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In anticipation of the upcoming May 15th deadline, we've compiled a list of the most common questions here.
In anticipation of the upcoming May 15th deadline, we've compiled a list of the most common questions here.
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NY Passive Loss and Non-Resident
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msmith7305
Level 7
03-10-2024
10:10 AM
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I have a Texas resident client who is a partner and received a K-1 for New York. The K-1 shows a $4,000 ordinary business loss that is passive. There are no other passive activities and he has no other New York source income or deductions. The $4,000 loss is not allowed for federal or NY purposes. The NY K-1, however, lists 2 modifications related to this K-1 that appear should be entered on Form IT-225. One is a NY addition modification of $2,000 and the other is a NY subtraction modification of $1,200 for a net positive modification of $800. These entries from the IT-225 flow through the return (IT-203 lines 22 and 29) to show a NY income of $800 and therefore a tax owed to NY.
This doesn't make sense to me as it seems like the modifications should be applied to reduce the $4,000 unallowed loss to a $3,200 unallowed loss. I am obviously not a NY expert and could use some guidance as to how to address this. Or, did I do it right to begin with?
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