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2016 Connecticut Composite

2016 Connecticut FORM Composite CT-1065/. CT-1120SI Income Tax instructions This booklet contains information and instructions about the following forms: All Forms CT-1065/CT-1120SI. Form CT-1065/. CT-1120SI and their associated payments are required to be filed and paid Form CT-1065/ electronically. CT-1120SI EXT. Schedule CT K-1. Only amended returns and Form CT K-1T taxpayers who have valid electronic filing waivers from DRS. Form CT-1065/. CT-1120SI may submit paper returns. Supplemental Attachment Tax information is available on the DRS. website at More Department of Revenue Services (DRS) tax information is listed on the back cover. Page 1. Table of Contents What's New .. 4 Member That Is Itself a Pass-Through Entity .. 10. Other Taxes For Which the Pass- Through Entity May Be Liable .. 6 Composite Payment of Tax ..11. Registration ..6 Estimated Payments ..11. Abusive Tax Shelters .. 6 Domestic Production Activity Deduction ..11. Definitions .. 7 Tax Credits ..11. General Information.

Page 1 Connecticut Composite Income Tax Instructions This booklet contains information and instructions about the following forms: • Form CT-1065/

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1 2016 Connecticut FORM Composite CT-1065/. CT-1120SI Income Tax instructions This booklet contains information and instructions about the following forms: All Forms CT-1065/CT-1120SI. Form CT-1065/. CT-1120SI and their associated payments are required to be filed and paid Form CT-1065/ electronically. CT-1120SI EXT. Schedule CT K-1. Only amended returns and Form CT K-1T taxpayers who have valid electronic filing waivers from DRS. Form CT-1065/. CT-1120SI may submit paper returns. Supplemental Attachment Tax information is available on the DRS. website at More Department of Revenue Services (DRS) tax information is listed on the back cover. Page 1. Table of Contents What's New .. 4 Member That Is Itself a Pass-Through Entity .. 10. Other Taxes For Which the Pass- Through Entity May Be Liable .. 6 Composite Payment of Tax ..11. Registration ..6 Estimated Payments ..11. Abusive Tax Shelters .. 6 Domestic Production Activity Deduction ..11. Definitions .. 7 Tax Credits ..11. General Information.

2 7 Angel Investor Tax Credit .. 12. Claiming the Tax Credits .. 12. How to Get Help .. 7. When to File Form CT-1065/CT-1120SI .. 12. Electronic Filing Required .. 7. Due Date .. 12. Forms and Publications .. 8. Extension Request .. 12. Taxpayer Service Center .. 8. Extension Request With Credit or Modernized e-File Program (MeF).. 8 Debit Card Payments .. 13. Who Must File .. 8 Extension of Time to Pay the Tax .. 13. Substantial Economic Presence .. 8 Where to File ..13. Accounting Period and Method of Payment Options ..13. Accounting .. 8 Pay Electronically .. 13. Pay by Credit Card or Debit Card .. 13. Requirement to Attach Copies of Federal Forms .. 8 Interest and Penalties ..13. Interest .. 13. Requirement to Identify Exempt Members .. 8 Penalty for Late Payment or Late Filing .. 14. Disregarded Entities .. 9 Penalty for Failure to File .. 14. Penalty for Willful Failure to File or Pay .. 14. Sale or Disposition of an Interest Penalty for Willful Filing of a in an Entity that Owns Property Fraudulent or Materially False Return.

3 14. in 9. Income Tax Refund ..14. Special Filing Requirements for Direct Deposit .. 14. Form CT-1040NR/PY .. 9. Offset Against Debts .. 14. A PE Must Provide Schedule CT K-1s to All Members .. 9 Waiver of Penalty .. 14. How Members Report Income ..10 Recordkeeping .. 14. Resident Noncorporate Member .. 10. Nonresident Noncorporate Member .. 10. Electronic Filing! Free and secure! Page 2. Copies of Returns .. 14 Part V Member's Share of Connecticut Modifications ..24. Amended Returns .. 15. Additions .. 24. File a Paper Return .. 15 Subtractions .. 25. Pay by Mail for Amended Returns or Granted Waivers .. 15. Part VI Connecticut -Sourced Portion of Items From Federal Schedule K-1, Form CT-1065/CT-1120SI instructions 16 Form 1065, or Form 1120S .. 27. Order in Which to Complete Schedules .. 16 Part VII Connecticut Income Tax Credit Summary .. 30. Pass-Through Entity Information .. 16. Schedule CT K-1 instructions .. 30. Rounding Off to Whole Dollars .. 16. Part I Connecticut Modifications.

4 30. Part I Schedule A PE Computation of Composite Tax Due .. 17 Part II Connecticut -Sourced Portion of Items From Federal Schedule K-1 of Part I Schedule B PE Member Form 1065 or Form 1120S .. 30. Composite Return .. 18. Part III Connecticut Income Tax Part I Schedule C Federal Schedule K 30. Information .. 19. Part IV Connecticut Income Tax Part I Schedule D Connecticut -Sourced Credit Summary .. 30. Income From Subsidiary PE(s) .. 21. Income Tax Credit Worksheet .. 30. Part II Allocation and Apportionment of Income .. 22 Signature .. 30. Part III Place(s) of Business .. 24 Paid Preparer Signature .. 30. Part IV Member Information .. 24 Paid Preparer Authorization .. 31. Tax Information ..Back Cover Electronic Filing! Free and secure! Page 3. What's New Angel Investor Tax Credit Businesses that cannot reasonably determine where Effective for taxable years beginning on or after their receipts should be sourced under the statutory January 1, 2016 , an angel investor may sell, assign, rules may petition the Commissioner to use an or transfer all or part of the Angel Investor Tax alternate method that reasonably approximates Credit to another taxpayer once.

5 The PE member such sourcing rules. or shareholder and the buyer assignee or transferee Sales of intangible property and tangible personal must obtain a new certificate from Connecticut property are excluded from the apportionment Innovations, Inc. Additionally, an angel investor calculation (numerator and denominator) if such can continue to seek this tax credit through property is not held by the company primarily Connecticut Innovations, Inc., until June 30, for sale to customers in the ordinary course of the 2019. The program was previously scheduled to company's trade or business. If receipts from the sunset on June 30, 2016 . sale of tangible personal property are excluded You must complete Form CT-AIT, Angel from the sales factor, the net gain from such sale Investor Tax Credit, if you are selling, assigning, should be allocated to the state where the property or transferring the credit. You must also complete is located and is not subject to apportionment. this form if you have obtained the Angel Investor Net income from the sale, rental, lease, or license Tax Credit through a purchase, assignment, or of real property is allocated to the location of the transfer.

6 Real property, and the gross receipts from these transactions are excluded from the apportionment calculation. Pass-through Entities DRS is preparing guidance regarding market-based Single Sales Factor Apportionment and sourcing and will post this guidance on its website Market-Based Sourcing: Effective for taxable as soon as it becomes available. years beginning on or after January 1, 2017, a business, trade, profession or occupation carried Determination of nonresident partner's, on in Connecticut and outside of Connecticut must shareholder's or beneficiary's share of income apportion its income using a single factor gross within Connecticut : Effective for taxable years income percentage. beginning on or after January 1, 2017, nonresident partners, shareholders, or beneficiaries must These multistate businesses are required to determine their share of income derived from utilize market-based sourcing for purposes of or connected with sources within Connecticut determining their gross income percentage.

7 According to the statutory apportionment provisions Businesses must source receipts from the sales of Conn. Gen. Stat. 12-711, as amended by May of services and intangible property on a market Spec. Sess. 16-3, section 200, rather than basis. Receipts from the rental, lease, or license of according to Conn. Agencies Regs. 12-711(c)-3. tangible personal property are sourced according and 12-711(c)-4 to the extent such regulations are to the location of the property. Receipts from the inconsistent with the revisions to Conn. Gen. Stat. sale of tangible personal property continue to be 12-711(c). sourced based upon the location of the purchaser. Timely Filed Returns April 18, 2017. The 2016 Connecticut income tax return (and payments) will be considered timely if filed on Tuesday, April 18, 2017. In 2017, the due date for filing a Connecticut income tax return (April 15) falls on a Saturday. The next business day is Monday, April 17, which is a legal holiday in the District of Columbia (Emancipation Day).

8 Therefore, for filing purposes the next business day is Tuesday, April 18, 2017. Page 4. Internal Revenue Code section 457A. Reporting Requirements of Deferred Compensation The Tax Extenders and Alternative Minimum Tax Relief Act of 2008 enacted Internal Revenue Code section 457A. For federal income tax purposes, this section applies to deferred compensation paid to any service provider under a nonqualified deferred compensation plan of a nonqualified entity that is attributable to services performed after December 31, 2008. The compensation is includible in gross income when there is no substantial risk of forfeiture of the rights to such compensation. Deferred compensation attributable to services performed before January 1, 2009 must be reported on or before taxable year 2017, or, if the deferred compensation is subject to a substantial risk of forfeiture beyond 2017, then it must be reported in the taxable year in which the compensation is no longer subject to a substantial risk of forfeiture.

9 Service providers includes an individual, corporation, subchapter S corporation, partnership, personal service corporation, and noncorporate entity that would be a personal service corporation if it were a corporation, qualified service corporation, and noncorporate entity that would be a qualified service corporation if it were a corporation. Pursuant to Conn. Gen. Stat. 12-711(a), compensation from nonqualified deferred compensation plans attributable to services performed within Connecticut , including compensation required to be included in federal gross income under section 457A. of the Internal Revenue Code ( ), is subject to Connecticut income tax. Thus, if you are a service provider to whom 457A applies, you must report such income as Connecticut sourced. Consult your tax advisor to determine whether 457A applies to you. Electronic Filing! Free and secure! Page 5. Other Taxes For Which the Pass-Through Entity May Be Liable The information that follows is a general description of Controlling Interest Transfer Taxes other Connecticut taxes for which a pass-through entity Tax is imposed on the sale or transfer for consideration (PE) may be liable.

10 Failure to pay these or any taxes for of a controlling interest in an entity where the entity which the PE is liable may subject the PE to civil and owns, directly or indirectly, an interest in Connecticut criminal penalties. real property. This tax is reported on Form AU-330, Controlling Interest Transfer Taxes. See Special Notice Connecticut Income Tax Withholding 2003(11), Legislation Affecting the Controlling Interest Any PE that maintains an office or transacts business Transfer Tax. in Connecticut (regardless of the location of the payroll department) and is considered an employer Real Estate Conveyance Tax for federal income tax withholding purposes must If a PE transfers real estate in Connecticut , it must withhold Connecticut income tax from Connecticut complete and file Form OP-236, Connecticut Real Estate wages as defined in Conn. Agencies Reg. 12-706(b)-1. Conveyance Tax Return, in the town in which the real See Informational Publication 2017(1), Connecticut estate is situated.


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