Schedule K-1 State

[rmccrea]

I received a K-1 for an LLC that I'm a general member.    I live in Minnesota, and the address of the LLC is listed as Minnesota.   We however, own property in another state and the corporation filed a state tax for that state.   I believe I should capture the amount on the K-1 as coming from another state but want to confirm. 

[Rick19744]

We need some additional information:

• You indicate that this is an LLC and also note K-1
• Then you note that the "corporation" filed a state tax for that state.
• These are conflicting entity structures.
• What exactly is the entity structure?
  • A multi-member LLC taxed as a partnership?
  • An LLC that checked the box to be taxed as an association taxed as a corporation?
• What is the activity of the business
• What state is the activity performed
• Where do the other member's reside
• Where was the LLC organized?

[rmccrea]

Here are the answers to the questions.

• What exactly is the entity structure? -  It is a Multi-Member LLC
  
  • A multi-member LLC taxed as a partnership?
  • An LLC that checked the box to be taxed as an association taxed as a corporation?
• What is the activity of the business -  Short term rental
• What state is the activity performed  - Oklahoma
• Where do the other member's reside - Combination between Minnesota and Texas
• Where was the LLC organized? -  Oklahoma

Thanks,

Robin

[rmccrea]

Here are the answers to the questions.

• What exactly is the entity structure? -  It is a Multi-Member LLC
  
  • A multi-member LLC taxed as a partnership?
  • An LLC that checked the box to be taxed as an association taxed as a corporation?
• What is the activity of the business -  Short term rental
• What state is the activity performed  - Oklahoma
• Where do the other member's reside - Combination between Minnesota and Texas
• Where was the LLC organized? -  Oklahoma

[RobertB4444]

Looks like the LLC is an Oklahoma corporation earning money in Oklahoma from Oklahoma sources so - yes, you should file an Oklahoma return to report the income from your K-1.  In fact, as an Oklahoma Multi-Member LLC taxed as a partnership the LLC itself should have issued you a K-1 from the Oklahoma return as well as the federal and Oklahoma has some pretty strict rules about with holding for non-residents that the LLC should have followed and with held tax on your behalf.  If they didn't then there could be problems down the road so you should let them know.

Here are those rules.

[rmccrea]

Robert,

Thanks for the information and the LLC did file a tax return in Oklahoma as a Composite REturn including the Form 514 so each partner didn't have to file individually.   My question is more of how to handle it on the State of Minnesota tax return.   We actually had a loss in 2021 and it is reducing my State of Minnesota income since it reduced the Net Income on the Federal tax.   I don't think that is correct but not 100% sure.  

Thanks,

Robin

Here is the State of Oklahoma Tax info.

COMPOSITE RETURN INFORMATION
Any partnership required to file an Oklahoma income tax return may elect to file a composite return for its nonresident
partners. The income tax liability for such nonresident partners will be computed and paid on the partnership return.
Any nonresident partner may be included in the composite return. When filing a composite return, the Form 514-PT
“Partnership Composite Income Tax Supplement” and Form 514, Part One “Tax Computation for Nonresident
Composite Filers” must be completed. If there are more than 15 partners included in the composite return, complete
Form(s) 514-PT-SUP. Rule 710:50-19-1.

[RobertB4444]

@rmccrea  Minnesota taxes everything earned by a resident while you live there.  That includes losses on your investments.  This loss should definitely be included - especially since you didn't have to file in Oklahoma.