Client received K-1 with multiple state K-1s attached for a stock sale distribution

[Christine Rep]

The client received a 1099-B with company stock sale w/o basis and a Sch K-1 showing same amount in the box 19A distribution. Is this amount taxable to the several state K-1s' that came with the Federal K-1 as non-resident Capital Gains income if taxable to each particular state?  

[Taxes-by-Rocky · Accepted solution]

Christine, not sure if you are referring to a PTP transaction.

See instructions to Box 19A (distribution of marketable securities).

Partner's Instructions for Schedule K-1 (Form 1065) (2020) | Internal Revenue Service (irs.gov)

Does your partner have a gain from the sale or exchange of their partnership interest....requiring a look through for hot assets, etc.?  Some states might tax such gain/income.

[Christine Rep]

Yes, Rocky this is it. There's no basis, all gain. Just hoping to avoid the state taxes on top of it. Thanks for your help. 

[Christine Rep]

Do you know if I need to show the gain from the 1099-B on the state allocations?  The transaction itself from the K-1, shows as a $0 amount if you were to allocate it, but there are a couple of states that do generate a tax without specifically allocating any amount from the K-1.  But, if I were to start allocating a $6,000 capital gain to each of the states, even though that amount is not specifically pulled from the K-1, they would all pretty much show a tax due.