Municipal Income (1041 AR)

If a return has municipal interest income you must include the taxable amount on the Form AR1002F, Page 1, column B. You must also include it on Form AR1002F, line 17 as amounts to distribute. For resident beneficiaries, this amount reports on Schedule K-1. For nonresident beneficiaries, this amount reports on Schedule B as a distribution since this amount is not taxable to a nonresident. Arkansas only taxes nonresident beneficiaries on in-state source income.

Note: Form AR1002F, line 17 should equal Schedule B, but Schedule B total does not always equal the amount on the Schedule K-1s.

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