Lynncenter2,
If the Non-resident partner files an affidavit to timely file their composite return, then the partnership is exempt from withholding, and thus, there is nothing to report on the K-1 in terms of withholdings. It’s an either/or situation, if the NR partner is filing a composite return (or the entity is filing on their behalf), their taxes are paid on the composite return and you report it on their K-1 via the “partner is included in a composite return” checkbox. However, if their taxes are w/held and paid by the entity, then they would be reported on the K-1 withholding line, and the entity would provide the partner a 1099 misc.
Here’s a great resource for additional info on Withholdings on SC income:
https://dor.sc.gov/resources-site/lawandpolicy/Advisory%20Opinions/RP17-2.pdf
