Programming error for Arizona multistate partnership returns if apportionment equals 100% in AZ

[taxmanbing04]

I recently dealt with an Arizona partnership return that was e-filed but rejected due to an issue as explained below.

I recently spent 50 minutes on the phone with a Lacerte support specialist trying to figure out an issue.  It is a multistate partnership return but the box "is this a multistate partnership" was being checked no by Lacerte.  We did the "jump to input" and spent a significant amount of time trying to figure out why the inputs weren't causing Lacerte to check the box "yes" instead of no.

We finally figured out what was causing it, although it shouldn't have been a problem in the first place.

In this case, we were using "sales factor only" apportionment for Arizona, and it so happened that it was 100% in Arizona, and therefore the apportionment percentage was 100%.  Because Schedule C of the AZ return was showing 100%, the box "is this a multistate partnership" was being checked no by Lacerte.  I had to reduce AZ sales by just a few bucks to get the percentage to be 99.9999% and then it went back to "yes".

This should NOT be necessary.  It is completely normal and reasonable for a state to have 100% apportionment even though it's multistate.  Perhaps the simplest example would be that 100% of sales occur in AZ even though they may have some property or employees in another state.  In such a case, they would be required to file in that other state, which may use a 3-factor apportionment formula.  Thus, a taxpayer could have 100% apportionment in one state and still have apportionment in another (they do NOT have to add up to 100% since each state has its own rules).

The next Lacerte update should change the programming so that a 100% apportionment in AZ doesn't automatically cause the box to be checked "no" on if it's a multistate partnership.  Again, it can be totally normal for the state to have 100% apportionment AND be multi-state.