2059354

[#1]

The following diagnostic is generating: e-file: If an incoming or outgoing Form 106K is marked non-resident, then one and only one checkbox for composite, Form DR107, Form DR108, or SALT Parity election is required per 106K We are filing a CA pship return with CO source rental income. All partners are CO non-residents and we will file a composite return and have paid all the non-res ptr tax due, but cannot clear the above diagnostic. Clicking it takes us to Screen 23, Pass Through Entities. Looks like it wants us to create an outgoing K-1 for each partner. Is this so? If so, looks like we're paper filing CO return. Please advise Thank you!

[sjrcpa]

Yes there should be both CA and CO K-1s.

[brent]

Thank you sjrcpa.  I should have been more specific. Lacerte is generating correct Fed, CA, and CO K-1s, as it does readily with multi-state pship returns.  We have checked the composite return box (and only that box) on each CO K-1.  They generate fine with the tax return, but we still get the above diagnostic. It looks to me like CO wants composite filers to generate a separate electronic K-1 file for each non-resident partner in order to e-file, presumably so they can match the Pship's tax payment to each partner.

See input screen 23, "Passthrough K-1's,"in the section titled "Colorado Form K-1 (e-file only)," where it says "NOTE: Entries in all Colorado partner input sections below do not impact amounts on the Colorado tax return.  These input sections are used to create an electronic copy of the CO DR 0106K."And also screen 37, "St. Misc Info," in the section titled "Colorado Miscellaneous," where the first field is for: "K-1s are being sent to state by: 1=online, 2=mail." 

Since the CO K-1s are already being generated correctly, and the whole return is e-filed, it seems tremendously redundant to complete screen 23 for every partner to manually create a second electronic CO K-1 file just for CO's convenience.  Seems as onerous as generating multiple 5471s.  If anyone has relevant CO experience, please opine or advise.  Otherwise CO is getting a paper return.

Thank you,

Brent       

[PerfectlyBal]

In Proconnect: 

State & Local - CO Schedule K-1 Overrides - Colorado Miscellaneous - Check the box you want there. I had to do this for all three of my partners that do not live in CO.