maintain or operate

outside the KOZ any office, shop, store, warehouse, factory,

agency or commercial establishment where it systematically

and regularly conducted or managed such business. The

entity or its representative also did not: employ individuals

who solicited sales outside the KOZ; make installations of

or repairs to the products sold outside the KOZ; repair,

improve or service real or personal property of the cus-

tomer at a location outside the KOZ; or provide services to

a customer or client when the income-producing activity

was performed outside the KOZ.

For a qualified business wholly operated inside a KOZ that

has no taxable income from other entities (Line 1b of Form

PA-20S/PA-65 is blank), all of the PA-reportable business

income is KOZ-exempt income. Enter the amount from

Column A, Line 1 in Column B, Line 1. The entity must also

complete Worksheet 1 to calculate the exempt business

income under KOZ law.

If the entity receives business income from other entities, do

not include the income from other entities in the amount shown

in Column B, Line 1. In such cases, a partnership enters in Col-

umn B, Line 1 the amount from Line 1a of Form PA-20S/PA-65,

and a PA S corporation enters in Column B, Line 1 the amount

from Line 1e of Form PA-20S/PA-65, less the amount from Line

1b of Form PA-20S/PA-65.

B. Operation Wholly Outside a KOZ. If the operation of the

business is wholly outside a KOZ, the entity cannot allocate or

apportion to the KOZ any item of revenue, loss, cost or expense

it derives or incurs. The operation of a business is wholly out-

side a KOZ if during the taxable year the entity is not a qualified

business, because it does not own or lease an office, shop,

store, warehouse, factory, agency or commercial establishment

within the geographical boundaries of a KOZ. In this situation,

do not enter any amount in Column B, Line 1.

C. Operation Partly Inside a KOZ. An entity that operates a

qualified business, profession or farm neither wholly inside nor

outside a KOZ is defined as partly inside a KOZ. The entity must

then determine if the business income is derived only from

sources within PA or derived from sources inside and outside PA.

Follow the instructions for determining the sources of income:

1. Business Income Derived only from Sources Inside

PA. An entity must complete Worksheet 1 to determine

the exempt portion of business income under KOZ law.

Worksheet 1 uses the apportionment method for deter-

mining the exempt business income. Use the instructions

for the accompanying Worksheet 1 to calculate the exempt

net profits under the KOZ law.

2. Business Income Derived from Sources Both Inside

and Outside PA. An entity receiving income from sources

inside and outside PA must complete PA-20S/PA-65

Schedule H to apportion its income to PA before determining

the amount of business income derived from sources

inside PA. Use the apportioned PA-source income from

PA-20S/PA-65 Schedule H in conjunction with Worksheet 1

to determine the exempt portion of the business income

under KOZ law. Enter the income amount from Line 7 of

PA-20S/PA-65 Schedule H on Line 6 of Worksheet 1.

COLUMN A INSTRUCTIONS

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Use the instructions for the accompanying Worksheet 1 to

calculate the exempt net profits under the KOZ law.

Include PA-20S/PA-65 Schedule H along with the PA

Schedule P-S KOZ.

NOTE: Separate accounting may only be used upon written

request to and approval by the PA Department of Revenue.

Line instructions for Worksheet 1

Line 1. Property Factor. The property factor is a fraction deter-

mined by dividing the average historical cost of property located

inside the KOZ by the average historical cost of property located

inside all of PA. In Box i, enter the average value of the entity’s real

and tangible personal property owned or rented by and used in PA

during the tax period. In Box ii, enter the average value of the entity’s

real and tangible personal property owned or rented by and used

inside the KOZ during the tax period. Rental property is valued by

multiplying the gross rents paid during the taxable year by 8. Divide

the amount in Box ii by the amount in Box i and enter the result in

Box iii. Calculate the factor to six decimal places.

Line 2. Payroll Factor. The payroll factor is a fraction determined

by dividing the amount of payroll inside the KOZ by the amount of

payroll in all of PA. In Box i, enter the total compensation paid in

PA during the tax period by the entity. In Box ii, enter the total

compensation paid in the KOZ during the tax period by the entity.

Compensation is paid in a KOZ if:

a. The person’s service is performed entirely inside the KOZ;

b. The person’s service is performed inside and outside the

KOZ but the service performed outside the KOZ is incidental

to the service inside the KOZ;

c. Some of the service is performed inside the KOZ and the

base of operations or, if there is no base of operations, the

place from which the service is directed or controlled is

inside the KOZ; or

d. Some of the service is performed inside the KOZ and

the base of operations from which service is directed or

controlled is not in any location in which some part of the

service is performed but the person’s residence is inside

the KOZ.

Divide the amount in Box ii by the amount in Box i and enter the

result in Box iii. Calculate the factor to six decimal places.

Line 3. Sales Factor.

NOTE: As a result of Act 79 of 2008, the sales factor is not required

to be calculated for KOZ, KOEZ, KIZ or AKOEZ entities for tax years

beginning after Dec. 31, 2008. Worksheet 1, Line 3 should be left

blank for all such entities. Amended returns for tax years ending on

or before Dec. 31, 2008, must include this factor. The sales factor

must be calculated for SDA entities only.

The sales factor is a fraction determined by dividing the amount of

sales inside the SDA by the amount of sales in all of PA. Enter in

Box i, the total sales of the entity in PA during the tax period. Enter

in Box ii, the total sales of the entity inside the SDA during the tax

period. Sales inside an SDA include sales of tangible personal prop-

erty and other property if:

a. The sales of tangible personal property are delivered to a

purchaser inside the SDA regardless of the F.O.B. point or other

conditions of sale;

b. The sales of property other than sales of tangible personal

property are from an income-producing activity performed

inside the SDA; or

c. The sales of property other than sales of tangible personal

property are from an income-producing activity performed

inside and outside the SDA and a greater proportion of the

income-producing activity is performed inside the SDA than in

any other location, based upon costs of performance.

Divide the amount in Box ii by the amount in Box i and enter the

result in Box iii. Calculate the factor to six decimal places.

Lines 4, 5, 6 and 7. See the instructions on Worksheet 1.

Line 2. Apportioned Net Qualified Business Income or Loss.

Determine income attributable to PA sources and exempt from tax-

ation. If the entity realized a net loss in Column A, Line 1, and

Column A, Line 2, or if the entity has no nonresident owners, the

entity does not need to calculate KOZ-exempt income from PA

sources and may enter zeros on Line 2 for Columns B, C and E. If

the entity realized a net profit, enter the amount from Column B,

Line 1 of this schedule in Column B, Line 2.

NOTE: Separate accounting may only be used upon written request

to and approval by the PA Department of Revenue.

Line 3. PA Taxable Interest Income. Under the provisions of KOZ

law, interest is exempt for PA personal income tax only if received

by a resident of a KOZ. Do not enter any amount in Column B, Line

3. The KOZ resident owner claims an exemption for this income upon

filing a PA individual income tax return (PA-40 KOZ).

Line 4. PA Taxable Dividend Income. Under the provisions of KOZ

law, dividends are exempt from PA personal income tax only if received

by a resident of a KOZ. Do not enter any amount in Column B, Line 4.

The KOZ resident owner claims an exemption for this income upon

filing a PA individual income tax return (PA-40 KOZ).

Inside KOZ/SDA

iii

Apportionment Factors (ii divided by i)

Inside Pennsylvania

Factors

1. Enter the average value of real and

tangible personal property.

2. Enter the amount of wages, salaries

and compensation paid.

3. Enter the amount of sales.

(SDA only)

WORKSHEET 1 (for Column B, Line 1)

QUALIFIED BUSINESS, PROFESSION OR FARM

COLUMN B INSTRUCTIONS (continued)

4. TOTAL - Add the decimals from 1, 2 and 3 in Box iii.

6. For partnerships, enter net profits from Line 1a of PA-20S/PA-65 or Line 7 of PA-20S/PA-65 Schedule H (if required to

apportion to PA). For PA S corporations, enter net profits from Line 1e of PA-20S/PA-65 less Line 1b of PA-20S/PA-65,

or Line 7 of PA-20S/PA-65 Schedule H less Line 1b of PA-20S/PA-65 (if required to apportion to PA).

7. Exempt KOZ/SDA Business Income. Multiply Line 6 by Line 5. Enter this amount on Column B, Line 1 of this schedule.

5. Apportionment Factor - Divide Line 4 by 3 if all three factors apply; by 2 if only two factors apply; or by 1 if only one

factor applies. Express in a decimal.

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Line 5. Net Gain or Loss from the Sale, Exchange or Disposition

of Property. An entity must determine if the property sold, exchanged

or disposed of was tangible personal property, real property or intangible

property. Generally, an entity may only exempt income from the sale of

tangible personal or real property. However, owners who are residents

of a KOZ may also exempt the income from the sale of intangible

property. See the rules relating to intangible property below for

additional information regarding exemption of gains from intangible

property. If an entity realized a net loss in Column A, Line 5, do not

calculate KOZ-exempt income. Enter a zero in Column B, Line 5, and

proceed to the instructions for Column B, Line 6. If the entity realized

a net gain, see the following rules relating to tangible personal or

real property and intangible property to determine what portion of

the net gains reported during the tax period may be exempted:

Tangible Personal or Real Property. Net gains from the sale,

exchange or disposition of tangible personal or real property owned

by the entity must be physically located inside a KOZ to be exempt

under KOZ law. Whenever an entity makes a sale, exchange or

disposition of such property, it must calculate the exempt portion of

the gain for the period when the property was owned and located

inside a KOZ during the effective date of the KOZ law from the later

of the date of ownership or eligibility. If an entity makes a sale,

exchange or disposition of such property that straddles a KOZ,

include a statement showing the method that reasonably and accu-

rately reflects the value of the property inside and outside the KOZ

and provides the amount of gain or loss attributable to the property

inside and outside the KOZ. If the entity reported a gain in Column B,

Line 5, Worksheet 2 must be completed for each sale of tangible

personal or real KOZ property.

Intangible Personal Property. Under the provisions of the KOZ

law, only residents of a KOZ are entitled to claim exemptions

against net gains (less net losses) from the sale, exchange or

disposition of intangible property. Do not exclude gain or loss for

this income item when reporting each owner’s share of income on

Form PA-20S/PA-65 Schedule RK-1. Each owner who satisfies the

residency requirements under the KOZ law will be able to claim the

exemption for this income upon filing of a PA individual income tax

return (PA-40 KOZ). The entity will be required (upon request by a

KOZ resident owner) to provide all information necessary for the

owner to report the sale and calculate the exempt portion of the

net gains from the entity’s sale of the intangible property.

WORKSHEET 2 (for Column B, Line 5)

SALE, EXCHANGE OR DISPOSITION OF TANGIBLE PERSONAL OR REAL KOZ PROPERTY

Complete a separate worksheet for each sale.

Description and/or address of the KOZ property sold, including its tax parcel ID number:

a. If the property was acquired after the date(s) in parenthesis for the type of zone and was located inside:

a KOZ (12/31/98); a KOEZ (12/31/00 or 12/31/09); a KOIZ (12/31/02 or 12/31/09); an SDA (12/31/06);

or an AKOEZ (12/31/09 or 12/31/13), and was eligible for KOZ benefits for the entire time it was owned,

enter the gain or loss here. a.

b. If the property was acquired prior to 1/1/99 (KOZ), 1/1/01 or 1/1/10 (KOEZ), 1/1/03 or 1/1/10 (KOIZ),

1/1/07 (SDA) or 1/1/10 or 1/1/14 (AKOEZ), or if it was located outside of a KOZ/KOEZ/KOIZ/SDA/AKOEZ

during the ownership period, follow the steps below.

1. Enter the number of days the property was owned from the later of the date of ownership or eligibility inside a

KOZ since 1/1/99, inside a KOEZ since 1/1/01 or 1/1/10, inside a KOIZ since 1/1/03 or 1/1/10, inside an

SDA since 1/1/07, or inside an AKOEZ since 1/1/10 or 1/1/14. 1.

2. Enter the total number of days the property was owned. 2.

3. Apportionment Factor. Divide Line 1 by Line 2. Calculate the factor to six decimal places. 3.

4. Enter the gain or loss on the sale of the property. 4.

5. Multiply Line 4 by Line 3. 5.

If the entity sold only one article of KOZ property, enter the amount from this worksheet in Column B, Line 5. If a loss, enter zero in Column B, Line 5.

If the entity sold more than one article of real or tangible personal property located in a KOZ, first total the amounts from all Worksheet 2 forms, then enter

the net result in Column B, Line 5. If a net loss, enter zero in Column B, Line 5.

COLUMN B INSTRUCTIONS (continued)

NOTE: When reporting the distributive share of income on Form

PA-20S/PA-65 Schedule RK-1 for each owner, only exclude the KOZ-

exempt income from each particular owner’s income if the property

was held by the entity during the period of time the owner held an

ownership interest in the entity. If the asset sold, disposed of

or exchanged was purchased by an entity before the owner held an

ownership interest in the entity and the asset sold, disposed of or

exchanged was purchased before or after the entity became eligible

under the requirements of the KOZ law, the exempt portion of any gain

or loss for the owner must be adjusted to reflect only the exemption of

the net gain or loss attributable for the owner’s period of ownership in

the KOZ entity.

A separate Worksheet 2 is required for each property sold located in

a KOZ. Enter the amount from Line 5 of Worksheet 2 in Column B,

Line 5 of the Schedule P-S KOZ. If more than one Worksheet 2 was

completed as a result of more than one property located in a KOZ

being sold, add the amounts from each Worksheet 2, Line 5 and enter

the amount in Column B, Line 5 of the Schedule P-S KOZ.

Line 6. Allocable Net Gain or Loss from the Sale, Exchange or

Disposition of Tangible Personal or Real Property. Determine

the net gain or loss attributable to the sale, exchange or disposition

of tangible personal or real property from PA sources that is exempt

from taxation. If the entity realizes a net loss in Column A, Line 5

and Column A, Line 6, or if the entity has no nonresident owners, the

entity does not need to calculate KOZ-exempt income from PA

sources and may enter zeros on Line 6 for Columns B, C and E. If

the entity has nonresident owners and realizes net gains from the

sale, exchange or disposition of tangible personal or real property,

enter the amount from Column B, Line 5, of this schedule in Column

B, Line 6. If the entity realizes a net loss in Column A, Line 5 but

realizes a net gain in Column A, Line 6, calculate the exemption by

completing a separate Worksheet 3 for each sale of tangible personal

or real KOZ property.

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WORKSHEET 3 (for Column B, Line 6)

SALE, EXCHANGE OR DISPOSITION OF TANGIBLE PERSONAL OR REAL KOZ PROPERTY

Complete a separate worksheet for each sale.

a. If the property was acquired after the date(s) in parenthesis for the type of zone and was located inside:

a KOZ (12/31/98); a KOEZ (12/31/00 or 12/31/09); a KOIZ (12/31/02 or 12/31/09); an SDA (12/31/06);

or an AKOEZ (12/31/09 or 12/31/13), and was eligible for KOZ benefits for the entire time it was owned,

enter the gain or loss here. a.

b. If the property was acquired prior to 1/1/99 (KOZ), 1/1/01 or 1/1/10 (KOEZ), 1/1/03 or 1/1/10 (KOIZ),

1/1/07 (SDA) or 1/1/10 or 1/1/14 (AKOEZ), or if it was located outside of a KOZ/KOEZ/KOIZ/SDA/AKOEZ

during the ownership period, follow the steps below.

1. Enter the number of days the property was owned from the later of the date of ownership or eligibility inside a

KOZ since 1/1/99, inside a KOEZ since 1/1/01 or 1/1/10, inside a KOIZ since 1/1/03 or 1/1/10, inside an

SDA since 1/1/07 or inside an AKOEZ since 1/1/10 or 1/1/14. 1.

2. Enter the total number of days the property was owned. 2.

3. Apportionment Factor. Divide Line 1 by Line 2. Calculate the factor to six decimal places. 3.

4. Enter the gain or loss on the sale of the property. 4.

5. Multiply Line 4 by Line 3. 5.

If the entity sold only one article of KOZ property, enter the amount from this worksheet in Column B, Line 6. If a loss, enter zero in Column B, Line 6.

If the entity sold more than one article of real or tangible personal property located in a KOZ, first total the amounts from all Worksheet 3 forms, then enter

the net result in Column B, Line 6. If a net loss, enter zero in Column B, Line 6.

Description and/or address of the KOZ property sold, including its tax parcel ID number:

NOTE: When reporting the distributive share of income on Form

PA-20S/PA-65 Schedule RK-1 for each owner, only exclude the

KOZ-exempt income from each particular owner’s income if the

property was held by the entity during the period of time the owner

held an ownership interest in the entity. If the asset sold, disposed

or exchanged was purchased by an entity before the owner held an

ownership interest in the entity and the asset sold, disposed or

exchanged was purchased before or after the entity became eligible

under the requirements of the KOZ law, the exempt portion of any

gain or loss for the owner must be adjusted to reflect only the

exemption of the net gain or loss attributable for the owner’s period

of ownership in the KOZ entity.

A separate Worksheet 3 is required for each property sold located in

a KOZ. Enter the amount from Line 5 of Worksheet 3 in Column B,

Line 6, of the Schedule P-S KOZ. If more than one Worksheet 2 was

completed as a result of more than one property located in a KOZ

being sold, add the amounts from each Worksheet 3, Line 5 and

enter the amount in Column B, Line 6 of the Schedule P-S KOZ.

Line 7. Real Estate Rents or Tangible Personal Property

Rents. Determine real estate rents or tangible personal property

rents separate from other rents. An entity may only exempt the

income from real estate rents and tangible personal property rents

(as further outlined below) of property located or leased for use

inside a KOZ. Under KOZ law there is no exemption for income from

patents, royalties or copyrights. If an entity realized a net loss in

Column A, Line 7, do not calculate KOZ exempt income. Enter a zero

in Column B, Line 7, and proceed to the instructions for Column B,

Line 8.

Real Estate Rents. Rental income the entity derives from real

estate and costs, expenses and liabilities the entity incurs in the

production or collection of such rents are allocable to a KOZ only

if the rental property is inside a KOZ.

Tangible Personal Property Rents. The entity apportions the

rental income it derives from tangible personal property to a KOZ

only for the periods the lessee used the tangible personal property

inside a KOZ. Costs, expenses and liabilities the entity incurs in the

production or collection of such rents are allocable to a KOZ only if

the rental property is inside a KOZ.

If the entity receives rents from real estate or tangible personal

property that straddles a KOZ, include a statement showing the

method that reasonably and accurately reflects the value of the

property inside and outside the KOZ and provides the amount of

rental income or loss attributable to the property inside and outside

the KOZ.

If the entity derives net rental income from real estate or tangible

personal property located inside a KOZ during the tax period, complete

Worksheet 4. If the entity derives income from renting tangible

personal property leased for use inside and outside a KOZ during the

tax period, it can only claim an exemption for the net rents attributable

to the time the property was leased and used inside a KOZ. A separate

Worksheet 4 is required for each property and each type of property.

Enter the amount from Line 1 or Line 2e of Worksheet 4 in Column B,

Line 7 of Schedule P-S KOZ. If more than one Worksheet 4 was

completed as a result of more than one property being located within

a KOZ or leased for use in a KOZ, add the amounts from each

Worksheet 4, Line 1 and/or Line 2e and enter the amount in Column B,

Line 7 of Schedule P-S KOZ.

COLUMN B INSTRUCTIONS (continued)

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WORKSHEET 4 (for Column B, Line 7)

RENTAL OF REAL OR TANGIBLE PERSONAL KOZ PROPERTY

Complete a separate worksheet for each rental property.

Real Property

1. Net rental income or loss from real property inside a KOZ. 1.

Tangible Personal Property

2a. Net rental income or loss from tangible personal property rented inside a KOZ. 2a.

2b. Days during taxable year tangible personal property was rented inside a KOZ. 2b.

2c. Total days rented during the taxable year. 2c.

2d. Apportionment Factor. Divide Line 2b by Line 2c. Calculate the factor to six decimal places 2d.

2e. Multiply Line 2a by Line 2d for the tangible personal property rented during the

taxable year. 2e.

If the entity derived rental income from only one KOZ property, enter this amount in Column B, Line 7. If a loss, enter zero in Column B, Line 7.

If the entity derived rental income from multiple KOZ properties, first total the amounts from all Worksheet 4 forms, then enter the net result in Column B,

Line 7. If a loss, enter zero in Column B, Line 7.

Description and/or address of the KOZ rental property:

Line 8. Allocable Real Estate Rents or Tangible Personal Prop-

erty Rents. Determine the real estate rents or tangible personal

property rents attributable to PA sources. Under KOZ law, there is no

exemption for income from patents, royalties or copyrights. If the

entity realizes a net loss in Column A, Line 7 and Column A, Line 8,

or if the entity has no nonresident owners, the entity does not need

to calculate KOZ-exempt income from PA sources and may enter

zeros on Line 8 for Columns B, C and E. If the entity realizes net

income in Column A, Line 7 and Column A, Line 8, enter the amount

from Column B, Line 7, in Column B, Line 8. If an entity realizes a

net loss in Column A, Line 7 but realizes net income in Column A,

Line 8, calculate the exempt income by completing a separate

Worksheet 5 for each rental property. See the instructions for

Column B, Line 7 for further information.

COLUMN B INSTRUCTIONS (continued)

WORKSHEET 5 (for Column B, Line 8)

RENTAL OF REAL OR TANGIBLE PERSONAL KOZ PROPERTY

Complete a separate worksheet for each rental property.

Real Property

1. Net rental income or loss from real property inside a KOZ. 1.

Tangible Personal Property

2a. Net rental income or loss from tangible personal property rented inside a KOZ. 2a.

2b. Days during taxable year tangible personal property was rented inside a KOZ. 2b.

2c. Total days rented during the taxable year. 2c.

2d. Apportionment Factor. Divide Line 2b by Line 2c. Calculate the factor to six decimal places 2d.

2e. Multiply Line 2a by Line 2d for the tangible personal property rented during the

taxable year. 2e.

If the entity derived rental income from only one KOZ property, enter this amount in Column B, Line 8. If a loss, enter zero in Column B, Line 8.

If the entity derived rental income from multiple KOZ properties, first total the amounts from all Worksheet 5 forms, then enter the net result in Column B,

Line 8. If a loss, enter zero in Column B, Line 8.

Description and/or address of the KOZ rental property:

Line 9. Estate or Trust Income. Under KOZ law, estate or trust

income is only exempt from PA personal income tax when distributed

to a resident of a KOZ. Do not enter any amount on Column B, Line 9.

The KOZ resident owner claims the exemption for this income upon

filing a PA individual income tax return (PA-40 KOZ).

Line 10. Allocable Estate or Trust Income. Under KOZ law,

estate or trust income is only exempt from PA personal income tax

when distributed or credited to a resident of a KOZ. Do not enter any

amount in Column B, Line 10.

Line 11. Gambling and Lottery Winnings. Gambling and Lottery

winnings are not exempt for any taxpayers under KOZ law. Do not

enter any amount in Column B, Line 11. Report each resident

owner’s distributive share of this income on Form PA-20S/PA-65

Schedule RK-1 without any deductions. Do not enter any amount in

Column B, Line 11. Report each resident owner’s distributive share

of this income on Form PA-20S/PA-65 Schedule RK-1 without any

deductions.

Line 12. Allocable Gambling and Lottery Winnings. Gambling

and Lottery winnings are not exempt for any taxpayers under KOZ

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law. Do not enter any amount in Column B, Line 12. Report each

nonresident owner’s distributive share of this income on Form

PA-20S/PA-65 Schedule NRK-1 without any deductions.

Line 13. Guaranteed Payments for Capital or Other Services.

Guaranteed payments for return of capital or for any other services

are generally not taxable for PA personal income tax purposes. Each

partner should determine separately if any guaranteed payments for

return of capital exceed the partner’s basis in the partnership by

completing REV-999 PT. Any payment determined to be in excess of

basis (taxable) for PA personal income tax purposes on REV-999 PT

is considered the sale of an intangible asset by the partner. A partner

who satisfies the residency requirements under KOZ law will be able

to claim the exemption for this income based upon the ownership

period of the partnership upon the filing a PA individual tax return

(PA-40 KOZ). Do not enter any amount in Column B, Line 13.

Lines 14 and 15. All Other Guaranteed Payments for Services

Rendered - Resident and Nonresident Partners. When deter-

mining what guaranteed payments are exempt from taxation for a

KOZ-based partnership entity, there are four issues the entity must

resolve. First, the entity must determine if Worksheet 6 and/or

Worksheet 7 must be completed based upon whether the entity has

income from the operation of a business located wholly within a

KOZ, wholly outside a KOZ or partly within a KOZ. If the entity is

wholly within a KOZ or partly within a KOZ, the entity must complete

Worksheet 6 and/or Worksheet 7. If the entity operates wholly

outside a KOZ, there is no exemption of guaranteed payments by the

partnership, and Worksheets 6 and 7 need not be completed. The

entity must also classify the guaranteed payments as business or

rental income. The entity must then determine separately for each

partner if net income will be greater than zero when combining the

amount of each partner’s guaranteed payments with the business

partner’s income or loss from the operation of a business, profession

or farm or the rental income or loss from rents, royalties, patents

and copyrights for each partner. For each partner whose income is

greater than zero, the guaranteed payments are then reduced by the

KOZ-exempt portion of the income. Use Worksheet 6 to calculate the

exemption for partnerships with resident partners. Use Worksheet 7 to

calculate the exemption for partnerships with nonresident partners.

Use both worksheets when a partnership has both resident and

nonresident partners.

COLUMN B INSTRUCTIONS (continued)

WORKSHEET 6 (for Column B, Line 14)

ALLOCABLE ALL OTHER GUARANTEED PAYMENTS FOR SERVICES RENDERED (Resident Partners)

Complete a separate column for each resident partner. Include additional worksheets if necessary.

Income Tests:

1. Amount of resident partner’s share of income (loss) from

Schedule P-S KOZ, Column A, Line 1.

2. Amount of resident partner’s portion of Schedule P-S KOZ,

Column A, Line 14 classified as business income.

3. Add Lines 1 and 2. See instructions.

4. Amount of resident partner’s share of income (loss) from

Schedule P-S KOZ, Column A, Line 7.

5. Amount of resident partner’s portion of Schedule P-S KOZ,

Column A, Line 14 classified as rental income.

6. Add Lines 4 and 5. See instructions.

Guaranteed Payment Type:

Business Income:

7. Amount of resident partner’s portion of Schedule P-S KOZ,

Column A, Line 14 classified as business income.

8. PA apportionment factor from Line 5 of PA Schedule H.

9. PA KOZ apportionment factor from Line 5 of Worksheet 1.

10. Multiply Line 7 by Line 8, and the result by Line 9, and enter result.

Rental Income:

11. Amount of resident partner’s portion of Schedule P-S KOZ,

Column A, Line 14 classified as real estate rents from property

located inside a KOZ.

12. Amount of resident partner’s portion of Schedule P-S KOZ,

Column A, Line 14 classified as tangible personal property rents.

13. PA KOZ apportionment factor from Line 2d of Worksheet 4.

14. Multiply Line 12 by Line 13 and enter result.

15. Total Exempt Guaranteed Payments by Partner - Add Lines 10, 11

and 14 for each resident partner.

16. Add Lines 2 and 5 and subtract Line 15. Enter the result here and

on each resident partner’s Schedule RK-1.

17. Total Exempt Guaranteed Payments - add the amounts in the Totals

Column for Lines 10, 11 and 14. Enter the result here and in

Column B, Line 14 of Schedule P-S KOZ.

Partner A B C Totals

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IMPORTANT: For Worksheets 6 and 7, the Income Tests Sections

must be completed by all partnerships with guaranteed payments

regardless of whether or not any of the guaranteed payments are

exempt from taxation as determined by the worksheets.

Classifying Guaranteed Payments as Business or Rental

Income. Partnerships that have guaranteed payments paid to

partners will classify the income as net income or loss from the

operation of a business, profession or farm or net income or loss

from rents, royalties, patents and copyrights depending upon what

type of income the partnership reports. Partnerships reporting both

types of income must classify the guaranteed payments according

to whether the services provided were related to the operation of

a business or related to services provided for the rental property

or both. If the guaranteed payments are classified as both business

income and rental income, complete all lines of the Income Tests

Sections on Worksheet 6 and Worksheet 7 (if applicable). If the

guaranteed payments are classified only as business income or only

as rental income, complete the appropriate lines for the appropriate

classes of income in the Income Tests Sections and enter zeros on

the lines for other class of income in the Income Tests sections.

Worksheet 6 Instructions

Line 1. For each resident partner, enter the partner’s share of

income or loss from Schedule P-S KOZ, Column A, Line 1.

NOTE: Multiple copies of Worksheet 6 may be required for entities

with more than three partners. Complete additional Worksheets 6

for entities with more than three partners and include the totals for

all partners in the entity on the first Worksheet 6 only.

Line 2. Enter the amount of each resident partner’s portion of

guaranteed payments from Schedule P-S KOZ, Column A, Line 14

classified as business income.

Line 3. Add Lines 1 and 2 for each resident partner. If the result is

zero or less for any partner, enter a zero on Line 10 for that partner.

Complete Lines 7 through 10 as required for any partner with a

result greater than zero.

Line 4. For each resident partner, enter the partner’s share of

income or loss from Schedule P-S KOZ, Column A, Line 7.

Line 5. Enter the amount of each resident partner’s portion of

guaranteed payments from Schedule P-S KOZ, Column A, Line 14

classified as rental income.

Line 6. Add Lines 4 and 5 for each resident partner. If the result

is zero or less for any partner, enter a zero on Lines 11 and 14 for

that partner. Complete Lines 11 through 14 as required for any

partner with a result greater than zero.

NOTE: If Line 3 shows zero or less total income for the business class

of income, there is no exempt portion of the guaranteed payments

classified as business income. Likewise, if Line 6 shows zero or less

income for the rental class of income, there is no exempt portion

of the guaranteed payments classified as rental income.

Line 7. If the entity reports its guaranteed payments as business

income, enter the amount of each resident partner’s portion of

Schedule P-S KOZ, Column A, Line 14 guaranteed payments

classified as business income where Line 3 is greater than zero.

Line 8. Enter the PA apportionment factor from PA Schedule H,

Line 5 for each partner with an amount on Line 7. If the entity

operates wholly within Pennsylvania, enter 1.0 on Line 8.

Line 9. Enter the KOZ apportionment factor from Line 5 of

Worksheet 1 for each partner with an amount on Line 7. If the

entity’s PA operations are wholly within a KOZ, enter 1.0 on Line 9.

Line 10. For each partner with an amount on Line 7, multiply Line 7

by the factor on Line 8, and the result by the factor on Line 9. This

is the amount of guaranteed payments attributable to a partner

from the operation of business, profession or farm located within a

KOZ. Add the amounts for each partner with an amount on Line 10

and enter the result in the Totals Column.

Line 11. If the entity reports its guaranteed payments as rental

income and the rental property is real estate, enter the amount of

Schedule P-S KOZ, Column A, Line 14 guaranteed payments attrib-

utable to any KOZ-exempt rental income reported on Schedule P-S

KOZ, Column A, Line 7, where Line 6 for a partner is greater than

zero. If the entity has more than one real estate property and

some properties are located inside the KOZ and some properties

are located outside the KOZ, the guaranteed payments must be

prorated based upon the gross rents of the properties unless the

guaranteed payments are specifically associated with or attributable

to the real estate properties located in the KOZ. Enter only the

KOZ-exempt portion of the guaranteed payments. Add the amounts

for each partner with an amount on Line 11 and enter the result in

the Totals Column.

Line 12. If the entity reports its guaranteed payments as rental

income and the rental property is tangible personal property, enter

the amount of Schedule P-S KOZ, Column A, Line 14 guaranteed

payments attributable to the KOZ-exempt exempt tangible personal

property reported Schedule P-S KOZ, Column A, Line 7, where

Line 6 for a partner is greater than zero. If the entity has more

than one item of tangible personal property, and some properties

are located and used inside the KOZ and some properties are

located or used outside the KOZ, the guaranteed payments must

be prorated based upon the gross rents of the properties unless the

guaranteed payments are specifically associated with or attributable

to the specific items of tangible personal property located and used

inside the KOZ. Enter only the KOZ-exempt portion of the guaranteed

payments for a single property. Complete a separate Worksheet 6

for each property.

Line 13. Enter the PA KOZ apportionment factor from Line 2d of

Worksheet 4 for each partner with an amount on Line 12. Complete

a separate Worksheet 6 for each property.

Line 14. Multiply Line 12 by Line 13 for each partner with an

amount on Line 10 greater than zero and enter the result here. Add

the amounts for each partner with an amount on Line 14 and enter

the result in the Totals Column.

Line 15. Add the amounts on Lines 10, 11 and 14 for each resident

partner.

Line 16. Add the amounts on Lines 2 and 5, subtract Line 15 and

enter the result here. Report the result on each partner’s Schedule

RK-1. If multiple Worksheets 6 were completed, add the amounts

from any other Worksheets 6 for each partner and then subtract

the result from the resident partner’s total guaranteed payments

before reporting the result on the resident partner’s Schedule RK-1

from the partnership entity. Add the amounts for each resident

partner and enter the total in the Totals Column. This amount

should also be reported on Schedule P-S KOZ, Column D, Line 14.

Line 17. Add the amounts in the Total Column for Lines 10, 11 and

14. Enter the result here and on Schedule P-S KOZ, Column B,

Line 14. If multiple Worksheets 6 were completed, add the amounts

from any other Worksheets 6 for each line 17 before reporting the

result on Schedule P-S KOZ, Column B, Line 14.

COLUMN B INSTRUCTIONS (continued)

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Worksheet 7 Instructions

Line 1. For each nonresident partner, enter the partner’s share of

income or loss from Schedule P-S KOZ, Column A, Line 2.

Line 2. Enter the amount of each nonresident partner’s share of

the guaranteed payments included in Schedule P-S KOZ, Column A,

Line 15 classified as business income.

Line 3. Enter the PA apportionment factor from Line 5 of PA

Schedule H.

Line 4. Multiply Lines 2 and 3 and enter result here.

Line 5. Add Lines 1 and 4 for each nonresident partner. If the

result is zero or less for any partner, enter a zero on Line 12 for

that partner. Complete Lines 9 through 12 for any partner with a

result greater than zero. If the result for Line 5 is greater than

zero, Worksheet 1 must be completed.

Line 6. For each nonresident partner, enter the partner’s share of

income or loss from Schedule P-S KOZ, Column A, Line 8.

Line 7. Enter the amount of each nonresident partner’s share

of the guaranteed payments included in Schedule P-S KOZ,

Column A, Line 15 attributable only to rental property located

inside Pennsylvania.

COLUMN B INSTRUCTIONS (continued)

WORKSHEET 7 (for Column B, Line 15)

ALLOCABLE ALL OTHER GUARANTEED PAYMENTS FOR SERVICES RENDERED (Nonresident Partners)

Complete a separate column for each resident partner. Include additional worksheets if necessary.

Income Tests:

1. Amount of nonresident partner’s share of income (loss) from

Schedule P-S KOZ, Column A, Line 2.

2. Amount of nonresident partner’s portion of Schedule P-S KOZ,

Column A, Line 15 classified as business income.

3. PA apportionment factor from Line 5 of PA Schedule H.

4. Multiply Line 2 by Line 3 and enter result.

5. Add Lines 1 and 4. See instructions.

6. Amount of nonresident partner’s share of income (loss) from

Schedule P-S KOZ, Column A, Line 8.

7. Amount of nonresident partner’s portion of Schedule P-S KOZ,

Column A, Line 15 classified as rental income from PA properties.

8. Add Lines 6 and 7. See instructions.

Guaranteed Payment Type:

Business Income:

9. Amount of nonresident partner’s portion of Schedule P-S KOZ,

Column A, Line 15 classified as business income.

10. PA apportionment factor from Line 5 of PA Schedule H.

11. PA KOZ apportionment factor from Line 5 of Worksheet 1.

12. Multiply Line 9 by Line 10, and the result by Line 11, and enter result.

Rental Income:

13. Amount of nonresident partner’s portion of Schedule P-S KOZ,

Column A, Line 15 classified as real estate rents from property

located inside a KOZ.

14. Amount of nonresident partner’s portion of Schedule P-S KOZ,

Column A, Line 15 classified as tangible personal property rents.

15. PA KOZ apportionment factor from Line 2d of Worksheet 5.

16. Multiply Line 14 by Line 15 and enter result.

17. Total Exempt Guaranteed Payments by Partner - Add Lines 12, 13

and 16 for each nonresident partner.

18. Add Lines 4 and 7 and subtract Line 17. Enter the result here and on

each nonresident partner’s Schedule NRK-1.

19. Total Exempt Guaranteed Payments - add the amounts in the Totals

Column for Lines 12, 13 and 16. Enter the result here and in

Column B, Line 15 of Schedule P-S KOZ.

Partner A B C Totals

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Line 8. Add Lines 6 and 7 for each nonresident partner. If the result

is zero or less for any partner, enter zeros on Lines 13 and 16.

Complete Lines 13 through 16 for any partner with a result greater

than zero. If the result is greater than zero for any partner,

Worksheet 1 must be completed

NOTE: If Line 5 shows zero or less total income for the business

class of income, there is no exempt portion of the guaranteed pay-

ments classified as business income. Likewise, if Line 8 shows zero

or less income for the rental class of income, there is no exempt

portion of the guaranteed payments classified as rental income.

Additionally, if the Line 5 result for any nonresident partner is

greater than zero, Worksheet 1 must be completed.

For each line, Lines 1 through 8, add the amounts from each partner

reporting an amount on a line and enter the result in the Totals

Column. If a partnership has multiple Worksheets 7, enter total

amounts in the Totals Column on the first Worksheet 7 only.

Line 9. If the entity reports its guaranteed payments as business

income, enter the amount of each nonresident partner’s portion

of Schedule P-S KOZ, Column A, Line 15 guaranteed payments

classified as business income, where Line 5 is greater than zero.

Line 10. Enter the PA apportionment factor from PA Schedule H,

Line 5 for each partner with an amount on Line 9. If the entity

operates wholly within Pennsylvania, enter 1.0 on Line 10.

Line 11. Enter the KOZ apportionment factor from Line 4 of

Worksheet 1 for each partner with an amount on Line 10. If the

entity’s PA operations are wholly within a KOZ, enter 1.0 on Line 11.

Line 12. For each partner with an amount on Line 9, multiply

Line 9 by the factor on Line 10, and the result by the factor on

Line 11. This is the amount of guaranteed payments attributable

to a partner from the operation of business, profession or farm

located within a KOZ. Add the amounts for each partner with an

amount on Line 12 and enter the result in the Totals Column.

Line 13. If the entity reports its guaranteed payments as rental

income and the rental property is real estate, enter the amount of

Schedule P-S KOZ, Column A, Line 15 guaranteed payments attrib-

utable to any KOZ-exempt rental income reported on Schedule P-S

KOZ, Column A, Line 8, where Line 8 of Worksheet 7 for a partner

is greater than zero. If the entity has more than one real estate

property and some properties are located inside the KOZ and some

properties are located outside the KOZ, the guaranteed payments

must be prorated based upon the gross rents of the properties

unless the guaranteed payments are specifically associated with or

attributable to the real estate properties located in the KOZ. Enter

only the KOZ-exempt portion of the guaranteed payments. Add the

amounts for each partner with an amount on Line 13 and enter the

result in the Totals Column.

Line 14. If the entity reports its guaranteed payments as rental

income and the rental property is tangible personal property, enter

the amount of Schedule P-S KOZ, Column A, Line 15 guaranteed

payments attributable to the KOZ-exempt exempt tangible personal

property reported Schedule P-S KOZ, Column A, Line 8, where Line 8

of Worksheet 7 for a partner is greater than zero. If the entity has

more than one item of tangible personal property and some prop-

erties are located and used inside the KOZ and some properties are

located or used outside the KOZ, the guaranteed payments must

be prorated based upon the gross rents of the properties unless the

guaranteed payments are specifically associated with or attributable

to the specific items of tangible personal property located and used

inside the KOZ. Enter only the KOZ-exempt portion of the guaranteed

payments for a single property. Complete a separate Worksheet 7

for each property.

Line 15. Enter the PA KOZ apportionment factor from Line 2d of

Worksheet 5 for each partner with an amount on Line 14. Complete

a separate Worksheet 7 for each property.

Line 16. Multiply Line 14 by Line 15 for each partner with an

amount on Line 15 and enter the result here. Add the amounts for

each partner with an amount on Line 16 and enter the result in the

Totals Column.

Line 17. Add the amounts on Lines 12, 13 and 16 for each

nonresident partner.

Line 18. Add Lines 4 and 7 and subtract Line 17 from the result.

Enter the result here and on Schedule NRK-1 for each nonresident

partner. Add the amounts for each nonresident partner and enter

the total in the Totals Column. This amount should also be reported

on Schedule P-S KOZ, Column E, Line 15.

Line 19. Add the amounts in the Total Column for Lines 12, 13 and

16. Enter the result here and on Schedule P-S KOZ, Column B,

Line 15. If multiple Worksheets 7 were completed, add the

amounts from any other Worksheets 7 for each line before reporting

the result on Schedule P-S KOZ, Column B, Line 15.

Column B Instructions

Line 16. Distributions of Cash, Marketable Securities and

Property. Do not enter any amount in Column B, Line 16. The KOZ

resident owner is required to determine any income and exemption

for this income on the filing of a PA individual income tax return

(PA-40 KOZ).

Column C Instructions

Subtract the amount in Column B for Lines 1, 2, 5, 6, 7, 8, 14 and 15

from the amounts in Column A for the same lines and enter the

results in Column C. For Lines 3, 4, 9, 10, 11, 12, 13 and 16, enter

the amounts in Column A in Column C.

Column D Instructions

To determine the amount taxable in total to PA resident owners,

carry over the amounts in Column C to the non-shaded blocks in

Column D (shaded blocks are not applicable to PA resident owners).

For Lines 1, 3, 4, 5, 7, 9 and 11, use the amounts in Column D to

multiply by each owner’s percentage of ownership or distributive

income percentage to determine the distributive income to report on

the Form PA-20S/PA-65 Schedule(s) RK-1 of each resident owner.

For Line 13, use the amount attributable to each resident partner to

report the amount on the Form PA-20S/PA-65 Schedule(s) RK-1 of

each resident partner. For Line 14, enter the amount from the Totals

Column for Line 16 of Worksheet 6.

Column E Instructions

To determine the amount taxable to nonresident owners, carry over

the amounts in Column C as appropriate to the non-shaded blocks

in Column E (shaded blocks are not applicable to nonresident

owners). For Lines 2, 6, 8, 10 and 12, use the amounts in column E

to multiply by each owner’s percentage of ownership or distributive

income percentage to determine the distributive income to report on

the Form PA-20S/PA-65 Schedule(s) NRK-1 of each nonresident

owner. For Line 13, use the amount attributable to each nonresident

partner. For Line 15, enter the amount from the Totals Column for

Line 18 of Worksheet 7.

Special Help

Obtain additional information or instructions regarding the filing of PA

Schedule P-S KOZ by calling the Taxpayer Service and Information

Center at 717-787-1064 (business taxes) or 717-787-8201 (individual

taxes). You may order forms by calling 1-800-362-2050.

Mailing Instructions

Mail the Completed PA Schedule P-S KOZ, all related worksheets

and other required documents along with the PA-20S/PA-65 PA S

Corporation/Partnership Information Return to the address provided

in the Form PA-20S/PA-65 PA S Corporation/Partnership Information

Return instructions. A PA-20S/PA-65 PA S Corporation/Partnership

Information Return should be assembled such that the PA Schedule

P-S KOZ and related documents are included immediately after

Pages 1 through 3 of the information return.

COLUMN B INSTRUCTIONS (continued)

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