Arizona booklet X

              Arizona Booklet X 2010
VOLUME 1
This booklet contains:
 Individual Tax Forms
 Corporation, Partnership, and
Exempt Organization Tax Forms
CAUTION
The federal amounts that you use on your Arizona return may not be the
same as the federal amounts from your federal tax return.
Each year the Arizona State Legislature considers if they will adopt changes
made to the federal tax law during the prior year. These forms assume the
Legislature will adopt all federal law changes made after January 1, 2010.
If you use the amounts from your 2010 federal tax return to complete your
Arizona return and the Legislature does not adopt the 2010 federal changes,
you may have to amend your return at a later date for any difference
between Arizona and federal law. For more details, visit www.azdor.gov
and click on the link for 2010 conformity.
QUICK AND EASY ACCESS TO TAX HELP AND FORMS
PERSONAL COMPUTER
You may use a personal computer and
modem to get the forms and
information you need.
Here is a sample of what you will
fi nd when you visit our web site
at www.azdor.gov:
• Forms and Instructions
• Brochures
• Tax Rulings and Procedures
• Other General Tax Information
PHONE
Information by phone...
Individual and
Corporate Income Tax:
Phoenix...................................... (602) 255-3381
Toll-free from
area codes 520 and 928 ............ (800) 352-4090
Withholding Tax:
Phoenix...................................... (602) 255-2060
Toll-free from
area codes 520 and 928 ............ (800) 843-7196
Hearing Impaired TDD User:
Phoenix ..................................... (602) 542-4021
Toll-free
from area codes 520 and 928.... (800) 397-0256
WALK-IN SERVICE
You may get forms and
information at
any of our offi ces.
We have offi ces at
the following locations:
Phoenix
1600 West Monroe
Gilbert
275 East Germann Road
Building 2, Suite 180
Tucson
400 West Congress
Reasonable accommodations for any person with a disability can be made.
Tax software does all the hard work for
you! The software:
 Calculates Tax
 Does the Math
 Selects Forms and Schedules
 Makes Complex Returns Simple
 Checks for Errors Before You File
 E-Files the IRS and AZ Returns at
the same time
 Gives Proof of E-Filing
www.azdor.gov
For details & eligibility
Did You Know?
FREE
E-Fi l e
Avai lable
Notice
As a rule, the starting point for your Arizona return is your federal adjusted gross income. To take
itemized deductions, you must start with the amount shown on the federal Schedule A. This is the
case for 2010, except for changes Congress made to the federal tax code during 2010 and the
following apply.
1. The changes affect how you figure your federal adjusted gross income.
AND/OR
2. The changes affect how you figure your itemized deductions.
When federal changes are made, Arizona legislature must adopt those changes if the Arizona starting
points are to be kept the same. The legislature will address this issue when it is in session during
2011. We must publish these forms before this issue will be addressed by the legislature. When we
went to print, Arizona had not yet adopted any federal tax law changes made after January 1, 2010.
What does this mean to you? It means that if any of the federal law changes made in 2010
apply to your 2010 return, you can opt to file your 2010 return using one of the following
methods.
1. You can wait and file your 2010 return after this issue has been addressed.
  To do this, you may need to ask for a filing extension. You must pay 90% of the tax due by
the due date of the return before any extension.
2. You can file your 2010 return assuming that the federal law changes will be adopted.
If you opt for method 2, one of the following will apply.
  If Arizona adopts those changes, you do not have to do anything more.
  If Arizona does not adopt all those changes, you may need to amend your 2010 Arizona
return. Your amended return will have to show the difference between the Arizona law and
the federal law. If this happens, we will post more details at http://www.azdor.gov, you will
need to click on the link for 2010 conformity.
3. You can file your 2010 return assuming that we will not adopt the federal law changes. If you opt
for this method, you will have to do the following.
  You will have to research all of the federal changes made after January 1, 2010.
  You will have to figure out if any of those changes apply to you.
  You will have figure out how to make adjustments for those changes on your return.
If you opt for method 3, one of the following will apply.
  If Arizona does not adopt those changes, you do not have to do anything more.
  If Arizona adopts those changes, you may need to amend your 2010 Arizona return. Your
amended return will have to show the difference between what you reported and what you
should have reported. If this happens, we will post more details at http://www.azdor.gov,
you will need to click on the link for 2010 conformity.
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VOLUME 1 CONTENTS
Individual Tax Forms
131 Claim for Refund on Behalf of Deceased Taxpayer ........................................................................................ 1
140 Series Info Items of Interest ......................................................................................................................................... 3
140 Resident Personal Income Tax Return .......................................................................................................... 5
140 Schedule A Itemized Deduction Adjustments ................................................................................................................31
140A Resident Personal Income Tax Return (Short Form)......................................................................................33
140EZ Resident Personal Income Tax Return (EZ Form) ..........................................................................................49
140PY Part-Year Resident Personal Income Tax Return ..........................................................................................61
140PY Schedule A(PY) Itemized Deductions for Part-Year Residents...............................................................................................89
140PY Schedule A(PYN) Itemized Deductions for Part-Year Residents With Nonresident Income........................................................93
140NR Nonresident Personal Income Tax Return ....................................................................................................97
140NR Schedule A(NR) Itemized Deductions for Nonresidents.......................................................................................................119
140ES Individual Estimated Income Tax Payment (2011) .....................................................................................121
140ET Credit for Increased Excise Taxes ..............................................................................................................125
140PTC Property Tax Refund (Credit) Claim............................................................................................................131
140X Individual Amended Income Tax Return.....................................................................................................139
200 Request for Innocent Spouse Relief and Separation of Liability and Equitable Relief..................................149
201 Renter's Certificate of Property Taxes Paid................................................................................................159
202 Personal Exemption Allocation Election ....................................................................................................161
204 Application for Filing Extension (Individual)...............................................................................................163
221 Underpayment of Estimated Tax by Individuals..........................................................................................165
Tables Tax Tables ...............................................................................................................................................171
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VOLUME 1 CONTENTS
Corporation, Partnership, and Exempt Organization Tax Forms
51 Combined or Consolidated Return Affiliation Schedule .............................................................................181
99/99T Info Exempt Organization Information Sheet ....................................................................................................185
99 Arizona Exempt Organization Annual Information Return ...........................................................................187
99T Arizona Exempt Organization Business Income Tax Return.........................................................................191
Corp. Info. Corporate Income Tax Highlights...............................................................................................................201
120 Arizona Corporation Income Tax Return.....................................................................................................203
120A Arizona Corporation Income Tax Return (Short Form) .................................................................................223
120ES Corporation Estimated Tax Payment (2011) ..............................................................................................237
120EXT Application for Automatic Extension of Time to File Corporation, Partnership,
and Exempt Organization Returns .............................................................................................................239
120S Arizona S Corporation Income Tax Return..................................................................................................243
120S Schedule K-1(NR) Nonresident Shareholder's Share of Income and Deductions ....................................................................255
120W Estimated Tax Worksheet for Corporations (2011).....................................................................................257
120X Arizona Amended Corporation Income Tax Return .....................................................................................263
122 Authorization and Consent of Subsidiary Corporation to be Included in a Consolidated Income
Tax Return...............................................................................................................................................271
165 Arizona Partnership Income Tax Return .....................................................................................................273
165 Schedule K-1 Resident Partner's Share of Adjustment to Partnership Income .................................................................285
165 Schedule K-1(NR) Arizona Nonresident and Out-of-State Partner's Share of Income and Deductions .....................................287
Schedule 165 EER Subtraction for Sale of New Energy Efficient Residences............................................................................289
220 Underpayment of Estimated Tax by Corporations.......................................................................................291
Schedule ACA Air Carrier Apportionment........................................................................................................................301
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VOLUME 2 CONTENTS
Tax Credit Forms
300 Nonrefundable Corporate Tax Credits and Recapture ................................................................................303
301 Nonrefundable Individual Tax Credits and Recapture.................................................................................309
302 Defense Contracting Credits .....................................................................................................................315
304 Enterprise Zone Credit ..............................................................................................................................317
305 Environmental Technology Facility Credit ..................................................................................................329
306 Military Reuse Zone Credit........................................................................................................................337
307 Recycling Equipment Credit......................................................................................................................349
308 Credit for Increased Research Activities ....................................................................................................351
308-I Credit for Increased Research Activities - Individuals.................................................................................359
309 Credit for Taxes Paid to Another State or Country.......................................................................................369
310 Credit for Solar Energy Devices .................................................................................................................381
312 Agricultural Water Conservation System Credit..........................................................................................385
315 Pollution Control Credit ............................................................................................................................389
318 Credit for Taxes Paid for Coal Consumed in Generating Electrical Power.....................................................393
319 Credit for Solar Hot Water Heater Plumbing Stub Outs and Electric Vehicle Recharge Outlets .....................397
320 Credit for Employment of TANF Recipients.................................................................................................407
321 Credit for Contributions to Charities That Provide Assistance to the Working Poor ......................................415
322 Credit for Contributions Made or Fees Paid to Public Schools ....................................................................419
323 Credit for Contributions to Private School Tuition Organizations.................................................................423
325 Agricultural Pollution Control Equipment Credit ........................................................................................427
331 Credit for Donation of School Site .............................................................................................................431
332 Credit for Healthy Forest Enterprises .........................................................................................................435
333 Credit for Employing National Guard Members..........................................................................................445
334 Motion Picture Credits.............................................................................................................................451
334-E Transferee Notice of Transfer of Motion Picture Credits..............................................................................463
334-O Transferor Notice of Transfer of Motion Picture Credits ..............................................................................465
335 Credit for Corporate Contributions to School Tuition Organizations ............................................................467
336 Credit for Solar Energy Devices - Commercial and Industrial Applications ..................................................471
337 Credit for Water Conservation System Plumbing Stub Outs ........................................................................479
338 Credit for Investment in Qualified Small Businesses ..................................................................................483
339 Credit for Water Conservation Systems......................................................................................................487
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VOLUME 2 CONTENTS
Tax Credit Forms (continued)
340 Credit for Donations to the Military Family Relief Fund...............................................................................489
341 Credit for Corporate Contributions to School Tuition Organizations for Displaced Students
or Students With Disabilities...................................................................................................................491
342 Credit for Renewable Energy Industry ........................................................................................................495
Fiduciary Tax Forms
141AZ Arizona Fiduciary Income Tax Return .........................................................................................................499
141AZ Schedule K-1 Resident or Part-Year Resident Beneficiary's Share of Fiduciary Adjustment ..............................................515
141AZ Schedule K-1(NR) Nonresident Beneficiary's Share of Income and Share of Fiduciary Adjustment..........................................517
141AZ EER Subtraction for Energy Efficient Residences ..............................................................................................519
141AZ ES Estate or Trust Estimated Income Tax Payment (2011)...............................................................................521
141AZ EXT Application for Filing Extension (Fiduciary) ................................................................................................523
210 Notice of Assumption of Duties in a Fiduciary Capacity ..............................................................................525
Withholding Tax Forms
A1-APR Arizona Annual Payment Withholding Tax Return .......................................................................................527
A1-APR EXT Application for Extension of Time to File the Arizona Annual Payment Withholding Tax Return.....................533
A1-QRT Arizona Quarterly Withholding Tax Return..................................................................................................535
A1-WP Payment of Arizona Income Tax Withheld ..................................................................................................545
A1-C Arizona Charitable Withholding Statement (2011) ....................................................................................547
A1-R Arizona Withholding Reconciliation Return................................................................................................551
A1-R EXT Application for Extension of Time to File the Arizona Withholding Reconciliation Return .............................555
A1-E Employer’s Election to Not Withhold Arizona Taxes in December (2011).....................................................557
A-4 Employee's Arizona Withholding Percentage Election and Employee’s Instructions (2011) ........................559
Instructions Employer’s Instructions for Form A-4.........................................................................................................561
A-4P Annuitant's Request for Voluntary Arizona Income Tax Withholding (2011)................................................563
A-4V Voluntary Withholding Request for Arizona Resident Employed Outside of Arizona (2011)..........................565
WEC Withholding Exemption Certificate (2011).................................................................................................567
WECI Withholding Exemption Certificate, Native Americans (2011) ....................................................................569
WECM Withholding Exemption Certificate for Military Spouses (2011) .................................................................571
Miscellaneous Tax Forms
285 General Disclosure/Representation Authorization Form...........................................................................573
450 Request for Certified Copies of Documents ..............................................................................................577
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REVENUE USE ONLY. DO NOT MARK IN THIS AREA.
88
81 80
Claim for Refund on Behalf of Deceased Taxpayer
Please print or type.
ADOR 10412 (10)
Previous ADOR 91-0010
ARIZONA FORM
131
SCHEDULE A: Complete only if you checked box (c) above.
12 Did the decedent leave a will? .................................................................................................................................... 12
a Has a personal representative been appointed for the estate of the decedent? .......................................................... 12a
b If “No”, will one be appointed? ..................................................................................................................................... 12b
If you answered “Yes” to 12a or 12b, do not fi le this form. The personal representative should fi le for the refund.
13 As the person claiming the refund for the decedent’s estate, will you pay out the refund according to the laws of the
state where the decedent was a legal resident? ......................................................................................................... 13
If you answered “No”, a refund cannot be made until you submit a court certifi cate showing your appointment as
personal representative or until you submit other evidence that you are entitled under state law to receive the refund.
4 Number and Street (permanent residence or domicile on date of death) 5City State Zip Code
6 Name of Person Claiming Refund (last, fi rst, middle initial) 7 Relationship to Decedent 8 Claimant’s Social Security or Federal I.D. No.
11 I am fi ling this claim as (check only one box):
a  Surviving spouse claiming a refund based on a joint return.
b  Court Appointed Personal Representative for the decedent’s estate. Attach a
court certifi cate (issued after death) showing your appointment.
c  Person other than 11a or 11b claiming refund for the decedent’s estate.
Complete Schedule A below, and attach a copy of the death certifi cate or proof
of death. Please attach requested information and sign below. If you checked
box 11c, complete Schedule A.
• Attach this form to the front of the income tax return that
would have been fi led if the decedent had lived.
• If the refund is issued in the name of the decedent, it may be
cashed with the endorsement of the executor or administrator of
the estate.
• Attach any required documents, certifi cates, etc., to this form.
• For military personnel, the original or an authentic copy of a
telegram or letter from the Department of Defense notifying the
next of kin of the decedent’s death while in active service, or a
death certifi cate issued by the Department of Defense will be
suffi cient proof of death.
• As the surviving spouse or personal representative, you may
be required to fi le a fi duciary return (Form 141AZ) for the
decedent’s estate. For further information concerning this form,
call (602) 255-3381, or toll-free from area codes 520 and 928,
call (800) 352-4090.
NOTE:
If you are a surviving spouse who fi led a joint return without
Form 131 and you have already received a refund check in
your name and your deceased spouse’s name, you may return
the joint-name check with Form 131. We will issue a new
check in your name and we will mail the new check to you. If
this applies to you, send Form 131 along with the joint-name
check to: Arizona Department of Revenue, PO Box 52138,
Phoenix, AZ 85072-2138.
OR OTHER TAX YEAR BEGINNING M M D D Y Y Y Y AND ENDING M M D D Y Y Y Y .
I request a refund of taxes overpaid by, or on behalf of, the decedent. Under penalties of perjury, I declare that the statements made
on this form have been examined by me and to the best of my knowledge, they are true, correct and complete.
 
Signature of Person Claiming Refund Date
YES NO
Instructions
FOR
CALENDAR YEAR 20YY
9 Number and Street of Person Claiming Refund
10 City State Zip Code
1 Decedent’s Name (last, fi rst, middle initial) 2 Date of Death 3 Decedent’s Social Security No.
M M D D Y Y Y Y
1
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2
Items of Interest for 2010
Extra Time for Filing 2010 Returns
You have extra time to file and pay for 2010 because April
15, 2011 is a legal holiday in Washington DC. This means
that your 2010 calendar year tax return is due no later than
midnight, April 18, 2011.
2010 Standard Deduction the Same as 2009
For 2010, the standard deduction is the same as it was for
2009 ($4,677 for a single taxpayer or a married couple filing
separate returns and $9,354 for a head of household or a
married couple filing a joint return).
Haiti Earthquake Relief Donations Made in 2010 but
Deducted on Your 2009 Federal Return.
For Arizona purposes, you must deduct any donations for
Haiti relief that you made during 2010 on your 2010
Arizona return. If you deducted these donations on your
2009 federal income tax return, you must add that amount
back on the 2009 Arizona return and then deduct it on your
2010 Arizona return.
Discharge of Indebtedness (DOI) Income under
I.R.C § 108(i)
If you made the federal election to defer the inclusion of DOI
income under I.R.C. § 108(i), you must make an addition to
Arizona income for the amount of DOI that you deferred and
excluded from your 2010 federal adjusted gross income. In
future years when you include that income on your federal
income tax return, you will be allowed to take a subtraction for
the amount already included in Arizona income.
Original Issue Discount (OID) on Reacquisition of
Debt Instrument
Arizona did not adopt the federal provisions requiring a
taxpayer to defer the OID deduction in cases where the
taxpayer deferred the DOI income under I.R.C. § 108(i). In
this case a taxpayer may subtract any OID deduction that was
deferred on the federal return. In future years when the
taxpayer takes this deduction on the federal return, the taxpayer
will be required to make an addition to Arizona income for the
amount of OID already subtracted for Arizona purposes.
Special Net Operating Loss (NOL) Subtraction Rules
for Losses Carried Forward from 2008 or 2009
Arizona did not adopt the federal net operating loss rules
[I.R.C. § 172(b)(1)(H)] for losses incurred during 2008 or
2009. For Arizona purposes, you must deduct the loss as if
you computed the loss under I.R.C. § 172 in effect prior to
the enactment of those rules. An Arizona subtraction will be
allowed for the difference between the actual carryforward
on the federal return and the carryforward that would have
been allowed as a deduction on the federal return if the
election had not been made.
New Refund Check-off for the “I Didn’t Pay Enough
Fund’
You may give some or all of your refund to the I Didn’t Pay
Enough Fund. Gifts that you make to the I Didn’t Pay
Enough Fund will aid the state by going to the Arizona
general fund.
Nonresidents Must Now Prorate the Standard
Deduction
Nonresident individuals, who claim the standard deduction,
must now prorate the deduction by the percentage which the
taxpayer’s Arizona gross income is of the taxpayer’s federal
adjusted gross income.
Private School Tuition Credit
If you make a donation to a private school tuition
organization between January 1, 2011 and April 15, 2011,
you may opt to take a credit for this donation on your 2010
return. If you do not take the credit for this donation on your
2010 return, you may take the credit on your 2011 return.
See Form 323 for details.
New Refundable Renewable Energy Industry Credit
A taxpayer may qualify for the refundable renewable energy
industry credit if the taxpayer expanded or located a
qualified renewable energy operation in Arizona. See Form
342 for details.
Portion of R & D Credit May Now be Refundable
Starting with the 2010 taxable year, a portion of the R & D
credit may be refundable to qualified taxpayers. See Form
308-I for details.
Innocent Spouse Relief Form 200 Revised
We have revised the Form 200 to help us process the form
faster. The new Form 200 asks for a lot more information.
We know that some of the questions on this form involve
sensitive subjects, but we need this information to determine
whether a taxpayer qualifies for relief.
New Estimated Payment Form for Form 141AZ Filers
A fiduciary making estimated income tax payments on
behalf of an estate or trust should use new Form 141AZ ES
rather than Form 140ES to make those payments.
New Extension Request Form for Form 141AZ Filers
A fiduciary filing for an Arizona extension or making an
Arizona extension payment on behalf of an estate or trust
should use new Form 141AZ EXT rather than Form 204.
Special Notice for 2009 Returns
Arizona did not fully conform to federal tax law changes for 2009. This means that you may have to file an amended return for 2009.
Look at items 1 through 5 below. See if any of those items apply to you. If any of those items apply to you, this will affect your 2009
return. If you have already filed your 2009 return, you must file an amended return to properly report those items. If you were a full year
resident during 2009 and you filed Form 140, 140A or 140EZ, you may use Form 140X-NC to correct your 2009 return. If you file Form
140X-NC and pay the entire tax due by October 17, 2011, we will not charge you any penalty or interest on that tax.
The following is the list of items that affect your 2009 return.
1. You received unemployment income during 2009. You excluded up to $2,400 of that income on your 2009 federal return.
2. You claimed an itemized deduction for both the sales tax on a new motor vehicle and state income taxes on your 2009
federal return.
3. You made a cash gift during 2010 to aid Haiti earthquake victims. You claimed an itemized deduction for that gift on your
2009 federal return.
4. You elected to exclude discharge of indebtedness (DOI) income from the reacquisition of a business debt instrument on your
2009 federal return.
5. You excluded original issue discount (OID) on a debt instrument described in number 4 above from income on your 2009
federal return.
If any of items 1 through 5 above apply to you, you must correct your 2009 Arizona return.
To get Form 140X-NC or for more news on this topic, visit our web site at www.azdor.gov.
3
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4
88
81 80
REVENUE USE ONLY. DO NOT MARK IN THIS AREA.
98 C= Checking or
S= Savings
Direct Deposit of Refund: Check box 57A if your deposit will be ultimately placed in a foreign account; see instructions. 57A 
ROUTING NUMBER ACCOUNT NUMBER
ONE STAPLE. NO TAPE.  
Aid to Education
(entire refund only) ......... 42 00 Arizona Wildlife ............. 43 00
Citizens Clean Elections .. 44 00 Child Abuse Prevention ... 45 00 Domestic Violence
Shelter ......................... 46 00
I Didn’t Pay Enough Fund 47 00 National Guard Relief Fund 48 00 Neighbors Helping
Neighbors ..................... 49 00
Special Olympics ........... 50 00 Veterans’ Donations Fund 51 00 Political Gift .................. 52 00
OR FISCAL YEAR BEGINNING M M D D Y Y Y Y AND ENDING M M D D Y Y Y Y . 66
ARIZONA FORM Resident Personal Income Tax Return
140
Your First Name and Initial Last Name Your Social Security No.
1
Spouse’s First Name and Initial (if box 4 or 6 checked) Last Name Spouse’s Social Security No.
1
Current Home Address - number and street, rural route Apt. No. Daytime Phone (with area code) Home Phone (with area code)
2 94
City, Town or Post Offi ce State Zip Code
8 Age 65 or over (you and/or spouse)
9 Blind (you and/or spouse)
10 Dependents. From page 2, line A2 – do not include self or spouse.
11 Qualifying parents and ancestors of your parents. From page 2, line A5.
12 Federal adjusted gross income (from your federal return) ......................................................................................................... 12 00
13 Additions to income (from page 2, line B12) ............................................................................................................................. 13 00
14 Add lines 12 and 13 ............................................................................................................................................................. 14 00
15 Subtractions from income (from page 2, line C17 or line C30): If applicable, enter the number from line C26a .... 151 15 00
16 Arizona adjusted gross income: Subtract line 15 from line 14 .................................................................................................. 16 00
17 Deductions: Check box and enter amount. See instructions, page 15 ................ 17I  ITEMIZED 17S STANDARD 17 00
18 Personal exemptions. See page 15 of the instructions .............................................................................................................. 18 00
19 Arizona taxable income: Subtract lines 17 and 18 from line 16. If less than zero, enter zero ......................................................... 19 00
20 Compute the tax using amount on line 19 and Tax Table X, Y or Optional Tax Tables ......................................................... 20 00
21 Tax from recapture of credits from Arizona Form 301, Part II, line 31 .................................................................................. 21 00
22 Subtotal of tax: Add lines 20 and 21 ....................................................................................................................................... 22 00
23 - 24 Clean Elections Fund Tax Reduction: See instructions, page 16 ............................. 231  YOURSELF 232 SPOUSE 24 00
25 Reduced tax: Subtract line 24 from line 22 ............................................................................................................................... 25 00
26 Family income tax credit from worksheet on page 17 of instructions ................................................................................... 26 00
27 Credits from Arizona Form 301, Part II, line 59, or Forms 310, 321, 322, and 323 if Form 301 is not required ................... 27 00
28 Credit type: Enter form number of each credit claimed ................ 28 3 3 3 3
29 Clean Elections Fund Tax Credit. From worksheet on page 19 of the instructions ....................................................................... 29 00
30 Balance of tax: Subtract lines 26, 27 and 29 from line 25. If the sum of lines 26, 27 and 29 is more than line 25, enter zero .............. 30 00
31 Arizona income tax withheld during 2010 ............................................................................................................................. 31 00
32 Arizona estimated tax payments for 2010 ............................................................................................................................ 32 00
33 2010 Arizona extension payment (Form 204) ....................................................................................................................... 33 00
34 Increased Excise Tax Credit from worksheet on page 19 of the instructions ....................................................................... 34 00
35 Property Tax Credit from Form 140PTC ............................................................................................................................... 35 00
36 Other refundable credits: Check the box(es) and enter the amount(s) ...................... 361 Form 308-I 362 Form 342 36 00
37 Total payments/refundable credits: Add lines 31 through 36 ............................................................................................... 37 00
38 TAX DUE: If line 30 is larger than line 37, subtract line 37 from line 30 and enter amount of tax due. Skip lines 39, 40 and 41 .............. 38 00
39 OVERPAYMENT: If line 37 is larger than line 30, subtract line 30 from line 37 and enter amount of overpayment .............................. 39 00
40 Amount of line 39 to be applied to 2011 estimated tax ......................................................................................................... 40 00
41 Balance of overpayment: Subtract line 40 from line 39 ............................................................................................................. 41 00
42 - 52 Voluntary Gifts to ...........................
53 Check only one if making a political gift ................ 531 Democratic 532 Green 533 Libertarian 534 Republican
54 Estimated payment penalty and MSA withdrawal penalty .................................................................................................... 54 00
55 Check applicable boxes ..... 551 Annualized/Other 552 Farmer or Fisherman 553 Form 221 attached 554 MSA Penalty
56 Total of lines 42 through 52 and 54 ...................................................................................................................................... 56 00
57 REFUND: Subtract line 56 from line 41. If less than zero, enter amount owed on line 58 ................................................................ 57 00
58 AMOUNT OWED: Add lines 38 and 56. Make check payable to Arizona Department of Revenue; include SSN on payment. 58 00
  Payment enclosed. Check the box and attach your payment to the upper left corner of this page.
3
Attach required documents in upper left corner after page 2 of the return. Include any payment, federal and Arizona Schedules A. Exemptions Filing Status
Enter the
number
claimed.
Do not put a
check mark.
FOR
CALENDAR YEAR 2010
ADOR 10413 (10)
Previous ADOR 91-0011
82F Check box 82F if filing under extension
You must
enter your
SSN(s).
4 Married fi ling joint return
5 Head of household .......................... 
NAME OF QUALIFYING CHILD OR DEPENDENT
6 Married fi ling separate return. Enter spouse’s name and Social Security No. above.
7 Single
5
ADOR 10413 (10) [Previous ADOR 91-0011] AZ Form 140 (2010) Page 2 of 2
Your Name (as shown on page 1) Your Social Security No.
PART A: Dependents and Qualifying Parents - do not list yourself or spouse
If completing Part A, also complete Part C, lines C15 and/or C16 and C17.
A1 List children and other dependents. If more space is needed, attach a separate sheet. NO. OF MONTHS LIVED
FIRST AND LAST NAME SOCIAL SECURITY NO. RELATIONSHIP IN YOUR HOME IN 2010
A2 Enter total number of persons listed in A1 here and on the front of this form, box 10; also complete Part C below. .... TOTAL A2
A3 a Enter the names of the dependents listed above who do not qualify as your dependent on your federal return:
b Enter dependents listed above who were not claimed on your federal return due to education credits:
A4 List qualifying parents and ancestors of your parents. If more space is needed, attach a separate sheet.
You cannot list the same person here and also on line A1. For information on who is a
qualifying parent or ancestor of your parents, see page 6 of the instructions. NO. OF MONTHS LIVED
FIRST AND LAST NAME SOCIAL SECURITY NO. RELATIONSHIP IN YOUR HOME IN 2010
A5 Enter total number of persons listed in A4 here and on the front of this form, box 11 ................................................ TOTAL A5
PART B: Additions to Income
B6 Non-Arizona municipal interest .......................................................................................................................................... B6 00
B7 Ordinary income portion of lump-sum distributions excluded on your federal return .......................................................... B7 00
B8 Total federal depreciation. Also see the instructions for line C22 .............................................................................................. B8 00
B9 Medical savings account (MSA) distributions. See page 7 of the instructions ......................................................................... B9 00
B10 I.R.C. §179 expense in excess of allowable amount. Also see the instructions for line C29 .................................................... B10 00
B11 Other additions to income. See instructions and attach your own schedule ............................................................................... B11 00
B12 Total. Add lines B6 through B11. Enter here and on the front of this form, line 13 .......................................................................... B12 00
PART C: Subtractions from Income
C13 Exemption: Age 65 or over. Multiply the number in box 8, page 1, by $2,100 ......................................... C13 00
C14 Exemption: Blind. Multiply the number in box 9, page 1, by $1,500......................................................... C14 00
C15 Exemption: Dependents. Multiply the number in box 10, page 1, by $2,300 ........................................... C15 00
C16 Exemption: Qualifying parents and ancestors of your parents. Multiply the number in
box 11, page 1, by $10,000 ...................................................................................................................... C16 00
C17 Total exemptions: Add lines C13 through C16. If you have no other subtractions from
income, skip lines C18 through C30 and enter the amount on line C17 on Form 140, Page 1, line 15 ..................... C17 00
C18 Interest on U.S. obligations such as U.S. savings bonds and treasury bills ........................................................................ C18 00
C19 Exclusion for federal, Arizona state or local government pensions (up to $2,500 per taxpayer) ......................................... C19 00
C20 Arizona state lottery winnings included as income on your federal return (up to $5,000 only) ........................................... C20 00
C21 U.S. Social Security or Railroad Retirement Act benefi ts included as income on your federal return (the taxable amount) ... C21 00
C22 Recalculated Arizona depreciation ..................................................................................................................................... C22 00
C23 Certain wages of American Indians .................................................................................................................................... C23 00
C24 Income tax refund from other states. See instructions .......................................................................................................... C24 00
C25 Deposits and employer contributions into MSAs. See page 11 of the instructions ................................................................... C25 00
C26 Construction of an energy effi cient residence. See page 12 of the instructions. Enter the number then amount .... C26a C26 00
C27 Pay received for active service as a member of the reserves, national guard or the U.S. armed forces ............................ C27 00
C28 Net operating loss adjustment. See instructions before you enter any amount here ................................................................... C28 00
C29 Other subtractions from income. See instructions and attach your own schedule ...................................................................... C29 00
C30 Total: Add lines C17 through C29. Enter here and on the front of this form, line 15 ................................................... C30 00
Part D: Last Name(s) Used in Prior Years – if different from name(s) used in current year
D31
If you are sending a payment with this return, mail to Arizona Department of Revenue, PO Box 52016, Phoenix, AZ, 85072-2016.
If you are expecting a refund or owe no tax, or owe tax but are not sending a payment, mail to Arizona Department of Revenue, PO Box 52138, Phoenix, AZ, 85072-2138.
PLEASE SIGN HERE
 
I have read this return and any attachments with it. Under penalties of perjury, I declare that to the best of my knowledge and belief, they are
true, correct and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
YOUR SIGNATURE DATE OCCUPATION
SPOUSE’S SIGNATURE DATE SPOUSE’S OCCUPATION
PAID PREPARER’S SIGNATURE DATE FIRM’S NAME (PREPARER’S IF SELF-EMPLOYED)
( )
PAID PREPARER’S TIN PAID PREPARER’S ADDRESS PAID PREPARER’S PHONE NO.
 
6
Arizona Form
2010 Resident Personal Income Tax Return 140
Special Notice for 2009 Returns
Arizona did not fully conform to federal tax law changes for
2009. This means that you may have to file an amended
return for 2009. Look at items 1 through 5 below. See if any
of those items apply to you. If any of those items apply to
you, this will affect your 2009 return. If you have already
filed your 2009 return, you must file an amended return to
properly report those items. If you were a full year resident
during 2009 and you filed Form 140, 140A or 140EZ, you
may use Form 140X-NC to correct your 2009 return. If you
file Form 140X-NC and pay the entire tax due by October 17,
2011, we will not charge you any penalty or interest on that
tax.
The following is the list of items that affect your 2009 return.
1. You received unemployment income during 2009.
You excluded up to $2,400 of that income on your
2009 federal return.
2. You claimed an itemized deduction for both the sales
tax on a new motor vehicle and state income taxes on
your 2009 federal return.
3. You made a cash gift during 2010 to aid Haiti
earthquake victims. You claimed an itemized
deduction for that gift on your 2009 federal return.
4. You elected to exclude discharge of indebtedness
(DOI) income from the reacquisition of a business
debt instrument on your 2009 federal return.
5. You excluded original issue discount (OID) on a debt
instrument described in number 4 above from income
on your 2009 federal return.
If any of items 1 through 5 above apply to you, you must
correct your 2009 Arizona return.
To get Form 140X-NC or for more news on this topic, visit
our web site at www.azdor.gov.
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e-File today, pay by April 18, 2011, to avoid penalties
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e-File through an Authorized IRS/DOR e-file provider or
by using your Personal Computer and the Internet. Visit
our web site at www.azdor.gov for a listing of approved
e-file providers and on-line filing sources.
** For free e-file requirements, check out our web site at
www.azdor.gov.
Who Must Use Form 140?
You (and your spouse if married filing a joint return) may
file Form 140 only if you are full year residents of Arizona.
You must use Form 140 rather than Form 140A or Form 140EZ
to file for 2010 if any of the following apply to you.
  Your Arizona taxable income is $50,000 or more,
regardless of filing status.
  You are making adjustments to income.
  You itemize deductions.
  You claim tax credits other than the family income tax
credit, the credit for increased excise taxes, the property
tax credit, or the Clean Elections Fund tax credit.
  You are claiming estimated payments.
Do You Have to File?
Arizona Filing Requirements
These rules apply to all Arizona taxpayers.
You must file if
you are:
and your
Arizona adjusted
gross income is
at least:
or your gross
income is at
least:
  Single $ 5,500 $15,000
  Married
filing jointly
$11,000 $15,000
  Married
filing
separately
$ 5,500 $15,000
  Head of
household
$ 5,500 $15,000
If you are an Arizona resident, you must report income
from all sources. This includes out-of-state income.
To see if you have to file, figure your gross income the
same as you would figure your gross income for federal
income tax purposes. Then, you should exclude income
Arizona law does not tax.
Income Arizona law does not tax includes:
  Interest from U.S. Government obligations
  Social security retirement benefits received under
Title II of the Social Security Act
  Benefits received under the Railroad Retirement Act
  Active duty military pay
  Pay received for active service as a reservist or a
National Guard member
You can find your Arizona adjusted gross income on
line 16 of Arizona Form 140.
NOTE: Even if you do not have to file, you must still file a
return to get a refund of any Arizona income tax withheld.
Do You Have to File if You are an American
Indian?
You must file if you meet the Arizona filing requirements
unless all the following apply to you.
  You are an enrolled member of an Indian tribe.
  You live on the reservation established for that tribe.
  You earned all of your income on that reservation.
The department has issued a ruling on the Arizona tax
treatment of American Indians. This ruling is ITR 96-4. To
see this ruling, visit our web site at www.azdor.gov and
click on legal research and then click on rulings.
Do You Have to File if You are the Spouse
of an American Indian and You are Not an
Enrolled Indian?
You must file if you meet the Arizona filing requirements. The
department has issued a ruling on the tax treatment of
7
Form 140
2
spouses of American Indians. This ruling is ITR 96-4. To
see this ruling, visit our web site at www.azdor.gov and
click on legal research and then click on rulings.
Do You Have to File if You are in the Military?
You must file if you meet the Arizona filing requirements
unless all the following apply to you.
  You are an active duty member of the United States
armed forces.
  Your only income for the taxable year is pay received
for active duty military service.
  There was no Arizona tax withheld from your active
duty military pay.
If Arizona tax was withheld from your active duty military
pay, you must file an Arizona income tax return to claim any
refund you may be due from that withholding.
You must also file an Arizona income tax return if you have
any other income besides pay received for active duty
military service.
If you are an Arizona resident and you have to file an
Arizona return, you should file using Form 140. If you were
an Arizona resident when you entered the service, you
remain an Arizona resident, no matter where stationed, until
you establish a new domicile. As an Arizona resident, you
must report all of your income, no matter where stationed.
You must include your military pay, but using Form 140,
you may subtract all pay received for active duty military
service, to the extent it is included in your federal adjusted
gross income.
If you are not an Arizona resident, but stationed in Arizona,
the following applies to you.
  You are not subject to Arizona income tax on your
military pay.
  You must report any other income you earn in Arizona.
Use Form 140NR, Nonresident Personal Income Tax
Return, to report this income.
To find out more, see Arizona Department of Revenue
brochure, Pub 704, Taxpayers in the Military.
If You Included Your Child's Unearned
Income on Your Federal Return, Does Your
Child have to File an Arizona Return?
No. In this case, the child should not file an Arizona return.
The parent must include that same income in his or her
Arizona taxable income.
Residency Status
If you are not sure if you are an Arizona resident for state
income tax purposes, we may be able to help. The
department has issued a procedure on determining residency
status. This procedure is ITP 92-1. To see this procedure,
visit our web site at www.azdor.gov and click on legal
research and then click on procedures.
Residents
You are a resident of Arizona if your domicile is in Arizona.
Domicile is the place where you have your permanent home. It
is where you intend to return if you are living or working
temporarily in another state or country. If you leave Arizona
for a temporary period, you are still an Arizona resident while
gone. A resident is subject to tax on all income no matter
where the resident earns the income.
Part-Year Residents
If you are a part-year resident, you must file Form 140PY,
Part-Year Resident Personal Income Tax Return.
You are a part-year resident if you did either of the
following during 2010.
  You moved into Arizona with the intent of becoming a
resident.
  You moved out of Arizona with the intent of giving up
your Arizona residency.
Nonresidents
If you are a nonresident, you must file Form 140NR,
Nonresident Personal Income Tax Return.
What if a Taxpayer Died?
If a taxpayer died before filing a return for 2010, the
taxpayer's spouse or personal representative may have to file
and sign a return for that taxpayer. If the deceased taxpayer
did not have to file a return but had tax withheld, a return
must be filed to get a refund.
The person who files the return should use the form the
taxpayer would have used. If the department mailed the
taxpayer a booklet, do not use the label. The person who
files the return should print the word "deceased" after the
decedent's name in the address section of the form. Also
enter the date of death after the decedent's name.
If your spouse died in 2010 and you did not remarry in 2010,
or if your spouse died in 2011 before filing a return for
2010, you may file a joint return. If your spouse died in
2010, the joint return should show your spouse's 2010
income before death, and your income for all of 2010. If
your spouse died in 2011, before filing the 2010 return, the
joint return should show all of your income and all of your
spouse's income for 2010. Print "Filing as surviving spouse"
in the area where you sign the return. If someone else is the
personal representative, he or she must also sign the return.
Are Any Other Returns Required?
You may also have to file a fiduciary income tax return. For
details about filing a fiduciary income tax return, call the
department at (602) 255-3381.
Claiming a Refund for a Deceased Taxpayer
If you are claiming a refund, you must complete Form 131,
Claim for Refund on Behalf of Deceased Taxpayer. Attach
this form to the front of the return.
Find an Authorized E-File Provider
An authorized E-File provider can
take the guesswork out of filing taxes.
To Find an
Authorized e-File
Provider near you
log on
www.azdor.gov
8
Form 140
3
What are the Filing Dates and Penalties?
When Should You File?
You have extra time to file and pay for 2010 because April
15, 2011 is a legal holiday in Washington DC. This means
that your 2010 calendar year tax return is due no later than
midnight, April 18, 2011. File your return as soon as you
can after January 1, but no later than April 18, 2011. If you
are a fiscal year filer, your return is due on the 15th day of the
fourth month following the close of your fiscal year.
What if You Cannot File on Time?
You may request an extension if you know you will not be
able to file on time.
NOTE: An extension does not extend the time to pay your income
tax. For details, see the instructions for Arizona Form 204.
To get a filing extension, you can either:
1. Apply for a state extension (Form 204). To apply for a state
extension, file Arizona Form 204 by April 18. See
Form 204 for details. You do not have to attach a copy of
the extension to your return when you file, but make
sure that you check box 82F on page 1 of the return. If
you must make a payment, use Arizona Form 204, or visit
www.aztaxes.gov to make an electronic payment.
2. Use your federal extension (federal Form 4868). File your
Arizona return by the same due date. You do not have to
attach a copy of your federal extension to your return, but
make sure that you check box 82F on page 1 of the return.
When Should You File if You are a
Nonresident Alien?
The due date for your Arizona return is not the same as the
due date for your federal return. Your Arizona return is due
by April 18 even though your federal return is due on June
15. If you want to file your Arizona return after April 18,
you must ask for a filing extension. You must file this
request by April 18. Arizona will allow up to a 6-month
extension. This will allow you to file your return by
October 17, 2011. See Form 204 for extension filing
details.
If you have a federal 6-month extension, you can file
your Arizona return under that extension. If you file
using your federal extension, Arizona will also allow
you an extra 6 months. Because we will allow only 6
months, the due date for your Arizona return is not the
same as the due date for your federal return. In this
case, your Arizona return will be due by October 17
even though your federal return will not be due until
December 15. If you file your 2010 Arizona calendar
return after October 17, 2011, your return will be late.
If you are a fiscal year filer, your return is due on the 15th
day of the fourth month following the close of your fiscal year.
What if You File or Pay Late?
If you file or pay late, we will charge you interest and
penalties on the amount you owe. If the U.S. Post Office
postmarks your 2010 calendar year return by April 18, 2011,
your return will not be late. You may also use certain private
delivery services designated by the IRS to meet the “timely
mailing as timely filed” rule.
Late Filing Penalty
If you file late, we will charge you a late filing penalty. This
penalty is 4½% of the tax required to be shown on the return
for each month or fraction of a month the return is late. This
penalty cannot exceed 25% of the tax found to be remaining
due.
Late Payment Penalty
If you pay your tax late, we will charge you a late payment
penalty. This penalty is ½ of 1% (.005) of the amount shown
as tax for each month or fraction of a month for which the
failure continues. We charge this penalty from the original
due date of the return until the date you pay the tax. This
penalty cannot exceed a total of 10%.
Extension Underpayment Penalty
If you file your return under an extension, you must pay 90%
of the tax shown on your return by the return's original due
date. If you do not pay this amount, we will charge you a
penalty. This penalty is ½ of 1% (.005) of the tax not paid for
each 30 day period or fraction of a 30 day period. We charge
this penalty from the original due date of the return until the
date you pay the tax. This penalty cannot exceed 25% of the
unpaid tax. If we charge you the extension underpayment
penalty, we will not charge you the late payment penalty
under Arizona Revised Statutes section 42-1125.D.
NOTE: If you are subject to two or more of the above
penalties, the total cannot exceed 25%.
Interest
We charge interest on any tax not paid by the due date. We
will charge you interest even if you have an extension. If you
have an extension, we will charge you interest from the
original due date until the date you pay the tax. The Arizona
interest rate is the same as the federal rate.
When Should You Amend a Return?
If you need to make changes to your return once you have
filed, you should file Form 140X, Individual Amended
Return. You should file your amended return after your
original return has processed. Do not file a new return for the
year you are correcting. Generally, you have four years to
amend a return to claim a refund.
If you amend your federal return for any year, you must also
file an Arizona Form 140X for that year. You must file the
Form 140X within 90 days of the final determination of the IRS.
If the IRS makes a change to your federal taxable income for
any year, you must report that change to Arizona. You may
use one of the following two options to report this change.
Option 1
You may file a Form 140X for that year. If you choose this
option, you must amend your Arizona return within 90 days
of the final determination of the IRS. Attach a complete copy
of the federal notice to your Form 140X.
Option 2
You may file a copy of the final federal notice with the
department within 90 days of the final determination of the
IRS. If you choose this option, you must include a statement
in which you must:
1. Request that the department recompute your tax; and
2. Indicate if you agree or disagree with the federal notice.
If you do not agree with the federal notice, you must also
include any documents that show why you do not agree.
If you choose option 2, mail the federal notice and any other
documents to:
9
Form 140
4
Arizona Department of Revenue
1600 W. Monroe, Attention: Individual Income Audit
Phoenix, AZ 85007-2650
Do You Need to Make Estimated Payments
in 2011?
You must make Arizona estimated income tax payments
during 2011 if:
Your filing status is: AND
Your Arizona gross
income for 2010
was greater than:
AND
Your Arizona gross
income for 2011 is
greater than:
Married Filing Joint $150,000 $150,000
Single $75,000 $75,000
Head of Household $75,000 $75,000
Married Filing
Separately
$75,000 $75,000
If you met the income threshold for 2010, you must make
estimated payments during 2011 unless you are sure you will
not meet the threshold for 2011.
As a full year resident, your Arizona gross income is your
federal adjusted gross income. This amount is on line 12 of
the 2010 Form 140.
See the worksheet for Form 140ES to figure how much your
payments should be.
What if You Make Your Estimated
Payments Late?
We will charge you a penalty if you fail to make any
required payments. We will charge you a penalty if you
make any of your required payments late.
For details, see Arizona Form 221.
Can You Make Estimated Payments Even if
You Do Not Have To?
If you do not have to make Arizona estimated income tax
payments, you may still choose to make them.
For details, see Arizona Form 140ES.
Line-by-Line Instructions
Tips for Preparing Your Return:
  Make sure that you write your SSN on your return.
  Complete your return using black ink.
  You must round dollar amounts to the nearest whole
dollar. If 50 cents or more, round up to the next dollar.
If less than 50 cents, round down. Do not enter cents.
  When asked to provide your own schedule, attach a separate
sheet with your name and SSN at the top. Attach your own
schedules to your return. Attach these schedules behind
page 2 of your return and behind your Schedules A if
itemizing.
  You must complete your federal return before you can
start your Arizona return.
  Make sure you include your home telephone number. If
your daytime number is not the same as your home number,
make sure you include a daytime telephone number.
  If filing a fiscal year return, fill in the period covered in
the space provided at the top of the form.
Entering Your Name, Address, and SSN
Lines 1, 2, and 3 -
NOTE: Make sure that you write your SSN on the
appropriate line.
If your booklet has a peel-off label, use that label if all the
information is correct. If any of the information on the label
is incorrect, do not use the label. Attach the label after you
finish your return. If you do not have a peel-off label, print
or type your name, address, and SSN in the space provided.
If you are filing a joint return, enter your SSNs in the same
order as your names. If your name appears first on the
return, make sure your SSN is the first number listed.
If you are married filing separately, enter your name and
SSN on the first line 1. Then enter your spouse’s name and
SSN on second line 1.
If you are a nonresident of the United States or a resident
alien who does not have an SSN use the identification
number (ITIN) the IRS issued to you.
For a deceased taxpayer, see page 2 of these instructions.
Use your current home address. The department will send
your refund to or correspond with you at that address.
NOTE: Make sure your SSN is correct. If you are filing a
joint return, also make sure you list your SSNs in the same
order every year.
Make sure that you enter your SSN on your return. Make sure
that all SSNs are clear and correct. You may be subject to a
penalty if you fail to include your SSN. It will take longer to
process your return if SSNs are missing, incorrect, or unclear.
ID Numbers for Paid Preparers
If you pay someone else to prepare your return, that person
must also include an ID number where requested.
A paid preparer may use any of the following.
  his or her SSN
  his or her PTIN
  the EIN for the business
A paid preparer who fails to include the proper numbers may
also be subject to a penalty.
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For a list of
approved software
visit our website at
www.azdor.gov
10
Form 140
5
Determining Your Filing Status
The filing status that you use on your Arizona return may be
different from that used on your federal return.
Use this section to determine your filing status. Check the
correct box (4 through 7) on the front of Form 140.
Line 4 Box - Married Filing a Joint Return
If you are married and filing a joint return, check box 4.
You may file a joint return if you were married as of
December 31, 2010. It does not matter whether or not you
were living with your spouse. You may file a joint return,
even if you and your spouse filed separate federal returns.
You may file a joint return if your spouse died during 2010
and you did not remarry in 2010. See page 2 of these
instructions for details.
The Arizona Form 140 is for full year residents only. You
may not file a joint Arizona income tax return on Form 140
if any of the following apply.
1. Your spouse is a nonresident alien (citizen of and living
in another country).
2. Your spouse is a resident of another state.
3. Your spouse is a part-year Arizona resident.
If filing a joint return with your nonresident spouse, you may file
a joint return using Form 140NR. See Form 140NR instructions.
If filing a joint return with your part-year resident spouse, you
may file a joint return using Form 140PY. See Form 140PY
instructions.
The department has issued a ruling on filing a joint return
with your part-year resident or nonresident spouse. This
ruling is ITR 95-2. To see this ruling, visit our web site at
www.azdor.gov and click on legal research and then click on
rulings.
Line 5 Box - Head of Household
If you are filing as a head of household, check box 5.
You may file as head of household on your Arizona return,
only if one of the following applies.
  You qualify to file as head of household on your federal
return.
  You qualify to file as a qualifying widow or widower on
your federal return.
Line 6 Box - Married Filing Separately
If you are filing a separate return, check box 6 and enter
your spouse's name and SSN on the second line 1.
If you were married as of December 31, 2010, you may choose
to file a separate return. You may file a separate return, even if
you and your spouse filed a joint federal return.
Arizona is a community property state. If you file a separate
return, you must figure how much income to report using
community property laws. Under these laws, a separate
return must reflect one-half of the community income from
all sources plus any separate income.
When you file separate returns, you must account for
community deductions and credits on the same basis as
community income. Both you and your spouse must either
itemize or not itemize. If one of you itemizes, you both must
itemize. If one of you takes a standard deduction, you both
must take a standard deduction. One of you may not claim a
standard deduction while the other itemizes.
If you and your spouse support a dependent child from
community income, either you or your spouse may claim the
dependent. Both of you cannot claim the same dependent on
both returns.
The department has issued tax rulings on filing a separate
return. These rulings are ITR 93-18 and ITR 93-19. To see
these rulings, visit our web site at www.azdor.gov and click
on legal research and then click on rulings.
NOTE: In some cases you may treat community income as
separate income. The department has issued a ruling on
when you may treat community income as separate income.
This ruling is ITR 93-22. To see this ruling, visit our web site
at www.azdor.gov and click on legal research and then click
on rulings.
If one spouse is a resident and the other spouse is not, other
special rules may apply when filing a separate return. The
department has issued a ruling on how to report income in
this case. This ruling is ITR 93-20. To see this ruling, visit
our web site at www.azdor.gov and click on legal research
and then click on rulings.
Line 7 Box - Single
If you are filing as single, check box 7.
Use this filing status if you were single on December 31,
2010. You are single if any of the following apply to you.
  You have never been married.
  You are legally separated under a decree of divorce or
of separate maintenance.
  You were widowed before January 1, 2010, and you did
not remarry in 2010, and you do not qualify to file as a
qualifying widow or widower with dependent children
on your federal return.
Exemptions
Write the number of exemptions you are claiming in boxes 8,
9, 10, and 11. Do not put a checkmark. You may lose the
exemption if you put a checkmark in these boxes. You may
lose the dependent exemption if you do not complete Part A,
lines A1 through A3 on page 2. You may lose the exemption
for qualifying parents or ancestors if you do not complete
Part A, lines A4 and A5, on page 2.
Line 8 Box - Age 65 and Over
Write "1" in box 8 if you or your spouse were 65 or older in
2010. Write "2" in box 8 if both you and your spouse were
65 or older in 2010.
Line 9 Box - Blind
Write "1" in box 9 if you or your spouse are totally or partially
blind. Write "2" in box 9 if both you and your spouse are totally
or partially blind.
If you or your spouse were partially blind as of December 31,
2010, you must get a statement certified by your eye doctor
or registered optometrist that:
1. You cannot see better than 20/200 in your better eye with
glasses or contact lenses or
2. Your field of vision is 20 degrees or less.
If your eye condition is not likely to improve beyond the
conditions listed above, you can get a statement certified by
your eye doctor or registered optometrist to that effect instead.
You must keep the statement for your records.
11
Form 140
6
Line 10 Box - Dependents
You must complete Part A, lines A1 through A3b, on page 2 of
your return before you can total your dependent exemptions.
You may claim only the following as a dependent.
  A person that qualifies as your dependent on your federal
return.
NOTE: If you do not claim a dependent exemption for a
student on your federal return in order to allow the student
to claim a federal education credit on the student’s federal
return, you may still claim the exemption on your Arizona
return. For more information, see Arizona Individual
Income Tax Ruling ITR 05-02.
  A person who is age 65 or over (related to you or not)
that does not qualify as your dependent on your federal
return, but one of the following applies.
1. In 2010, you paid more than one-fourth of the cost
of keeping this person in an Arizona nursing care
institution, an Arizona residential care institution,
or an Arizona assisted living facility. Your cost
must be more than $800.
2. In 2010, you paid more than $800 for either
Arizona home health care or other medical costs for
the person.
  A stillborn child if the following apply:
1. The stillbirth occurred during 2010.
2. You received a certificate of birth resulting in stillbirth
from the Arizona Department of Health Services.
3. The child would have otherwise been a member of your
household.
Completing Line(s) A1
NOTE: If a person who qualifies as your dependent is also
a qualifying parent or ancestor of your parent, you may claim
that person as a dependent on line A2, or you may claim that
person as a qualifying parent or ancestor of your parent on
line A5. You may not claim that same person on both line A2
and line A5. Do not list the same person on line A1 that you
listed on line A4.
Enter the following on line(s) A1.
1. The dependent's name. If you are claiming an
exemption for a stillborn child and the child was not
named, enter “stillborn child” in place of a name.
2. The dependent's SSN. If you are claiming an exemption
for a stillborn child enter the certificate number from the
certificate of birth resulting in stillbirth.
3. The dependent's relationship to you.
4. The number of months the dependent lived in your home
during 2010. If you are claiming an exemption for a stillborn
child, enter the date of birth resulting in the stillbirth.
You may lose the exemption if you do not furnish this
information.
Line A2 - Total Dependents
Enter the total number of persons listed on line(s) A1. Enter
the same number on the front of the return in box 10.
Lines A3a and A3b - Persons You Did Not
Take as Dependents on Your Federal
Return
On line A3a, enter the following.
1. The names of any dependents age 65 or over listed on
line(s) A1 that you cannot take as a dependent on your
federal return.
2. The name of any stillborn child listed on line(s) A1, if
the stillborn child was named. If the stillborn child was
not named, enter “stillborn child” on line A3a. Also
enter the date of birth resulting in the stillbirth.
On line A3b, enter the name of any student listed on line(s) A1
that you did not claim as an exemption on your federal return
in order to allow that student to claim a federal education
credit on the student’s federal return.
Line 11 Box - Qualifying Parents and
Ancestors of Your Parents
A qualifying parent or ancestor of your parent may be any
one of the following.
  Your parent or your parent’s ancestor. Your parent’s
ancestor is your grand parent, great grand parent, great
great grand parent, etc.
  If married filing a joint return, your spouse’s parent or
an ancestor of your spouse’s parent.
You may claim this exemption if all of the following apply.
1. The parent or ancestor of your parent lived in your
principal residence for the entire taxable year.
2. You paid more than one-half of the support and
maintenance costs of the parent or ancestor of your
parent during the taxable year.
3. The parent or ancestor of your parent was 65 years old
or older during 2010.
4. The parent or ancestor of your parent required assistance
with activities of daily living, like getting in and out of
bed or chairs, walking around, going outdoors, using the
toilet, bathing, shaving, brushing teeth, combing hair,
dressing, medicating or feeding.
You must complete Part A, lines A4 and A5, on page 2 of
your return before you can total your exemptions for
qualifying parents and ancestors of your parents.
NOTE: If a person who is a qualifying parent or ancestor of
your parent also qualifies as your dependent, you may claim
that person as a dependent on line A2, or you may claim that
person as a qualifying parent or ancestor of your parent on
line A5. You may not claim that same person on both line A2
and line A5. Do not list the same person on line A4 that you
listed on line A1.
FOR PEACE OF MIND…E-FILE
Ask your tax professional for E-File
or
Do-it-yourself using the Internet
www.azdor.gov
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Form 140
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Completing Line(s) A4
Enter the following on line(s) A4.
1. The name of the qualifying parent or ancestor of your parent.
2. The SSN of the qualifying parent or ancestor of your
parent.
3. The qualifying parent’s or ancestor’s relationship to
you, or your spouse if filing a joint return.
4. The number of months the qualifying parent or ancestor
of your parent lived in your home during 2010.
You may lose the exemption if you do not furnish this information.
Line A5 - Total Qualifying Parents or
Ancestors of Your Parents
Enter the total number of persons listed on line(s) A4. Enter
the same number on the front of the return in box 11.
Additions to Income
Line B6 - Non-Arizona Municipal Interest
Enter the amount of interest income from non-Arizona
municipal bonds that you did not include as income on your
federal return.
You may exclude any expenses incurred to purchase or carry the
obligation. Reduce the interest income by the amount of those
expenses that you could not deduct on your federal return.
If you received tax exempt interest from municipal bonds,
attach a schedule listing the payors and the amount received
from each payor. You may also want to attach supporting
documents for amounts received from Arizona municipal
bonds that are exempt from Arizona income tax. These may
be items such as bank statements, brokerage statements, etc.
Line B7 - Ordinary Income Portion of
Lump-Sum Distributions Excluded on Your
Federal Return
Use line B7 if you use federal averaging for lump-sum
distributions from your pension or profit-sharing plan.
Arizona law does not provide for averaging. Enter the
amount of the distribution that you treated as ordinary
income on your federal return. If you choose to treat the
capital gain portion of the distribution as ordinary income,
you must also include that amount.
For details, see Arizona Department of Revenue Income Tax
Ruling ITR 93-5.
Line B8 - Total Federal Depreciation
Enter the total amount of depreciation deducted on the
federal return. If you make an entry here, you should also take
a subtraction on line C22. To figure how much you should
subtract, see the instructions for line C22.
Line B9 - Medical Savings Account (MSA)
Distributions
For information on Arizona's MSA provisions, see the
department's MSA brochure, Pub 542.
You must add amounts received from an MSA here if any of
the following apply.
1 - You Withdrew Funds from Your MSA for Other
Than Qualified Expenses
You must make an entry here if all of the following apply.
1. You withdrew money from your MSA during 2010.
2. You did not use the amount withdrawn to pay qualified
medical expenses.
3. You did not have to include the withdrawal as income
on your federal income tax return.
Enter the amount withdrawn.
2 - Deceased Account Holder Where the Named
Beneficiary is Not the Decedent's Surviving Spouse
You must make an entry here if all of the following apply.
1. The account holder died during the year.
2. You are the named beneficiary of the decedent's MSA.
3. You are not the decedent's surviving spouse.
4. You did not have to include the value of the MSA as
income on your federal income tax return.
In this case, the MSA ceased to be an MSA. Enter the fair
market value of the MSA as of the date of death, less the amount
of MSA funds used within one year of the date of death, to pay
the decedent's qualified medical expenses. You can reduce the
fair market value by only those expenses paid from the MSA. If
you pay additional medical expenses for the decedent from the
MSA after you file, you may file an amended return to further
reduce the fair market value of the MSA.
3 - Decedent's Final Return and No Named MSA
Beneficiary
Make an entry here if all of the following apply.
1. The account holder died during the year.
2. There is no named MSA beneficiary.
3. This is the decedent's final return.
4. The value of the MSA did not have to be included on
the decedent's final federal income tax return.
In this case, the MSA ceases to be an MSA. Enter the fair
market value of the MSA as of the date of death. This rule
applies in all cases in which there is no named beneficiary,
even if the surviving spouse ultimately obtains the right to
the MSA assets.
NOTE: The following are not withdrawals. Do not enter
any of the following:
  Amounts from the MSA used to pay qualified medical
expenses.
  A qualified return of excess contributions.
  A qualified rollover.
  The fair market value of an MSA received by a surviving
spouse who was the deceased account holder's named
beneficiary.
For more information about the above items, see the
department's MSA brochure, Pub 542.
Line B10 - I.R.C. § 179 Expense in Excess
of Allowable Amount
Enter the amount of IRC § 179 expense deducted on the
federal return that exceeds $25,000. If you make an entry
here, you should also take a subtraction on line C29 for a
portion of the amount entered here. To figure how much you
should subtract, see the instructions for line C29.
Line B11 - Other Additions to Income
Use line B11 if any of the special circumstances below apply.
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Form 140
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Attach your own schedule to the back of your return
explaining any amounts entered here.
You may either add or subtract items A through D below
(line B11 or C29, respectively) depending on your situation.
A. Pension Adjustments
Use this adjustment if both of the following apply.
1. Arizona taxed your pension for years before 1979.
2. You reported that pension on your federal return using
the percentage exclusion method.
Do not use this adjustment if either of the following apply.
1. You reported your pension income as fully taxable on
your federal return.
2. You reported your pension income on your federal
return under the "three-year-rule".
Pension Adjustment Worksheet - Line B11
Follow these steps to figure the adjustment.
(Keep this worksheet for your records.)
1. Your contribution to annuity. 1.
2. Pension amount received in prior
years. 2.
3. Remainder of cost (line 1 minus
line 2 but not less than zero). 3.
4. Pension amount received this year.
4.
5. Subtract line 3 from line 4 (but not
less than zero). 5.
6. Enter the pension amount taxable
on your federal return. 6.
7. Subtract line 6 from line 5.
7.
If line 7 is more than zero, enter the amount on line 7 as an
addition to income. Enter the addition on line B11.
If line 6 is more than line 5, enter the difference as a
subtraction from income. Enter the subtraction on line C29.
B. Married Persons Filing Separate Returns
If you file a separate Arizona return, you must report the
following income on that return.
  one-half of the community income from all sources.
  all of your separate income.
If you and your spouse file a joint federal return but separate
Arizona returns, you must make sure that each separate return
reflects the correct income. If you begin your Arizona return
with only the income that you earned during the year, you
will have to adjust this income.
If you file separate federal returns, each of your federal returns
should already reflect the correct income. Since your separate
Arizona returns will begin with the federal adjusted gross
income, you will not have to adjust your income.
If you have to adjust your income, attach a schedule showing
how you figured your adjustment.
C. Partnership Income
Use this adjustment if your Arizona Form 165, Schedule K-1,
shows a difference between federal and state distributable income.
If the difference reported on your Arizona Form 165,
Schedule K-1, is a positive number, enter that difference as
an addition. Enter the addition on line B11.
If the difference reported on your Arizona Form 165,
Schedule K-1, is a negative number, enter that difference as
a subtraction. Enter the subtraction on line C29.
D. Fiduciary Adjustment
A fiduciary uses Form 141AZ, Schedule K-1, to report to you
your share of the fiduciary adjustment from the trust or estate.
Line 3 of Form 141AZ, Schedule K-1, shows your share of
the fiduciary adjustment from the estate or trust. If the
amount reported on line 3 of your Arizona Form 141AZ,
Schedule K-1, is a positive number, enter that amount as an
addition. Enter the addition on line B11.
If the amount reported on line 3 of your Arizona Form 141AZ,
Schedule K-1, is a negative number, enter that amount as a
subtraction. Enter the subtraction on line C29.
E. Net Operating Losses
Arizona does not have specific provisions for calculating the
net operating loss of an individual. Generally, the amount of
net operating loss deduction included in your federal
adjusted gross income is the amount allowable for Arizona
purposes. However, there are instances when the amount
allowable for Arizona purposes may be different.
You must adjust the amount of net operating loss deduction
included in your federal adjusted gross income if you have
already deducted any amount of the net operating loss
included in your federal adjusted gross income for Arizona
purposes. In this case, enter on line B11, the amount of net
operating loss included in your federal adjusted gross income
which you previously deducted for Arizona purposes.
Usually, Arizona conforms to the federal net operating loss
provisions, including the carryback provisions. However,
Arizona did not conform to the special federal net operating
loss rules for 2008 and 2009. Under the special rules for
2008 and 2009, you could have elected to carry the net
operating loss back for 3, 4 or 5 years, instead of the normal
2 years. This election would have been allowed under I.R.C.
§ 172(b)(1)(h) as amended by the American Recovery and
Reinvestment Act of 2009 or the Worker, Homeownership,
and Business Assistance Act of 2009. If you deducted a
federal net operating loss carryback under the federal
American Recovery and Reinvestment Act of 2009 or the
federal Worker, Homeownership, and Business Assistance
Act of 2009, see the instructions for line C28.
For information on deducting a net operating loss carryback in
cases where you did not make an election under I.R.C. §
172(b)(1)(h), see Arizona Department of Revenue Income Tax
Procedure ITP 99-1.
F. Items Previously Deducted for Arizona Purposes
Arizona statutes prohibit a taxpayer from deducting items more
than once. However, under the operation of former Arizona law
(1989 and prior), you could deduct certain items in greater
amounts for Arizona purposes than for federal purposes.
Investment interest and passive activity losses were such
items. In some cases, you could have deducted such amounts
in their entirety on the Arizona return. For federal purposes,
the deduction for these items was limited, with the unused
portions being carried forward and deducted in future years.
Your Arizona return may include these previously deducted
items because of the difference between the federal and
former Arizona treatment. If your Arizona taxable income
includes items previously deducted for Arizona purposes,
you must add such amounts to your Arizona gross income.
G. Claim of Right Adjustment for Amounts Repaid
in 2010
You must make an entry here if all of the following apply.
1. During 2010, you were required to repay amounts held
under a claim of right.
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Form 140
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2. The amount required to be repaid during 2010 was more
than $3,000.
3. You took a deduction for the amount repaid on your 2010
federal income tax return.
If the above apply, enter the amount deducted on your federal
income tax return here.
For more information on the Arizona claim of right provisions,
see Arizona Department of Revenue Individual Income Tax
Procedure ITP 95-1.
H. Claim of Right Adjustment for Amounts Repaid
in Prior Taxable Years
You must make an entry here if all of the following apply.
1. During a year prior to 2010 you were required to repay
amounts held under a claim of right.
2. You computed your tax for that prior year under
Arizona's claim of right provisions.
3. A net operating loss or capital loss was established due
to the repayment made in the prior year.
4. You are entitled to take that net operating loss or capital
loss carryover into account when computing your 2010
Arizona taxable income.
5. The amount of the loss carryover included in your
federal income is more than the amount allowed to be
taken into account for Arizona purposes.
Enter the amount by which the loss carryover included in
your federal adjusted gross income is more than the amount
allowed for the taxable year under Arizona law.
I. Addition to S Corporation Income Due to Credits
Claimed
Shareholders of an S corporation who claim a credit passed
through from an S corporation must make an addition to
income for the amount of expenses disallowed by reason of
claiming the credit.
An S corporation that passes the following credits through to its
shareholders must notify each shareholder of his or her pro rata
share of the adjustment. You must enter an amount on this line
when claiming any of the following credits.
  Agricultural water conservation system credit
  Environmental technology facility credit
  Pollution control credit
  Credit for solar hot water heater plumbing stub outs and
electric vehicle recharge outlets
  Credit for employment of TANF recipients
  Agricultural pollution control equipment credit
  Motion picture credits
J. Solar Hot Water Heater Plumbing Stub Outs and
Electric Vehicle Recharge Outlet Expenses
If you take a credit for installing solar hot water heater plumbing
stub outs or electric vehicle recharge outlets in a dwelling you
constructed (Form 319), you cannot deduct any expenses for
which you claim the credit. If you take this credit, enter the amount
of such expenses that you deducted on your federal return.
K. Wage Expense for Employers of TANF Recipients
If you take a credit for employing TANF recipients (Form
320), you cannot deduct any wage expense for which you
claim the credit. If you take this credit, enter the amount of
such expenses that you deducted on your federal return.
L. Motion Picture Expenses
If you take a motion picture credit on Form 334, you cannot
deduct any expenses deducted on your federal return related
to the production, the infrastructure project or related to a
transferred credit. Enter the amount of any such expenses
that were deducted in computing federal adjusted gross
income for which you claimed a credit.
M. Agricultural Water Conservation System Credit
If you take this credit (Form 312), you cannot deduct any
expenses for which you claim the credit. If you take this credit,
enter the amount of such expenses that you deducted on your
federal return.
N. Adjusted Basis in Property for Which You Have
Claimed a Credit for Investment in Qualified Small
Businesses
If you claim a credit for an investment in a qualified small
business on Arizona Form 338, you must adjust your basis in
the investment by the amount of the credit claimed. You must
report this difference in basis on the Arizona return that you
file for the taxable year in which you sell or otherwise
dispose of the investment. If you sold or otherwise disposed
of the investment during the 2010 taxable year, on line B11,
enter the amount by which the adjusted basis computed under
the internal revenue code with respect to that property
exceeds the adjusted basis of the property computed under
Arizona Revised Statutes section 43-1074.02.
O. Depreciation or Amortization for a Water
Conservation System
If you claimed a water conservation system credit on
Arizona Form 339, you may not deduct any depreciation or
amortization for that system on your Arizona return. Enter
the amount of depreciation or amortization claimed on your
federal return for the water conservation system for which
you have claimed a credit.
P. Nonqualified Withdrawals from 529 College
Savings Plans
You must make an addition to income if you received a
nonqualified withdrawal from a 529 college savings plan.
You must make an addition if the withdrawal was not
included in your federal adjusted gross income. The amount
that you must add is the amount withdrawn, but no more
than the difference between the amount of contributions
subtracted in prior years and the amount added in any prior
years.
A nonqualified withdrawal is a withdrawal other than any of
the following:
1. A qualified withdrawal. A qualified withdrawal is a
withdrawal from an account to pay the qualified higher
education expenses of the designated beneficiary of the
account.
2. A withdrawal made as the result of the death or
disability of the designated beneficiary of an account.
3. A withdrawal that is made on the account of a
scholarship, or the allowance or payment described in
section 135(d)(1)(B) or (C) of the internal revenue code,
and that is received by the designated beneficiary, but
only to the extent of the amount of this scholarship,
allowance or payment.
4. A rollover or change of designated beneficiary.
Q. 2010 Discharge of Indebtedness (DOI) Income
Generally, when a loan is settled for less than the amount
owed, DOI income is realized by the debtor and usually must
be included in the debtor’s gross income. The amount of
15
Form 140
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DOI income is generally equal to the amount of loan
forgiveness. DOI income also occurs when a debtor
repurchases his or her own debt at a discount (a price lower
than the adjusted basis issue price of the debt instrument).
In debt repurchase transactions, the amount of DOI income
is generally equal to the difference between the adjusted
issue price and the price paid for the debt instrument.
For federal purposes, a taxpayer may have made a special
election for taxable years 2009 or 2010 to include DOI
income in connection with the reacquisition of a business
debt instrument, ratably over a 5 year period. A taxpayer
that made this election will generally include this income in
federal adjusted gross income beginning with the 2014
taxable year. A taxpayer would have made the federal
election under I.R.C. § 108(i) as added by the American
Recovery and Reinvestment Act of 2009.
Arizona did not adopt the special federal DOI income
deferral provisions for the 2009 or 2010 taxable year. For
Arizona purposes, if you made the federal election to defer
the inclusion of DOI income under I.R.C. § 108(i), you must
make an entry here. On line B11, enter the amount of DOI
income that you deferred and excluded from the
computation of your 2010 federal adjusted gross income
under I.R.C. § 108(i). Even though you must include that
DOI income on your 2010 Arizona return, Arizona will not
tax that income again in the future years when you include
the income in your federal adjusted gross income. If you
make an entry here, also see the instructions for “Other
Subtractions from Income” even though this subtraction will
not apply until the year in which you include the income in
your federal adjusted gross income.
R. Original Issue Discount (OID) on Reacquisition
of Debt Instrument
For federal purposes, when a taxpayer made the special
election to defer DOI income under I.R.C. § 108(i) (see letter
“Q” above), the taxpayer was not allowed to take a deduction
with respect to the portion of any OID that accrued with respect
to that DOI income, during the income deferral period. In this
case, the taxpayer had to deduct the aggregate amount of the
OID deductions disallowed ratably over a 5 year period,
beginning with the period in which the income was includible
in federal adjusted gross income.
Arizona did not adopt the federal provisions requiring a
taxpayer to defer the OID deduction in cases where the
taxpayer federally deferred the DOI income. For Arizona
purposes, you had to report the DOI income from a debt
reacquisition in the year in which you reacquired the debt,
and you were allowed to subtract any OID related to that
DOI income in the year the OID accrued. (See the
instructions for “Other Subtractions from Income.”) If your
federal adjusted gross income includes a deduction for any
accrued OID that you have already subtracted for Arizona
purposes, you must make an addition to Arizona income for
the amount of deferred OID deducted on your federal return.
Generally, this addition will not apply until taxable year
2014 through 2018. However, if you were required to
accelerate reporting of the DOI income for federal purposes
and were allowed to deduct accrued OID attributable to that
income on a return filed for a year prior to 2014, this
addition may apply to an earlier year. On line B11, enter the
amount of any previously deferred OID that you deducted in
computing your 2010 federal adjusted gross income, to the
extent that the amount was previously subtracted from
Arizona gross income.
S. Early Withdrawal of Arizona, County, City, or
School Retirement System Contributions
If you meet all of the following, you must enter an amount here.
1. You left your job with the State of Arizona or an
Arizona county, city, or school district for reasons other
than retirement.
2. When you left, you took out the contributions you had
made to the retirement system while employed.
3. You deducted these contributions on your Arizona
income tax returns that you filed for prior years.
4. You did not include these contributions in your federal
adjusted gross income this year.
If you meet all these tests, you must report as income those
contributions previously deducted on your prior years'
Arizona tax returns.
For details, see Arizona Department of Revenue Income Tax
Ruling ITR 93-7.
T. Other Adjustments
Other special adjustments may be necessary. You may need
to make an addition for depreciation or amortization. You
may also need to make an addition if you claimed certain tax
credits. Call one of the numbers listed on the back cover if
any of the following apply.
  You are a qualified defense contractor that elected to
amortize under Arizona Revised Statutes section 43-1024.
  You sold or disposed of property that was held for the
production of income and your basis was computed
under the Arizona Income Tax Act of 1954.
  You claimed the environmental technology facility credit.
  You claimed the pollution control credit.
  You claimed the recycling equipment credit.
  You claimed the agricultural pollution control
equipment credit.
  You elected to amortize the basis of a pollution control
device or the cost of a child care facility under Arizona
law in effect before 1990. You are still deducting
amortization or depreciation for that device or facility
on your federal income tax return.
Line B12 - Total Additions
Add lines B6 through B11. Enter the total on line B12 and
on the front of your return on line 13.
Subtractions From Income
You may only subtract those items for which statutory authority
exists. Without such authority you cannot take a subtraction.
If you have any questions concerning subtractions from
income, call one of the numbers listed on the back cover.
NOTE: You may not subtract any amount that is allocable
to income excluded from your Arizona taxable income.
Line C13 - Exemption: Age 65 or Over
Multiply the number in box 8 on the front of your return by
$2,100 and enter the result.
Line C14 - Exemption: Blind
Multiply the number in box 9 on the front of your return by
$1,500 and enter the result.
Line C15 - Exemption: Dependents
Multiply the number in box 10 on the front of your return by
$2,300 and enter the result.
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Form 140
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Line C16 - Exemption: Qualifying Parents
and Ancestors of Your Parents
Multiply the number in box 11 on the front of your return by
$10,000 and enter the result.
Line C17 - Total
Add lines C13 through C16 and enter the total. If you have
no other subtractions from income, skip lines C18 through
C30 and enter this total on Form 140, page 1, line 15.
Line C18 - Interest on U.S. Obligations
Enter the amount of interest income from U.S. Government
obligations included as income on your federal return. U.S.
Government obligations include obligations such as savings
bonds and treasury bills. You cannot deduct any interest or other
related expenses incurred to purchase or carry the obligations. If
such expenses are included in your Arizona gross income,
you must reduce the subtraction by such expenses. If you are
itemizing deductions on your Arizona return, you must
exclude such expenses from the amount deducted.
NOTE: Do not subtract interest earned on FNMA or GNMA
bonds since this interest is taxable by Arizona. For details, see
the department's income tax ruling, ITR 06-1.
Do not subtract any amount received from a qualified pension
plan that invests in U.S. Government obligations. Do not
subtract any amount received from an IRA that invests in
U.S. Government obligations. These amounts are not interest
income. For details, see Arizona Department of Revenue
Income Tax Rulings ITR 96-2 and ITR 96-3.
Line C19 - Exclusion for U.S. Government,
Arizona State or Local Government Pensions
If you receive pension income from any of the sources listed
below, subtract the amount you received or $2,500, whichever
is less. Include only the amount you reported as income on
your federal return. If both you and your spouse receive such
pension income, each spouse may subtract the amount
received or $2,500, whichever is less.
Public pensions from the following
sources qualify for this subtraction.
  The United States Government Service Retirement and
Disability Fund
  The United States Foreign Service Retirement and
Disability System
  Retired or retainer pay of the uniformed services of the
United States
  Any other retirement system or plan established by
federal law
NOTE: This applies only to those retirement plans
authorized and enacted into the U.S. Code. This does not
apply to a retirement plan that is only regulated by federal
law (i.e., plans which must meet certain federal criteria to be
qualified plans).
  The Arizona State Retirement System
  The Arizona State Retirement Plan
  The Corrections Officer Retirement Plan
  The Public Safety Personnel Retirement System
  The Elected Officials' Retirement Plan
  A retirement plan established for employees of a county,
city, or town in Arizona
  An optional retirement program established by the Arizona
Board of Regents under Arizona Revised Statutes
  An optional retirement program established by an
Arizona community college district.
NOTE: Public retirement pensions from states other than
Arizona do not qualify for this subtraction.
Line C20 - Arizona Lottery Winnings
You may subtract up to $5,000 of winnings received in 2010
for Arizona lottery prizes.
If you subtract Arizona lottery winnings here, you may have
to adjust the amount of gambling losses claimed as an
itemized deduction. See instructions for Form 140 Schedule A,
Itemized Deduction Adjustments.
Line C21 - U.S. Social Security Benefits or
Railroad Retirement Benefits
Arizona does not tax social security benefits received under
Title II of the Social Security Act. Arizona does not tax railroad
retirement benefits received from the Railroad Retirement
Board under the Railroad Retirement Act. If you included
such social security or railroad retirement benefits as income
on your federal return, use line C21 to subtract this income.
NOTE: Enter only the taxable amount (the amount that was
subject to federal tax). Do not include any amount that was
not subject to federal income tax.
See Arizona Department of Revenue Income Tax Ruling ITR 96-1
for more information about railroad retirement benefits.
Line C22 - Recalculated Arizona Depreciation
Enter the total amount of depreciation allowable pursuant to
IRC § 167(a) for the taxable year calculated as if you had
elected not to claim bonus depreciation for eligible
properties for federal purposes.
Line C23 - Certain Wages of American Indians
Enrolled members of American Indian tribes may subtract
wages earned while living and working on their tribe's
reservation. The federal government must recognize these
tribes.
For more information, see Arizona Department of Revenue
Income Tax Ruling ITR 96-4.
Line C24 - Income Tax Refund from Other
States
You may subtract income tax refunds received from other
states if both of the following apply.
1. You reported the refund as income on your federal return.
2. You did not deduct the taxes paid to the other state as an
itemized deduction on a prior year Arizona return.
Line C25 - Deposits and Employer
Contributions Into MSAs
Deposits Made Into Your MSA
If you have a medical savings account (MSA), you may be
able to subtract deposits made into that MSA. Make an entry
here if all of the following apply.
1. You have an MSA that qualifies as an MSA under
Arizona law, but not federal law.
2. Either you or your employer made deposits into that
MSA during the tax year.
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3. You had to include the deposits in income on your
federal income tax return.
Enter the amount of the MSA deposits that you had to
include in your federal adjusted gross income.
Employer Contributions Made to Employee MSAs
If you are an employer, you may subtract the amount
contributed to your employees' MSAs that are established
under Arizona law. You can subtract these contributions
only to the extent not deductible for federal income tax
purposes. Enter these contributions here.
Line C26 - Construction of an Energy
Efficient Residence
For taxable years beginning from and after December 31, 2001,
through December 31, 2010, Arizona law allows a subtraction
for an energy efficient residence. The subtraction is allowed for
selling one or more new energy efficient residences located in
Arizona. The subtraction is equal to 5% of the sales price
excluding commissions, taxes, interest, points, and other
brokerage, finance and escrow charges. The subtraction cannot
exceed $5,000 for each new qualifying residence.
The taxpayer that builds the new residence may claim the
subtraction when the taxpayer first sells the residence.
However, the seller may elect to transfer the subtraction to
the buyer.
For more information, see Arizona Department of Revenue
Income Tax Procedure ITP 02-1.
Enter the number of residences for which you are claiming a
subtraction on line C26a, then enter the amount of the
subtraction on line C26. Also enter the number on line C26a
on Form 140, page 1, line 151.
Line C27 - Pay Received for Active Service
as a Member of the Reserves, National
Guard or the U.S. Armed Forces
Starting with 2006, members of the U.S. armed forces may
subtract pay received for active duty military service. On line
C27, enter the amount of that income included in your
federal adjusted gross income.
Starting with 2007, members of the reserves or the National
Guard may subtract pay received for active service as a
reservist or as a National Guard member. This includes
pay received for weekend or two-week training periods. On
line C27, enter the amount of that income included in your
federal adjusted gross income.
NOTE: You may not subtract pay received for active duty
service as a member of the U.S. Public Health Service or
NOAA. The department has issued a ruling on this issue.
This ruling is ITR 10-1. To see this ruling, visit our web site
at www.azdor.gov and click on legal research and then click
on rulings.
Line C28 – Net Operating Loss Adjustment
NOTE: This subtraction applies to only those individuals
who made an election under the special federal net
operating loss rules for 2008 and 2009. Under the special
rules for 2008 and 2009, you could have elected to carry the
net operating loss back for 3, 4 or 5 years, instead of the
normal 2 years. This election would have been allowed
under I.R.C. § 172(b)(1)(h) as amended by the American
Recovery and Reinvestment Act of 2009 or the Worker,
Homeownership, and Business Assistance Act of 2009.
Arizona did not adopt the special federal net operating loss
rules for losses incurred during 2008 or 2009. For Arizona
purposes, you must deduct a net operating loss as if the loss
was computed under I.R.C. § 172 in effect prior to the
enactment of those special rules. If you made an election to
deduct your 2008 or 2009 federal net operating loss under
I.R.C. § 172(b)(1)(h), you may have to enter an amount
here. Figure how much of the net operating loss carry
forward would have been allowed as a deduction on your
2010 federal income tax return, if the election described in
I.R.C. § 172(b)(1)(h) had not been made in the year of the
loss. On line C28, enter the amount that exceeds the actual
net operating loss carry forward that was deducted in
arriving at federal adjusted gross income.
Line C29 - Other Subtractions from Income
Use line C29 if any of the following special circumstances
apply. Attach your own schedule to the back of your return
explaining any amounts entered here.
A. Previously Reported Gain on Decedent's
Installment Sale
Prior Arizona law required acceleration of any unrecognized
installment sale gain upon the death of a taxpayer. However,
this acceleration could have been avoided by the posting of a
bond. If acceleration was required, your federal adjusted gross
income may include installment sale amounts already
recognized on a decedent's final Arizona return. If your federal
adjusted gross income includes such amounts, you may
subtract that portion of the gain included on your federal return.
B. Fiduciary Adjustment
A fiduciary uses Form 141AZ, Schedule K-1 to report to you
your share of the fiduciary adjustment from the trust or estate.
Line 3 of Form 141AZ, Schedule K-1 shows your share of
the fiduciary adjustment from the estate or trust. If the
amount reported on line 3 of your Arizona Form 141AZ,
Schedule K-1, is a negative number, enter that amount as a
subtraction. Enter the subtraction on line C29.
If the amount reported on line 3 of your Arizona Form 141AZ,
Schedule K-1, is a positive number, enter that amount as an
addition. Enter the addition on line B11.
C. Partnership Income
Use this adjustment if your Arizona Form 165, Schedule K-1,
shows a difference between federal and state distributable income.
If the difference reported on your Arizona Form 165,
Schedule K-1, is a negative number, enter that difference as
a subtraction. Enter the subtraction on line C29.
If the difference reported on your Arizona Form 165,
Schedule K-1, is a positive number, enter that difference as
an addition. Enter the addition on line B11.
D. Federally Taxable Arizona Municipal Interest
Enter the amount of any interest income received on obligations
of the State of Arizona, or any political subdivisions of
Arizona, that is included in your Arizona gross income. Do
not enter any Arizona municipal interest that is exempt from
federal taxation and not included in your federal adjusted
gross income.
E. Adoption Expenses
You may take this subtraction only in the year the final
adoption order is granted. Enter the lesser of the total of the
following adoption expenses or $3,000. When figuring your
subtraction, you may include expenses incurred in prior years.
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The following expenses are qualified adoption expenses.
1. Nonreimbursed medical and hospital costs.
2. Adoption counseling.
3. Legal and agency fees.
4. Other nonrecurring costs of adoption.
If filing separately, you may take the entire subtraction, or
you may divide the subtraction with your spouse. However,
the total subtraction taken by both you and your spouse
cannot exceed $3,000.
F. Qualified Wood Stove, Wood Fireplace, or Gas
Fired Fireplace
Arizona law provides a subtraction for converting an existing
fireplace to a qualified wood stove, qualified wood fireplace, or
gas fired fireplace and non-optional equipment directly related
to its operation. You may subtract up to $500 of the costs
incurred for converting an existing fireplace to a qualified wood
stove, qualified wood fireplace, or gas fired fireplace on your
property located in Arizona. When you figure your subtraction,
do not include taxes, interest, or other finance charges.
A qualified wood stove or a qualified wood fireplace is a
residential wood heater that was manufactured on or after
July 1, 1990, or sold at retail on or after July 1, 1992. The
residential wood heater must also meet the U.S. Environmental
Protection Agency's July 1990 particulate emissions standards.
A qualified gas fired fireplace is any device that burns
natural or liquefied petroleum gas as its fuel through a
burner system that is permanently installed in the fireplace.
The conversion of an existing wood burning fireplace to
noncombustible gas logs that are permanently installed in
the fireplace also qualifies as a gas fired fireplace.
G. Claim of Right Adjustment for Amounts Repaid
in Prior Taxable Years
You must make an entry here if all of the following apply.
1. During a year prior to 2010 you were required to repay
amounts held under a claim of right.
2. You computed your tax for that prior year under
Arizona's claim of right provisions.
3. A net operating loss or capital loss was established due
to the repayment made in the prior year.
4. You are entitled to take that net operating loss or capital
loss carryover into account when computing your 2010
Arizona taxable income.
5. The amount of the loss carryover allowed to be taken
into account for Arizona purposes is more than the
amount included in your federal income.
Enter the amount by which the loss carryover allowed for
the taxable year under Arizona law is more than the amount
included in your federal adjusted gross income.
H. Certain Expenses Not Allowed for Federal Purposes
You may subtract some expenses that you cannot deduct on
your federal return when you claim certain federal tax credits.
These federal tax credits are:
  The federal work opportunity credit
  The empowerment zone employment credit
  The credit for employer-paid social security taxes on
employee cash tips
  The Indian employment credit
If you received any of the above federal tax credits for 2010,
enter the portion of wages or salaries you paid or incurred
during the taxable year equal to the amount of those federal
tax credits you received.
I. Qualified State Tuition Program Distributions
If you are a beneficiary of a qualified state tuition program, you
may subtract some of the amount distributed from the program
for qualified education expenses. Enter the amount of the
distribution that you had to include in your federal adjusted
gross income. A qualified state tuition program is a program
that meets the requirements of I.R.C. § 529.
J. Subtraction for World War II Victims
You may subtract distributions made to you for your
persecution or the persecution of your ancestors by Nazi
Germany or any other Axis regime for racial, religious or
political reasons. If you are the first recipient of such
distributions, enter the amount of the distributions that you
had to include in your federal adjusted gross income.
You may also subtract items of income that are attributable to,
derived from or related to assets that were stolen or hidden
from or lost to you if you were persecuted by Nazi Germany or
any other Axis regime for racial, religious or political reasons
before, during or immediately after World War II. If you are
the first recipient of such income, enter the amount of income
that you had to include in your federal adjusted gross income.
K. Installment Sale Income from Another State
Taxed by the Other State in a Prior Taxable Year
You may subtract income from an installment sale if both of
the following apply:
1. The income from the sale is subject to Arizona income tax
in 2010; and
2. You paid income tax to another state on that income in a
prior tax year.
Enter the amount of such income that you included in your
Arizona gross income for 2010.
Do not enter any amount that is subject to tax by both Arizona
and another state in 2010. In this case, you may be eligible for a
tax credit. See Form 309 for details.
L. Agricultural Crops Given to Arizona Charities
Arizona law allows a subtraction for qualified crop gifts made
during 2010 to one or more charitable organizations. To take
this subtraction, you must be engaged in the business of
farming or processing agricultural crops. The crop must be
grown in Arizona. You must make your gift to a charitable
organization located in Arizona that is exempt from Arizona
income tax.
The subtraction is the larger of 80% of the wholesale market
price or 80% of the most recent sale price for the contributed
crop.
To determine if your crop gift qualifies for this subtraction, see
Arizona Department of Revenue Income Tax Procedure ITP 93-2.
M. Basis Adjustment for Property Sold or
Otherwise Disposed of During the Taxable Year
With respect to property that is sold or otherwise disposed of
during the taxable year by a taxpayer who has complied with
the requirement to add back all depreciation with respect to
that property on tax returns for all taxable years beginning
from and after December 31, 1999, enter the amount of
depreciation that has been allowed pursuant to I.R.C. §
167(a) to the extent that the amount has not already reduced
Arizona taxable income in the current or prior years. (Note:
The practical effect of this is to allow a subtraction for the
difference in basis for any asset for which bonus depreciation
has been claimed on the federal return.)
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N. Adjustment for IRC § 179 Expense Not Allowed
Enter 20% of the amount entered on line B10. This same
amount can also be subtracted in each of the following four
taxable years, effectively amortizing the difference in
treatment over five years. If you made an addition for IRC §
179 expense on your, 2006, 2007, 2008 and/or 2009 return,
also enter 20% of the amount added for 2006, 2007, 2008
and/or 2009.
O. Contributions to 529 College Savings Plans
For taxable years 2008 through 2012, you may subtract
amounts you contribute to 529 college savings plans during
the taxable year. You may subtract the amount you
contributed during the year up to a total of $750 ($1,500 for
a married couple filing a joint return). If you are married
filing separate returns, either you or your spouse may take
the subtraction, or you may divide it between you, but the
total taken by both of you cannot be more than $1,500.
If you contribute more than $750 ($1,500 if married) during
the year, your total subtraction is still limited to $750
($1,500 if you are married). For example, Jorge and Kate are
married and have two children. During 2010, Jorge and
Kate, contributed $1,500 to a 529 plan for Child 1 and
$1,500 to a 529 plan for Child 2. Even though Jorge and
Kate contributed a total of $3,000 during 2010, they may
subtract only $1,500 on their 2010 return.
You may take a subtraction for a contribution that you made
during 2010, to a plan that existed before 2010. You may
take a subtraction for a contribution that you made during
2010, to a plan established in another state. You may take a
subtraction for a contribution that you made in 2010, to any
529 college savings plan. This could be a plan established
for a child, grandchild, niece, nephew, or any other person
for whom a plan has been established.
You cannot take a subtraction for an amount transferred
from one college savings plan to a different college savings
plan (a rollover).
P. Previously Deferred Discharge of Indebtedness
(DOI) Income Adjustment
Generally, when a loan is settled for less than the amount
owed, DOI income is realized by the debtor and usually
must be included in the debtor’s gross income. The amount
of DOI income is generally equal to the amount of loan
forgiveness. DOI income also occurs when a debtor
repurchases his or her own debt at a discount (a price lower
than the adjusted basis issue price of the debt instrument).
In debt repurchase transactions, the amount of DOI income
is generally equal to the difference between the adjusted
issue price and the price paid for the debt instrument.
For federal purposes, a taxpayer may have made a special
election for taxable years 2009 or 2010 to include DOI
income in connection with the reacquisition of a business
debt instrument, ratably over a 5 year period. A taxpayer
that made this election will generally include this income in
federal adjusted gross income beginning with the 2014
taxable year. A taxpayer would have made the federal
election under I.R.C. § 108(i) as added by the American
Recovery and Reinvestment Act of 2009.
Arizona did not adopt the special federal DOI income
deferral provisions for the 2009 or 2010 taxable year. For
Arizona purposes, if you made the federal election to defer
the inclusion of DOI income under I.R.C. § 108(i), you were
required to add the amount of deferred DOI income to
Arizona income for the year for which you made the
election. (See the instructions for “Other Additions to
Income.”) If you made the required addition to Arizona
income on the Arizona return filed for the year in which you
reacquired the debt instrument (2009 or 2010), Arizona will
not tax that DOI income twice. In the year in which you
include that deferred DOI income in you federal adjusted
gross income, you may take a subtraction for the amount
included for that year. Usually this subtraction will apply to
taxable years 2014 through 2018. However, if you had to
accelerate the deferral for federal purposes, this subtraction
may apply to a taxable year prior to 2014. On line C29,
enter the amount of previously deferred DOI income that
you included in your federal adjusted gross income for the
current taxable year to the extent that the amount was
previously added to your Arizona income.
Q. Original Issue Discount (OID) on Reacquisition
of Debt Instrument
For federal purposes, when a taxpayer made the special
election to defer DOI income under I.R.C. § 108(i) (see letter
“P” above), the taxpayer was not allowed to take a deduction
with respect to the portion of any OID that accrued with respect
to that DOI income, during the income deferral period. In this
case, the taxpayer must deduct the aggregate amount of the
OID deductions disallowed ratably over a 5 year period,
beginning with the period in which the income is includible in
federal adjusted gross income.
Arizona did not adopt the federal provisions requiring a
taxpayer to defer the OID deduction in cases where the
taxpayer federally deferred the DOI income under I.R.C. §
108(i). For Arizona purposes, you were required to add the
amount of deferred DOI income to Arizona income on the
return filed for the year in which you reacquired the debt
instrument. Since Arizona is taxing the federally deferred
DOI income for 2009 or 2010 on your 2009 or 2010 Arizona
return, you may subtract the amount of OID that accrued
during the taxable year with respect to that DOI income. On
line C29, enter the amount of any OID that was deferred and
not allowed to be deducted in computing your federal adjusted
gross income for 2010 under I.R.C. § 108(i).
R. Other Adjustments
Other special adjustments may be necessary. Call one of the
numbers listed on the back cover if any of the following apply.
  You are a qualified defense contractor that elected to
amortize under Arizona Revised Statutes section 43-1024.
  You sold or disposed of property that was held for the
production of income and your basis was computed
under the Arizona Income Tax Act of 1954.
  You were an Arizona resident before December 31, 1975,
and you are receiving IRA distributions from your IRA
account to which you made contributions before
December 31, 1975.
  You were an Arizona resident before December 31, 1975,
and you are receiving distributions from your qualified
self-employment retirement plan to which you made
contributions before December 31, 1975.
  You deferred exploration expenses determined under
Internal Revenue Code section 617 in a taxable year
ending before January 1, 1990, and you have not
previously taken a subtraction for those expenses.
Line C30 - Total Subtractions
Add lines C17 through C29. Enter the total here and on the
front of your return on line 15.
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Line D31 - Last Name(s) Used in Prior
Years
Use line D31 if the last name that you are using on this
return is not the same as the last name you used on returns
filed for the last 4 years. On line D31, enter any other last
name(s) that you used when filing your return during the
last 4 years.
Totaling Your Income
Line 12 - Federal Adjusted Gross Income
You must complete your federal return before you enter an
amount on line 12. You must complete a 2010 federal return
to determine your federal adjusted gross income even if not
filing a federal return.
Arizona uses federal adjusted gross income as a starting
point to determine Arizona taxable income. Your federal
adjusted gross income is your Arizona gross income.
NOTE: Be sure to use your federal adjusted gross income
and not your federal taxable income.
If the amount on line 12 is more than $75,000 ($150,000 if filing a
joint return), you may need to make estimated payments. See "Do
You Need to Make Estimated Payments" instructions on page 4.
Line 13 - Additions to Income
Enter the amount from line B12, page 2, of your return.
Line 15 - Subtractions From Income
Enter the amount from page 2, line C17 or line C30.
Figuring Your Tax
Line 17 - Itemized or Standard Deductions
You must decide whether to take the standard deduction or
to itemize your deductions. Your Arizona income tax will be
less if you take the larger of your standard deduction or your
itemized deductions.
When you e-File, the software completes
the math for you.
Your Standard Deduction
If you take the standard deduction, check box 17S.
If your filing status is: Your standard deduction is:
  Single $4,677
  Married filing separately $4,677
  Married filing jointly $9,354
  Head of household $9,354
Your Itemized Deductions
You may claim itemized deductions on your Arizona return
even if you take a standard deduction on your federal return.
For the most part, you may claim those deductions allowable
as itemized deductions under the Internal Revenue Code. In
some cases, the amount allowed for some deductions may not
be the same as the amount allowable for federal purposes.
You may have to adjust the amounts shown on your
completed federal Form 1040, Schedule A. See Form 140
Schedule A, Itemized Deduction Adjustments to figure if you
have to make any adjustments.
To figure your itemized deductions, you must complete a
federal Form 1040, Schedule A. Then, if required, complete
Form 140 Schedule A, Itemized Deduction Adjustments. If you do
not have to complete Form 140 Schedule A, Itemized Deduction
Adjustments, enter the amount from federal Form 1040,
Schedule A, on Form 140, line 17.
NOTE: If you itemize, you must attach a copy of the
completed federal Schedule A to your Arizona return. If
itemizing, check box 17I.
Line 18 - Personal Exemptions
The amount you may claim as a personal exemption depends
on your filing status. If married, the amount you may claim as a
personal exemption also depends on whether you or your
spouse claim dependents. You may use the chart below to
figure your personal exemption. If married, you may also use
Form 202 to figure your pe