We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. These documents are classified as Revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.

Q&A with the Pennsylvania Department of Revenue

Will the Department of Revenue provide a specific section or sections in its return instructions that set forth the rules on how pass-through income from other pass-through entities should be treated for each class of income?

Nov 15, 2019
Q:

The alternative investment area has become more popular over the years. However, the Department’s partnership forms and instructions, e.g., Schedule M, Part B, do not clearly set forth instructions on how pass-through entities should exclude income/loss from other pass-through entities. The lack of clarity creates compliance issues. Would the Department either issue (1) some type of additional guidance in this area, or (2) provide a specific section or sections in its return instructions that set forth the rules on how pass-through income from other pass-through entities should be treated for each class of income?

A:

For business income, if reporting a loss from a pass-through entity, please refer to the PA-20S/PA-65 Information Return Schedule M Part II Section II (h) Other income adjustments that increase PA reportable income. If reporting income from a pass-through entity, refer to Section III (d) Other Income Adjustments that decrease PA reportable income. Pass through income should be reported on the information return Part I Line 1(b) Share of Business of Income (Loss) from All Other Entities. For all other classes of income refer to the instructions for each corresponding schedule.
 

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Disclaimer

These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.