Non-Resident Returns and Passive Losses

[msmith7305]

Assume you have a taxpayer who has invested in a partnership that operates in a state that is not his home state. The partnership is reporting passive losses to the taxpayer. As such, the taxpayer is not required to file a non-resident income tax return as the taxpayer is below the required filing requirement. Meanwhile, the suspended passive losses keep adding up. Do you file the state return anyway in order to give the state a paper trail of suspended losses or do you wait until the time the suspended losses are needed to offset income reported by the partnership to file a required return and reveal them at that time?

[BobKamman]

Assume you have a client with a Schedule K-1 showing a loss in a nonresident state.  Two years from now IRS audits the partnership return, disallows many of the deductions and determines that there was really a substantial profit. The nonresident state filing requirement is based on gross income, not on adjusted gross income or taxable income.  When the nonresident state assesses tax based on the IRS audit, who should pay the penalties and interest?  

[msmith7305]

So, I guess your answer to the question I asked is "Yes" you do?

[BobKamman]

I assume your answer to the question I asked is "Not I?"