I get a K1(1065) from a Colorado LLC. The K1 shows only interest in box 5. I am not a resident of Colorado. Do I have to file a Colorado non-resident tax return?

[winlynch]

The Turbo Tax program shows my Colorado LLC  K1 interest on a Sch b for the Federal 1040 and then entered on line 8a on the 1040 itself  When I do the Colorado 104PN Line 6, It asks how much of my interest from the 1040 line 8a was earned while I was a resident of Colorado.  My answer is zero since I don't live in Colorado. 

Or do I enter the amount of the LLC interest income regardless of the fact that I  don't live in the state of Colorado?

[GeoffreyG]

We can answer your question in two parts.

First, after looking into the matter, and reading the Colorado instructions for the Form 104PN, it seems like the full amount of your (federal) taxable interest income ends up on Line 6, while the amount on Line 7 is just that portion of the federal taxable interest income attributable to the time that you were a Colorado resident.  (As that appears to be none, for you, then you can answer the TurboTax question as $0 here.)

Second, according to the Colorado Department of Revenue, an individual "must file a Colorado income tax return if during the year you were:

• A full-year resident of Colorado, or
• A part-year resident of Colorado with taxable income during that part of the year you were a resident, or
• A nonresident of Colorado with Colorado source income;

AND

• You are required to file a federal income tax return, or
• You have a Colorado income tax liability for the year."

Thus, a Colorado LLC would give you enough reason to have to file a Colorado state return, because you do in fact have Colorado-source income.  However, how much, if anything, you would have to pay in Colorado taxes is another matter.  But, there is still a legal filing requirement, notwithstanding.

Thank you for asking this question.

[winlynch]

Thanks for your answer.  I don't see, however, that the LLC interest should be treated differently from the 1099 interest if it come from a Colorado state chartered bank or savings and loan.  Those are Colorado sourced incomes, but I don't report file a Colorado 104 non resident return.  Are there varying shades of interest?

[GeoffreyG]

Perhaps I don't have enough information on the activities of your Colorado LLC (as in what does business does it conduct?) to adequately answer that.  However, the previous answer has been updated with (2) new screen-capture images from the Colorado Department of Revenue, and that are relevant to your original question.  Hopefully that will provide you with the information you need, in order to accurately complete your tax return(s).  Thank you.

[winlynch]

Thanks again.  You're screen capture no. 2 was very helpful.  FYI The LLC is a vehicle to handle a seller financed mortage my brother and sister inherited from our parents.