Ownership in a Partnership or Corporation 510-03-75-05

(Revised 6/1/2015 ML #3441)

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(N.D.A.C. Sections 75-02-02.1-28(1) and 75-02-02.1-34(8))

Income from ownership in a Partnership or Corporation is countable income for ACA Medicaid.

Partnerships

A partnership is a self-employment business set up as a partnership with two or more partners. A partner’s share of income, gain, loss, deductions or credits is determined by a partnership agreement.

An individual, who is an owner or part owner in a partnership, will be issued a Schedule K-1 (Form 1065) from the partnership, which lists the income they received. The information from the appropriate K-1 is carried over to the Form 1040.

Corporation

A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law. Shareholders have the right to participate in the profits, through dividends and/or the appreciation of stock, but are not held personally liable for the company's debts.

The information from the Form 1099-DIV is used when the individual files their personal income taxes.

S –Corporation

An S-Corporation is a separate business entity with 1 to 100 shareholder(s) that passes through the net profit or loss to their shareholder(s). The business profits are taxed at individual tax rates on each individual shareholder’s income tax. The information from the appropriate K-1 is entered on the Schedule E of the individuals’ personal income tax forms. If the individual provides a copy of their income tax forms, the countable income from the K-1, 1099-DIV, or Schedule E would be carried over to the Form 1040. Therefore, the Schedule E amount from the Form 1040 would be used. If the individual does not file taxes, the net income from the individual’s schedule 1099-DIV or K-1 from the corporation or partnership, will be used, plus any wages paid to the individual in addition to the net income. If the 1099-DIV or K-1 is not prepared, ledgers must be provided.