Apportioning/Allocating Income on CA 568 Return (Other Income from Nevada)

[DSCPA]

I am not sure if there is a fix. Basically, the issue is for an entity that files in one state (California); however, it functions and makes income outside of California.

Example:

Entity, Joe and John LLC (a CA LLC), in 20XX had two partners who consulted business on improving morale. Joe was in CA and John was in Nevada. Joe earned for the entity $200,000 and John earned $200,000. For simplicity, nothing Joe did was outside of California (i.e. all clients and services were based in California) while John was outside of California. They had separate offices in CA and Nevada, and John was not a resident just doing a work outside of California; rather, they were nonresidents working exclusively outside of California. Since the entity did not have more than $250,000 gross receipts for California based income - they should only have to owe the $800 LLC tax not the $900 LLC fee. However, I am not sure on how to do this on Lacerte without overriding the Schedule IW/Schedule B which will just cause a notice.

Is there a way to do this? Or does the entity despite not having more than $250,000 CA income still owe the $900.

Thank you!

[Karl]

I think the first step in this is the form # you're filing.  CA 568 is for single-member LLC's.  CA 565 is for CA partnership returns, which is the default tax treatment for a multi-member LLC.

I'd move over to the partnership module and see if that solves your problem.  On the return, make sure both CA and NV are added as states, and then CTRL+E the income to itemize the split between CA and NV.

[George4Tacks]

I don't think NV requires a filing, so use US for the out of CA state to avoid extra REP fee in the Partnership module.

[DSCPA]

Yes, it's a 568 for Multi Member LLCs also. 565 is for Partnership.

I did do the US function as Nevada doesn't have a return. I clicked Multi-State in the 'State Information' on Client Information (Screen 1) but just didn't add a State, so it gives me the Federal option. However, there's still a problem if I allocate receipts, the Schedule B on the 568 gets messed up as well as the California Balance Sheet. To properly do the Schedule IW on the 568 (which shows the California income that shows up on Line 1 of the 568 that decides how much you pay) it flows from the Schedule B. I tried seeing if the Schedule R/Apportionment Screen could help but no such luck.

Still looking for a fix...

[Bayne]

Did you find a solution to this?  I am also trying to figure out how to make the balance sheet balance on the 568 when apportioning income to other states only changes the equity.

Thanks and please be kind, I'm thinking as hard as I can.

[George4Tacks]

I believe you need to use the S in the allocation

You enter all the federal information with state as US

You enter all the California information with state as CA and in the next column put an S to indicate this is state only and it is NOT to be added to the US income. 

https://accountants.intuit.com/support/en-us/help-article/state-taxes/using-source-column-understand...