DC Nonresident (K-1) Allocation Not Activating

Forum|Forum|5 years ago
April 9, 2021
10 replies
52 views

MD resident with K-1 from both MD and DC. Activated nonresident in Federal and apportioned income. Numbers not transferring to DC D-40 so entered them on DC Allocation worksheet and it's not activating either. DC is trying to tax on 100% of Federal income. Tried doing a subtraction of income and it still taxes as if it's 100% DC. What am I doing wrong?

This is NOT the DC D-40B Request for Refund as it's not wages. It's also not a D-3 Unincorporated Business Franchise Return. It's just a K-1.

ProSeries Professional

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dascpaAuthor

Level 11

sjrcpa posted this previously

DC does not have a nonresident return. Congress prohibits them from taxing nonresidents. Your client may be considered a part year resident based on the time spent in DC. Check the D-40 instructions.

So if I read this right I ignore the DC K-1 and only tax it to the resident state? Weird since DC taxes everything including franchise tax returns.

Correct?

rbynaker

Level 13

@sjrcpa will know way more about this stuff than I do, but my understanding is the same as hers. Was there tax paid to DC at the entity level? What type of entity?

dascpaAuthor

Level 11

Maryland 1065 that did work in MD and DC. The entity filed a D-30 and paid DC franchise taxes. But ProSeries spit out a DC K-1 Equivalent for each owner. In my thinking DC was paid a franchise tax but no income tax - yet.

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