Schedule F (IL-1065) is a tax form used by partnerships and other pass-through entities in Illinois to report gains from the sale or exchange of property acquired before August 1, 1969. This form is attached to the IL-1065 tax return, which is the general income tax return for partnerships. The purpose of Schedule F is to capture any capital gains, including those that are subject to specific federal tax rules such as Section 1245 and 1250, and any Section 1231 gains that may apply. It’s important to note that this schedule is only necessary if gains are reported on federal Form 1065, Schedule D, Form 4797, or Form 8949.
How to File Schedule F (IL-1065)
- Attach to IL-1065: Schedule F must be attached to the IL-1065 form for partnerships that have reported gains from property sales.
- Ensure Proper Documentation: If you’re reporting gains, make sure to attach copies of federal Form 1065, Schedule D, and Form 4797 or Form 6252, as required.
- Follow Federal Instructions: The form requires information from both federal tax filings and Illinois tax rules, so ensure that you’ve completed your federal forms first.
- File by Deadline: Submit Schedule F by the due date of your IL-1065 form to avoid any penalties.
How to Complete Schedule F (IL-1065)
Section 1: Property Details and Gains
- Column A: Description of Property
- Enter the description of the property sold, such as the type or nature of the asset. This might include buildings, land, or other significant assets.
- Column B: Date Acquired
- Enter the month/year the property was acquired. This is critical to ensure the property qualifies for the “pre-August 1, 1969” category.
- Column C: Date Sold
- Enter the month/year the property was sold or exchanged.
- Column D: Federal Gain
- Report the federal gain on this property as reported on federal Form 1065, Schedule D, or Form 4797.
- Column E: Section 1245 Gain
- Report any Section 1245 gain, if applicable. This applies to gains from the sale of depreciable property like machinery or equipment.
- Column F: Section 1250 Gain
- Report any Section 1250 gain, which relates to the sale of real property where depreciation has been claimed.
- Column G: Section 1231 Gain
- Enter any Section 1231 gain if it applies. This is related to property used in business and held for more than a year, such as real estate.
- Column H: August 1, 1969 Value
- For each property, report its value as of August 1, 1969, or the applicable fraction. This is used to determine the basis for the gain calculation.
- Column I: Federal Tax Basis
- Enter the federal tax basis of the property as of the sale date.
- Column J: Gain from Sale
- This column calculates the final gain from the sale, subtracting the value in Column I from Column H.
Section 2: Additional Calculations and Totals
- Line 2: Pre-August 1, 1969, Appreciation
- Enter the share of pre-August 1, 1969, appreciation from other partnerships, estates, or trusts. This is important for correctly allocating gains from other entities.
- Line 3: Total of Column K
- Add the values from Column K (which represents the gains after deductions) and report the total on Line 3. This amount is carried forward to Line 13 below.
- Line 4: Total of Column L
- Similarly, total the values in Column L, which may include additional deductions for involuntary conversions, and report it on Line 4. This amount is carried forward to Line 9 below.
- Line 5: Attributable to Involuntary Conversions
- If any amount on Line 4 is due to involuntary conversions (such as from casualty or theft), report it here.
- Line 6: Subtract Line 5 from Line 4
- Subtract the involuntary conversion amount (Line 5) from the total on Line 4. This ensures that only non-conversion gains are included.
- Line 7: Total of Column M
- Add up the amounts in Column M and report the total here. This amount is transferred to Line 8 below.
Section 3: Revaluation and Final Gains
- Line 8: Valuation Limitation Amount
- Report the total valuation limitation amount from Line 7. This amount represents any adjustments based on historical property valuation.
- Line 9: Amount from Line 4
- Report the amount from Line 4 here, which is the total gain from Column L, as it applies to the revaluation of assets.
- Line 10: Total Revalued Capital Gain
- Add Line 8 and Line 9 to get the total revalued capital gain. This is the total gain after applying the valuation adjustments.
- Line 11: Net Capital Gain
- Calculate the net capital gain based on your business’s overall capital gain and any applicable deductions. Follow the instructions to determine this figure.
- Line 12: Smaller of Line 10 or Line 11
- Enter the smaller of Line 10 or Line 11 here. This represents the final revalued capital gain after all calculations.
- Line 13: Revalued Ordinary Gain
- Enter the amount from Line 3 as the revalued ordinary gain. This is carried forward from earlier in the form.
- Line 14: August 1, 1969, Valuation Limitation Amount
- Add Line 12 and Line 13. This total is the final August 1, 1969, valuation limitation amount, which is reported on Form IL-1065, Line 25.