Multi-State Returns for Partnership, S-Corporate, and Corporate Modules in ProConnect Tax

Unlike individual returns, where each income item or deduction can be directly allocated to a certain state, partnerships, S-corporations, and corporations are required to use apportionment to calculate their returns. While apportionment factors vary among states, in general, the program calculates the following apportionment factors from their respective input screens:

• Property Factor - Depreciable assets, balance sheet totals, and deductions
• Payroll Factor - Deductions
• Sales Factor - Income

The "Nexus" Question?

Typically, nexus is a determination made by each state considering the circumstances regarding the business entity whether their activities require the filing of an income tax return. These determinations are based on, but not limited to principal place of business within the state; legally domicile within the state; keeping a physical presence (office) within the state; providing services within the state; or capital and/or property in state.

Steps to follow for apportionment:

1. At the Input Return workspace: click General to expand categories if necessary
2. Enter the state or states under Client Information
3. Click on State & Local on the left menu then scroll to Apportionment for the state
4. Select either Automatic apportionment: 1=yes, 2=no [Override]

NOTE: If automatic apportionment: 2=no; is chosen; override inputs are required

For fields used in apportionment, this is how you can use the state identifiers:

1. Select the + sign to open the Allocate Multi-State Amounts option.
   • Pressing Ctrl+E while the input field is active will also open the Allocate Multi-State Amounts option.
2. Enter the Amount for each state.
3. In the State column, select the state abbreviation.
   • For states with no income tax, like Texas, choose US.

The partnership, corporate, and S-corporate modules only allow you to assign state identifiers for items that apply to apportionment factors.