Non Resident State Returns by Pass Through Entity with only K-1 income or loss

[Mike C]

Needing to file several non resident state returns for both partnerships & S Corps.  The only income or loss to report is K-1 income or loss.  The entity returns don't have the NR worksheets as do the Individual returns so finding difficulty in how to report.

Any help or guidance appreciated!

[BobKamman]

What states would those be?

[Mike C]

The current S Corp I am working on has Arizona, Kansas, Mississippi & Louisiana.  Also, have another S Corp with 27 states although may of those are amounts less than 1,000 each.

[sjrcpa]

S Corps and Partnerships don't have Nonresident Returns (except composite/group nonresident returns for the owners).

You apportion the business' income to each state according to each state's rules. They all use revenue by state. Some also include payroll and property (owned and rented) too.

[sjrcpa]

Or are you trying to do individual nonresident returns for an S Corp Shareholder or Partnership partner?

If that is the case, you should be receiving State K-1s along with the federal K-1.

[Mike C]

Thanks for your response.  Trying to file the various state corporate returns for my S Corporation client based in Alabama that has received several K-1's in the states mentioned above.  The only income or loss in these states is the K-1 amount.  Seems to me that the entity that has issued the K-1 has already filed using the various apportionment or allocation methods.

In other words, if I have a K-1 issued to my corporate client in the amount of $10,000.  Should there be a simpler to show the 10,000 K-1 income is the only amount to report in that state?  Without having to go through all the apportionment or factor allocation hoops?

Thanks again.

[BobKamman]

In other words, your client is Alabama corporation, ABC Inc., which has $50,000 income with $10,000 of it coming from a K-1 showing, for example, XYZ Inc. of Delaware had $100,000 of income but allocated $10,000 of it to Kansas.  

Doesn't it depend on whether the other state has multiple tax brackets?  I don't know about Kansas, but let's say they tax the first $10,000 at 2% and the next $40,000 at 4%.  Do they only want 2% on your $10,000, or do they tell you to compute the entire tax on $50,000 and then take 20% of that, because 20% of the total income came from Kansas?  With individual taxpayers, many states calculate nonresident tax like that.  (I'm thinking especially of California and New York.)  And with electronic filing, it's easy for them to ask you for loads of data, even when it's unlikely anyone will look at it.  

[sjrcpa]

Maybe your S Corp can allocate that $10K to that state. Maybe they have to apportion anyway. It depends on the state. You will need to read each state's instructions