Guaranteed Payments Guidance
For tax years beginning on or after January 1, 2013, guaranteed payments of up to $250,000 in any calendar year to an individual partner are sourced as compensation for services and are sourced to the state where the services are performed. Any amount that exceeds $250,000 is sourced to Idaho based on the partnership's Idaho apportionment factor. All compensation paid to a retired partner is sourced to the partner's state of domicile.
For the entity, the total amount of guaranteed payments is reported on Form 65, line 15, as other items. Amounts up to $250,000 paid to an individual that are sourced as compensation for services performed outside Idaho and all payments made to retired partners are reported on Form 65, line 31, as other subtractions. Amounts paid to individuals who are Idaho residents are included in apportionable income (not listed on Form 65, line 31, as an other subtraction) and reported on Form 65, line 38. Guaranteed payments to an entity are not subtracted on Form 65, line 31, and are included in the entity's apportionable income. An explanation for both lines 15 and 31 should be included with the return
Guaranteed payments that are sourced as compensation for services performed in Idaho to an individual who is not an Idaho resident are subtracted on Form 65, line 31 and re-entered as allocated income on Form 65, line 37.
The total guaranteed payment information is shown on Form ID K-1, Part B, Supplemental Information. The information should show that the first $250,000 is sourced as compensation for services and is sourced to the state where the services are performed. Any amount that exceeds $250,000 is reported as Idaho source income based on the partnership's Idaho apportionment factor.
Example: A Utah partner receives a guaranteed payment of $300,000 for services performed in Utah. The partnership reported an Idaho apportionment factor of 75%. The first $250,000 is sourced to Utah as compensation, and $37,500 of the remaining $50,000 is sourced to Idaho ($50,000 x 75% Idaho apportionment factor).
On Idaho Form PTE-12, the entity reports only the amount that exceeds $250,000 apportioned to Idaho, unless the first $250,000 is sourced as compensation to Idaho.
The following flowchart explains this process.
- Pass-through Entity Guidance »
- Form ID K-1 »
- Your Guide to Backup Withholding (2012) (01-07-2013)
- Your Guide to Backup Withholding (2011) (10-30-2012)