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Level 3

Need help producing K1's for S-Corp that operates in multiple states

I'm trying to determine how to allocate net income/receipts by state on K1's produced by my Turbo Tax Business software.  Sounds like it is acceptable to either produce separate K1's by state or at least itemize either net income or receipts by state to facilitate shareholder's completing required personal returns for each state but I cannot determine how to accomplish this in TurboTax.  Thanks in advance, Mike

3 Replies
Level 20

Need help producing K1's for S-Corp that operates in multiple states


@mvann wrote:

I'm trying to determine how to allocate net income/receipts by state on K1's produced by my Turbo Tax Business software.  


There are a number of states that allow composite returns to be filed (refer to the links below). 

 

https://www.journalofaccountancy.com/issues/2011/feb/20103307.html

 

https://www.thetaxadviser.com/issues/2014/mar/tpm-mar2014.html

 

TurboTax Business supports all states (except Delaware) with respect to S corporation returns, but you need to purchase the states that you require separately. 

Level 14

Need help producing K1's for S-Corp that operates in multiple states

If I am reading your facts correctly, you can't just provide the shareholder's with the necessary state information.  Depending on your state activity, if the activity rises to the point in which the S corp has "nexus", then you will be required to file a state return.  

 

In addition to the potential required state filing at the S corp level, as @tagteam pointed out, the S corp may be able to file a composite return and remit the tax on behalf of the shareholder's.  This would eliminate each shareholder from having to file a separate 1040 in each state (other than their state of residency).

 

In some cases the composite return may be part of the S corp state filing and in other cases it may be a completely separate return.  

 

As you have most likely figured out, state filings vary dramatically and are not for the faint of heart.  You may want to consider getting some professional input at some point in time.  

Level 3

Need help producing K1's for S-Corp that operates in multiple states

Hi Tagteam and thanks for the prompt reply.  I was anticipating filing S-Corp state returns using the apportionment rules they require (AZ and CO in this case).  But I was also under the impression that the federal K1's issued by the S-Corp to its shareholders should either be per state or at least schedule out receipts or net income by state as well.

 

If it is a simple as providing a separate schedule to shareholders based upon the S-Corps state returns so that those same shareholders can file their individual state returns, then that is all I need to know.  

 

Thanks again.