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The Alabama 65 form, officially known as the Partnership/Limited Liability Company Return of Income, serves as a state tax document that must be completed by partnerships, limited liability companies (LLCs), syndicates, pools, joint ventures, and similar entities. Structured to accommodate financial data for either the calendar year or a specific fiscal period, the form captures essential information including total federal income, deductions, assets, the nature of business, and more. Entities that operate across state lines or qualify for specific Alabama tax credits also provide additional data relevant to their multi-state operations or tax credit eligibility. For those ready to tackle their state tax obligations, click the button below to securely fill out and submit the Alabama 65 form.

Filing taxes and ensuring compliance with Alabama's tax regulations is a crucial yet intricate part of managing a partnership or limited liability company (LLC). The Alabama Department of Revenue mandates the completion of Form 65, a comprehensive document required for the return of income for partnerships, limited liability companies, and similar entities such as syndicates, pools, joint ventures. This form, specific to the tax year 2010, covers various financial aspects, including total federal income, deductions, total assets as per Form 1065, and information on the company's number of members, nature of business, and its qualification for specific Alabama credits. Additionally, it requires detailed schedules that delve into the computation of separately stated and non-separately stated income, allocation of nonbusiness income, loss, and expenses, and the apportionment factor schedule, which is vital for entities operating both within and outside Alabama. The robust declaration section, along with spaces for pertinent preparer information, underscores the seriousness of the form's attestations. This document not only highlights the fiscal responsibilities but also emphasizes the importance of accurate reporting to the State of Alabama. Therefore, familiarity with its contents and ensuring every section is thoroughly and correctly completed can help avoid potential issues with state tax obligations.

Example - Alabama 65 Form

FORM	10000165	ALABAMA
65
		DEPARTMENT OF REVENUE

• CY

• FY 2010

•SY

				Partnership/Limited Liability Company Return of Income

					ALSO TO BE FILED BY SYNDICATES, POOLS, JOINT VENTURES, ETC.
Important!						For Calendar Year 2010 or Fiscal Year																			DEPARTMENT USE ONLY
						For Calendar Year 2010 or Fiscal Year																			DEPARTMENT USE ONLY
				beginning • _________________________________, 2010, and ending • ____________________________, _________																				FN
	You Must Check
	Applicable Box:			FEDERAL BUSINESS CODE NUMBER						FEDERAL EMPLOYER IDENTIFICATION NUMBER
	Applicable Box:			•						•
				•						•

•	Amended Return			Name of Company																				Total Federal income as shown on
•	Amended Return																							Total Federal income as shown on
•	Initial Return			•																				Form 1065, line 8.
•	Initial Return																							•
																								•
•	Final Return			Number and Street																				Total Federal deductions as shown on
•	General Partnership																							Form 1065, line 21.
•	General Partnership			City or Town								State			9 Digit ZIP Code									•
				City or Town								State			9 Digit ZIP Code									•
•	Limited Partnership																							Total assets as shown on Form 1065.
																								Total assets as shown on Form 1065.
•	LLC/LLP			Check if the company operates				If above name or address is different from the one
•	LLC/LLP			in more than one state		•		shown on your 2009 return, check here											.	. . •
•				in more than one state		•		shown on your 2009 return, check here									. .	.	. . . .	. . •				•
•	Qualified Investment			Check if the company qualifies for the Alabama					Number of Members															CN
				Check if the company qualifies for the Alabama					Number of Members
	Partnership			Enterprise Zone Credit or the Capital Credit .			. . . . .	. . . . •	During The Tax Year								•

State in Which Company Was Formed					Nature of Business		Date Qualified in Alabama					Number of Nonresident Members
•					•		•					Included in Composite Filing . . .					•

				UNLESS A COPY OF FEDERAL FORM 1065 IS ATTACHED THIS RETURN IS INCOMPLETE
	SCHEDULE A				COMPUTATION OF SEPARATELY STATED AND NONSEPARATELY STATED INCOME
		1	Federal Ordinary Income or (Loss) from trade or business activities												. .	. . . . . . . . . . . . . . . . . . .			. . . . .	. . . . .	.	1			•
		2	Net short-term and long-term capital gains – income or (loss)						. .	. .	.	. . . .		2		•
		3	.Salaries and wages reduced for federal employment credits						. .	. .	.	. . . .		3		•(					)
		4	. . . . . . . .Net income or (loss) from rental real estate activities						. .	. .	.	. . . .		4		•
Reconciliation		5	. . . . . . . . . . . .Net income or (loss) from other rental activities						. .	. .	.	. . . .		5		•
Reconciliation		6	Net gain or (loss) under I.R.C. §1231 (other than casualty losses)											6		•
	to Alabama	6										. . . .		6		•
	to Alabama	7	Adjustments due to the Federal Economic Stimulus Act of 2008
	Basis (see	7
	Basis (see		(attach schedule)											7		•
	instructions)		(attach schedule)			. . . .	. . . . . . . . . .	. .	. .	.	. . . .			7		•
	instructions)	8	Other reconciliation items (attach schedule)											8		•
		8	Other reconciliation items (attach schedule)				. . . .	. . . . . . . . . .	. .	. .	.	. . . .		8		•
		9	.Net reconciling items (add lines 2 through 8)				. . . .	. . . . . . . . . .	. .	. .	.	. . . . .	.	. .	. .	. . . . . . . . . . . . . . . . . . .			. . . . .	. . . . .	.	9			•
		10	Net Alabama nonseparately stated income or (loss) (add line 1 and line 9)											. .	. .	. . . . . . . . . . . . . . . . . . .			. . . . .	. . . . .	.	10			•
		11	Contributions				. . . .	. . . . . . . . . .	. .	. .	.	. . . .		11		•(					)
		12	. . . . . . . . . . . . . . . . . . . . .Oil and gas depletion				. . . .	. . . . . . . . . .	. .	. .	.	. . . .		12		•(					)
		13	. . . . . .I.R.C. §179 expense deduction (complete Schedule K)						. .	. .	.	. . . .		13		•(					)
	Separately	14	. . . . . . . . . . . . . . . . . . . . . . . . . .Casualty losses				. . . .	. . . . . . . . . .	. .	. .	.	. . . .		14		•(					)
	Separately	15	Portfolio income or (loss) less expenses (complete Schedule K)											15		•
	Stated Items	15										. . . .		15		•
	Stated Items	16	Other separately stated items (attach schedule)											16		•
	(Related to	16	Other separately stated items (attach schedule)						. .	. .	.	. . . .		16		•
	Business	17	. . . . . . . .Net separately stated items (add line 11 through 16)						. .	. .	.	. . . . .	.	. .	. .	. . . . . . . . . . . . . . . . . . .			. . . . .	. . . . .	.	17			•
	Business	18	Total separately stated and nonseparately stated items (add line 10 and line 17)																			18			•
	Income)	18															. . . . .	. . . . .	.			18			•
	Income)	19	Alabama apportionment factor from Schedule D, line 4											19		•	%						Do not multiply line 18 by line 19
		19	Alabama apportionment factor from Schedule D, line 4						. .	. .	.	. . . .		19		•	%						Do not multiply line 18 by line 19
		20	Nonseparately Stated Income Allocated and Apportioned to Alabama from Schedule D, line 7																. . . . .	. . . . .	.	20			•

•I authorize a representative of the Department of Revenue to discuss my return and attachments with my preparer.

Please

Sign

Here

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

		(	)
Signature of general partner	Date		Daytime Telephone No.	Social Security No.

		Preparer’s
		Signature
	Paid	Firm’s name (or yours, •
	Preparer’s	Firm’s name (or yours, •
	Preparer’s	if self-employed)
	Use Only	and address
	Use Only
		•

Date	Check if		Preparer’s Social Security No.
	Check if
•	self-employed		•
Telephone No.		E.I. No.

()

ZIP Code

Email Address

Mail to: Alabama Department of Revenue, Individual and Corporate Tax Division, P.O. Box 327441, Montgomery, AL 36132-7441	ADOR
on or before April 15, 2011. (Fiscal Year Returns must be filed on or before the 15th day of the fourth month following the close of the fiscal year.)

		10000265
	Form 65 — 2010	Page 2

SCHEDULE B		ALLOCATION OF NONBUSINESS INCOME, LOSS, AND EXPENSE

Identify by account name and amount all items of nonbusiness income, loss, and expense removed from apportionable income and those items which are directly allocable to Alabama. Adjustment(s) must also be made for any proration of expens- es under Alabama Income Tax Rule 810-27-1-4-.01, which states, “Any allowable

deduction that is applicable to both business and nonbusiness income of the tax- payer shall be prorated to each class of income in determining income subject to tax as provided…” (See instructions).

	DIRECTLY ALLOCABLE ITEMS		ALLOCABLE GROSS INCOME / LOSS						RELATED EXPENSE					NET OF RELATED EXPENSE

			Column A		Column B			Column C			Column D			Column E			Column F
			Everywhere		Alabama			Everywhere			Alabama			Everywhere			Alabama
														(Col. A less Col. C)			(Col. B less Col. D)

Nonseparately stated items

1a		•
1b		•
1c		•
1d Total (add lines 1a, 1b, and 1c)														•
Separately stated items

1e		•
1f		•
1g		•
1h Total (add lines 1e, 1f, and 1g)														•

SCHEDULE C			APPORTIONMENT FACTOR SCHEDULE – Do not complete if the entity operates exclusively in Alabama.

	TANGIBLE PROPERTY AT COST FOR						ALABAMA							EVERYWHERE
	PRODUCTION OF BUSINESS INCOME				BEGINNING OF YEAR				END OF YEAR			BEGINNING OF YEAR					END OF YEAR

1	Inventories				•
2	Land				•
3	Furniture and fixtures				•
4	Machinery and equipment				•
5	Buildings and leasehold improvements				•
6	IDB/IRB property (at cost)				•
7	Government property (at FMV)				•
8	•

9	Less Construction in progress (if included)				•
10	Totals				•
11	Average owned property (BOY + EOY ÷ 2)							•								•
12	Annual rental expense				•	x8 =								x8 =
13	. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Total average property (add line 11 and line 12)						13a	•				. . . . . .	. . . .	. . . . . . . . . . . .	13b	•
14	. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Alabama property factor — 13a ÷ 13b = line 14					.	. . . . . .	. . . . . .	. . . . . . . . . . .	. . . . . . .	. . . . .	. . . . . . .	. . . .	. . . . . . . . . . . .	14	•	%
	SALARIES, WAGES, COMMISSIONS AND OTHER COMPENSATION							15a	ALABAMA			15b	EVERYWHERE			15c
	RELATED TO THE PRODUCTION OF BUSINESS INCOME
15	Alabama payroll factor — 15a ÷ 15b = 15c					.	. . . . .	•									%
			SALES						ALABAMA				EVERYWHERE

16	Destination sales			. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
17	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Origin sales			. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
18	. .Total gross receipts from sales		. . . . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
19	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dividends			. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
20	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest			. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
21	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rents			. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
22	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Royalties			. .	. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•
23	. . . . . . .Gross proceeds from capital and ordinary gains				. . . . . . . . . . . . . . . . . . . . . .	. .	. . . .	•

24Other •____________________________________ (Federal 1065, line •_____ ) •

25	Alabama sales factor — 25a ÷ 25b = line 25c	25a •	25b		25c	%
26	Sum of lines 14, 15c, and 25c ÷ 3 = ALABAMA APPORTIONMENT FACTOR (Enter here and on line 4, Schedule D, page 3)			26	•	%

ADOR

		10000365
	Form 65 — 2010	Page 3

SCHEDULE D		APPORTIONMENT AND ALLOCATION OF INCOME TO ALABAMA

1 Net Alabama nonseparately stated income or (loss) from line 10, Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 Nonseparately stated (income) or loss treated as nonbusiness income (line 1d, Column E, Schedule B)

– please enter income as a negative amount and losses as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 Apportionable income or (loss) – add line 1 and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Apportionment factor from line 26, Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 Income or (loss) apportioned to Alabama (multiply amount on line 3 by the percentage on line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 Nonseparately stated income or (loss) allocated to Alabama as nonbusiness income (Column F, line 1d, Schedule B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 Nonseparately Stated Income Allocated and Apportioned to Alabama (add lines 5 and 6). Enter this amount on line 20,

Schedule A and line 1, Schedule K – Alabama Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1•

2	•
3	•
4	•	%
5	•

6•

7•

	SCHEDULE E			OTHER INFORMATION
1	Indicate method of accounting	(a) •	cash	(b) •	accrual	(c) •	other
2	Check if the company is currently being audited by the IRS	•	What years are involved? __________________________________
3	Check if the IRS has completed any audits	•

4Enter this company’s Alabama Withholding Tax Account Number •

5 Briefly describe your operations •

•

6 Indicate if company has been(a) • dissolved(b) • sold(c) • incorporated If company has been dissolved, sold, or incorporated, complete the following:

Nature of change •

Name and address of new company, corporation, or owner(s) •

7Location of the partnership records •

8 Check if an Alabama business privilege tax return was filed for this entity •

If the privilege tax return was filed using a different FEIN, please provide the name and FEIN used to file the return.

FEIN: •	NAME: •

9Taxpayer’s email address:

	SCHEDULE K	DISTRIBUTIVE SHARE ITEMS
		Federal Amount	Apportionment		Alabama Amount	Enter on Alabama
		Federal Amount	Factor		Alabama Amount	Schedule K-1
			Factor			Schedule K-1
1	Alabama Nonseparately Stated Income (Schedule D, line 7)
1	Alabama Nonseparately Stated Income (Schedule D, line 7)			•		Part III, Line M
	Separately Stated Items:
2	. . . . . .Contributions	•				Part III, Line S
3	Oil and gas depletion
3	Oil and gas depletion	•				Part III, Line Z
4	I.R.C. §179 expense deduction
4	I.R.C. §179 expense deduction
	a. Amount allowed on 1065	•
	. . . . . . . . . . . . . . . . . . . . . .b. Adjustments required (see instructions)	•
	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .c. Amount to be apportioned	•				Part III, Line O
5	. . .Casualty losses
5	. . .Casualty losses	•				Part III, Line W
6	. . .Portfolio income
6	. . .Portfolio income	•				Part III, Line Q
7	Interest expense related to portfolio income
7	Interest expense related to portfolio income	•				Part III, Line P
8	Other expenses related to portfolio income (attach schedule)
8		•				Part III, Line R
9	Other separately stated business items (attach explanation)
9	Other separately stated business items (attach explanation)	•				Part III, Line T
10	Small business health insurance premiums (attach explanation)
10				•		Part III, Line Y
11	. . . . . . . . . . .Separately stated nonbusiness items (attach schedule)	•		•		Part III, Line AA
12	. . . . . . . .Composite payment made on behalf of owner/shareholder			•		Part III, Line U
13	. . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. taxes paid (attach explanation)	•				Part III, Line V
14	Alabama exempt income (attach explanation)
14	Alabama exempt income (attach explanation)	•				Part III, Line AB
	Transactions with Owners:
	Transactions with Owners:		100%
15	Property distributions to owners	•	100%	•		Part III, Line X
15	Property distributions to owners	•		•		Part III, Line X
16	Guaranteed payments to partners
16	Guaranteed payments to partners	•		•		Part III, Line N

CHECK LIST

HAVE THE FOLLOWING FORMS BEEN ATTACHED TO THE FORM 65?

ALABAMA SCHEDULE K-1 (one for each owner)

ALABAMA SCHEDULE NRA (if applicable)

FEDERAL FORM 1065 (entire form as filed with the IRS)

ADOR

*10000465*

Form 65 — 2010

Page 4

Required Entity Information For Partnerships and LLCs

1. List general partners.

NAME OF GENERAL PARTNER

SSN / FEIN

ADDRESS

a.•

b.•

c.•

d.•

e.•

PERCENT OF OWNERSHIP

2. List other states in which the Partnership/LLC operates, if applicable.

3. At any time during the tax year, did the Partnership/LLC transact business in a foreign country?		Yes	No
If yes, complete the information below:

NAME OF COUNTRY	NATURE OF BUSINESS			TAXABLE INCOME
NAME OF COUNTRY	NATURE OF BUSINESS			REPORTED TO COUNTRY
				REPORTED TO COUNTRY

a. •

b. •

c. •

d. •

e. •

4. At any time during the tax year, did the Partnership/LLC invest in another Pass-Through entity?	Yes		No
If yes, complete the information below:

NAME OF ENTITY		FEIN		PERCENT OF
NAME OF ENTITY		FEIN		OWNERSHIP
				OWNERSHIP

a. •

b. •

c. •

d. •

e. •

5.Person to contact for information regarding this return:

Name:

Telephone Number: (

)

Email:

ADOR

▼ PDF File

Form Attributes

Fact	Detail
Form Type	Alabama 65
Governing Law	Alabama Department of Revenue regulations
Applicable Entities	Partnerships/Limited Liability Companies, Syndicates, Pools, Joint Ventures, etc.
Purpose	Return of Income for the specified tax year
Required Attachments	Federal Form 1065, Alabama Schedule K-1, Alabama Schedule NRA (if applicable)
Filing Deadline	April 15, 2011, for Calendar Year filers; 15th day of the 4th month following the close of the fiscal year for Fiscal Year filers

Steps to Filling Out Alabama 65

Filing the Alabama Form 65 is a crucial step for partnerships, limited liability companies, and other similar entities to report their income to the Alabama Department of Revenue. This process doesn't just help in keeping your entity compliant with Alabama state tax laws, but it also ensures that the right amount of tax is paid, protecting you from possible legal and financial penalties down the line. Here is a step-by-step guide on how to accurately complete the form:

Begin with the basic entity identification information at the top of the form. Fill in the tax year or fiscal year that your return is covering.
Check the appropriate box to indicate whether the return is an amended return, initial return, or final return.
Enter the company's federal business code number and federal employer identification number (EIN).
Provide the name and complete address of the company including the company type (general partnership, limited partnership, LLC/LLP).
Specify if the company operates in more than one state and if your name or address has changed since the 2009 return.
If applicable, check the box indicating qualification for the Alabama Partnership Enterprise Zone Credit or the Capital Credit.
Fill in the number of members, state in which the company was formed, nature of business, and the date qualified in Alabama.
Include the number of nonresident members and check the box if they are included in composite filing.
Attach a copy of Federal Form 1065 as required for a complete return.
Proceed to Schedule A to compute separately and nonseparately stated income, filling in all applicable fields based on your federal return and adjustments specific to Alabama.
In Schedule B, report any nonbusiness income, loss, and expense corrections as detailed in the schedule instructions.
Complete Schedule C only if your entity operates both inside and outside Alabama, detailing apportionment factors for tangible property, payroll, and sales.
Fill out Schedule D to apportion and allocate income to Alabama, using the calculated apportionment factor from Schedule C.
Provide additional information required on Schedule E, including accounting method, IRS audit details, and changes in company status.
Include details about distributive share items on Schedule K as they apply to Alabama and federal amounts.
Ensure all partners or members have been listed along with their ownership percentages under the required entity information section.
Sign and date the form, providing contact details for further communication.
Remember to attach any required documents, including the federal form 1065 and Alabama Schedules K-1 and NRA if applicable.
Mail the completed form and any attachments to the Alabama Department of Revenue, Individual and Corporate Tax Division, at the provided address, ensuring it's sent before the due date.

Once submitted, your Form 65 will be processed by the Alabama Department of Revenue. You may be contacted for further information or clarification if needed. Accurate and timely filing ensures your partnership or company remains in good standing and avoids any potential penalties or interest for late submissions. Should you encounter any difficulties, consider seeking professional tax advice to guide you through the process.

Understanding Alabama 65

What is the Alabama 65 form used for?

The Alabama 65 form is a document required by the Alabama Department of Revenue for reporting income by partnerships, limited liability companies (LLCs), and other similar entities. These formations use it to declare their overall income, deductions, and related tax items for a specific tax year. It serves to ensure that such business entities comply with state tax regulations by accurately disclosing their financial status.

Who needs to file Form 65 in Alabama?

Form 65 must be filed by partnerships, limited liability companies (LLCs), syndicates, pools, joint ventures, and similar entities operating within the state of Alabama. This includes entities that have generated income, gains, losses, deductions, or credits from business operations or investments in Alabama. The obligation to file is not dependent on whether the entity owes state taxes but is a requirement for reporting purposes.

What information is required when filling out Form 65?

When completing Form 65, entities are required to provide detailed information about their income, losses, and deductions as reported on Federal Form 1065. Additionally, specifics regarding the apportionment of income based on business activities in Alabama versus those elsewhere are necessary. The form asks for the entity’s name, identification numbers (FEIN), addresses, and the nature of the business. It also requires details about the ownership and allocation of income among members, nonresident member inclusion, and any applicable credits.

Are there any attachments required when filing Form 65?

Yes, entities must attach a complete copy of Federal Form 1065 along with all its schedules. If claiming certain deductions or credits, additional schedules or documentation specific to those claims may also be required. The instructions also mandate the inclusion of Alabama Schedule K-1s for each partner or member, detailing their share of the entity’s income, deductions, and credits.

What are the deadlines for filing Form 65 in Alabama?

The due date for filing Form 65 is on or before April 15th of the year following the calendar year reported. For entities operating on a fiscal year basis, the form must be filed by the 15th day of the fourth month following the close of their fiscal year. Failing to file on time can result in penalties and interest charges on any owed taxes. It's important for entities to be aware of their specific filing deadline to ensure compliance and avoid unnecessary fees.

Common mistakes

Filling out tax forms can be complicated, and mistakes are common. When it comes to completing the Alabama Form 65, there are several common errors that partnerships and LLCs should be aware of to avoid issues with their return. Here’s a list of ten mistakes to watch out for:

Not checking the correct return type box (initial, amended, or final return) can lead to processing delays.
Failing to update the company’s name or address if it has changed since the last filing period can result in misdirected correspondence.
Entering incorrect Federal Employer Identification Numbers (FEIN) makes it difficult for the Department of Revenue to match the return with the correct entity.
Omitting the total federal income from Form 1065, line 8, or deducting incorrect amounts on the Alabama return.
Overlooking the need to attach a copy of the Federal Form 1065 can lead to an incomplete return, as this document is necessary for the Alabama Department of Revenue to verify the information provided.
Incorrect calculation of the net Alabama nonseparately stated income or loss. This requires adding line 1 and line 9 from Schedule A, a step occasionally skipped or miscalculated.
Not properly identifying or allocating nonbusiness income, loss, and expense on Schedule B can result in inaccuracies in taxable income.
Forgetting to complete Schedule D, which is crucial for apportioning income to Alabama. The apportionment factor calculation is often overlooked, leading to incorrect state income amounts.
Not indicating the accounting method used. This information is critical as it impacts how income and deductions are reported.
Leaving the preparer’s information blank or incomplete. Even though this might seem trivial, having accurate preparer information is important for any follow-up required by the Department of Revenue.

Avoiding these mistakes requires careful attention to detail and a thorough review of the return before submission. Each part of the form has its importance and contributes to the accurate processing of the return. It's also advisable for partnerships and LLCs to consult with a tax professional or utilize available guides and resources from the Alabama Department of Revenue. A mistake-free return not only facilitates smoother processing but also minimizes the risk of audits and penalties, ensuring compliance with state tax regulations.

Documents used along the form

Completing Alabama's Form 65, a Partnership/Limited Liability Company Return of Income, requires careful coordination of various supporting documents to ensure compliance and accuracy in reporting. This process, while rigorous, aims to provide a comprehensive view of an entity's financial activities within the taxable year. Below, we explore additional forms and documents frequently utilized alongside Form 65 to fulfill state tax obligations and provide clarity on the entity's income and deductions.

Federal Form 1065: This is a must-have for entities filing Form 65, as it reports the income, gains, losses, deductions, credits, etc., of a partnership or multi-member LLC. A copy of the fully completed Federal Form 1065 must be attached to the Alabama Form 65 to provide a basis for state income calculations and adjustments.
Schedule K-1 (Federal): This schedule accompanies Form 1065 and details each partner's share of the partnership’s income, deductions, credits, etc. While the federal version is necessary for Alabama Form 65, Alabama Schedule K-1 must also be prepared and distributed to each partner for their individual tax filings.
Alabama Schedule K-1: Specific to Alabama, this document outlines each partner’s share of income, deductions, and credits from the entity, per state adjustments. It’s essential for partners to properly report and pay taxes on their individual tax returns.
Schedule D (Alabama): Used for calculating and reporting the apportionment factor, this schedule is crucial for entities operating in multiple states. It helps determine the portion of income attributable to Alabama based on property, payroll, and sales.
Alabama Schedule NRA: Necessary for partnerships with nonresident members, this schedule assists in computing and reporting income sourced to Alabama. It ensures correct tax withholding and payment on behalf of nonresidents.
Proof of Federal Adjustments: In cases of amendment or IRS audit adjustments, entities must provide documentation of changes to their federal tax returns. These adjustments could necessitate amendments to previously filed Alabama Form 65s to align state reporting with federal outcomes.

Form 65, alongside these documents, furnishes a detailed depiction of an entity's financial undertakings, ensuring both federal and state tax obligations are met comprehensively. Proper assembly and submission of these documents not only facilitate compliance but also optimize the entity and its members' tax positions through meticulous reporting and substantiation of income, deductions, and credits.

Similar forms

The Alabama 65 form is similar to the IRS Form 1065, U.S. Return of Partnership Income, in several ways. Both are used by partnerships and some other types of business organizations to report income, gains, losses, deductions, credits, and other financial information for the tax year to the respective tax authorities. The Alabama 65 form requires information on total federal income, deductions, and total assets mirroring the data called for on Form 1065. Specifically, items like ordinary income, net rental real estate income, and portfolio income must be reported on both forms. Additionally, both require attachments for specific schedules and supplementary documentation, emphasizing the parallel in their purpose to account for partnership-related tax liabilities comprehensively.

Another document akin to the Alabama 65 form is Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc. The Schedule K-1 is required by the IRS to provide partners with a detailed account of their share of the partnership’s taxable income so that they can report it on their individual tax returns. The Alabama 65 form's requirement for distributive share items and allocations of income, gains, losses, and credits to partners or members mirrors this concept. Both documents play a crucial role in ensuring that income from pass-through entities is reported accurately by each partner at both federal and state levels. Moreover, like the federal Schedule K-1, Alabama’s Form 65 essentially facilitates transparent reporting of individual income arising from partnerships under the state’s taxation laws.

Dos and Don'ts

When filling out the Alabama 65 form, it’s crucial to take careful steps to ensure that all information is accurately reported and in compliance with state regulations. Below are key dos and don'ts to guide you through the process:

Dos:

Double-check the company's name and address against the previous year's return to ensure consistency. If there has been a change, make sure to indicate this by checking the appropriate box on the form.
Attach a copy of the Federal Form 1065 as required. The Alabama 65 form is considered incomplete without the corresponding federal return information.
Accurately compute the apportionment factor if the entity operates in multiple states. This calculation is crucial for determining the correct amount of income attributable to Alabama.
Sign and date the form. The declaration by the signing partner under penalties of perjury attests to the form’s accuracy. Missing signatures can lead to processing delays or the form being considered invalid.

Don'ts:

Do not overlook the Schedules that need to be completed in addition to the main form. Schedules provide necessary detail about income sources, apportionment calculations, and other tax-related information specific to Alabama.
Avoid making estimates or guesswork when filling out financial amounts. Use actual figures from your financial records to ensure that all income and deductions are accurately represented.
Do not forget to report all states in which the Partnership/LLC operates if applicable. This information is critical for accurate apportionment and tax compliance.
Never leave sections blank that apply to your business situation. If a section is not applicable, fill it with “N/A” or “-” to indicate it was reviewed but not needed. Incomplete forms may lead to erroneous assumptions about missing data.

Misconceptions

When it comes to understanding the Alabama 65 form, specifically tailored for partnerships and limited liability companies regarding their Return of Income, there are several misconceptions that often lead to confusion and errors. Some of these misconceptions are detailed below:

Only for Partnerships: Many believe the Form 65 is exclusively for partnerships. However, it is also applicable to limited liability companies (LLCs), syndicates, pools, joint ventures, and similar entities that need to report their income and deductions to the Alabama Department of Revenue.
Static Filing Date: There's a misconception that the filing date is the same each year. In reality, the due date for the form is April 15th for calendar year filers or the 15th day of the fourth month following the close of the fiscal year for fiscal year filers.
No Need for Federal Information: Another common mistake is assuming that detailed federal income data isn't required. The form stipulates that a copy of the Federal Form 1065 must be attached for it to be considered complete.
Amendments Are Rarely Needed: Some believe amendments are rarely needed, yet the form has a specific box to check if you are filing an amended return, indicating amendments can and do happen for various reasons.
Enterprise Zone Credit Applies to All: Not all entities qualify for the Alabama Partnership Enterprise Zone Credit or the Capital Credit. Companies must meet specific qualifications, and eligibility shouldn't be assumed.
Apportionment Does Not Apply: There's a mistaken belief that all income is treated equally. In reality, the form includes a detailed Schedule D for the apportionment of income, which can significantly affect the taxable income attributed to Alabama.
All Income is Business Income: Schedule B of the form addresses the allocation of nonbusiness income, underscoring the importance of distinguishing between business and nonbusiness income for accurate tax reporting.
No Need to Report Changes in Company Details: If there are any changes in a company's name or address from the previous year, it's crucial these changes are indicated on the form. Overlooking these updates can lead to miscommunication and errors in records.
Electronic Filing Isn't Available: While the form does require detailed documentation, electronic filing is an option, offering a more streamlined and efficient submission process.
Flat Tax Rate for All: The form necessitates calculations that can affect the tax rate applied to the income, including the apportionment factor and adjustments for separately stated and nonseparately stated income, debunking the idea of a universal tax rate for all entities.

Understanding these misconceptions about the Alabama 65 form can lead to more accurate and efficient tax reporting for partnerships and LLCs operating in Alabama.

Key takeaways

Filling out and using the Alabama Form 65 requires attention to detail and understanding specific instructions tailored for partnerships, limited liability companies (LLCs), and similar entities. Below are key takeaways to ensure compliance and accuracy when dealing with this form:

The Alabama Form 65 is specifically designed for Partnership/Limited Liability Company Return of Income and should also be utilized by syndicates, pools, joint ventures, and similar entities.
It's crucial to check the appropriate box indicating whether the return is an initial, amended, or final return to inform the Department of Revenue of the return’s status.
For accuracy in reporting, ensure that the federal Employer Identification Number (EIN) and the Federal Business Code Number are correctly listed on the form.
The form requires detailed financial information, including total federal income, deductions, and total assets as shown on the federal Form 1065.
Entities operating in more than one state must declare this by checking the specific box on the form, which may affect the apportionment calculation and taxable income attributable to Alabama.
Qualifying for Alabama-specific credits, such as the Capital Credit or the Alabama Partnership Enterprise Zone Credit, necessitates the checking of another box. Such qualifications can impact the tax liability.
Attaching a copy of the Federal Form 1065 is mandatory; failing to do so renders the return incomplete, potentially leading to processing delays or inquiries from the Department of Revenue.
Schedules accompanying the form (such as Schedules A, B, C, D, and K) require detailed information on income allocation, apportionment of income to Alabama, and distributions. These details are critical for accurate tax calculation and compliance.
Before mailing the form to the Alabama Department of Revenue, all forms, including the Alabama Schedules K-1 for each owner and possible Alabama Schedule NRA if applicable, should be attached. Double-checking these attachments can prevent delays.
Finally, the signature of a general partner and the declaration affirming the accuracy and completeness of the information provided are essential. This, along with the contact information of the preparer if not self-prepared, is the final step to certify the return before submission.

Understanding these key aspects of the Alabama Form 65 ensures that partnerships and similar entities accurately report their income, claim eligible credits, and comply with Alabama tax law requirements. Always consult the form's instructions or a tax professional if uncertainties arise during the preparation of the return.

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