topic K1 LTCG reporting for nonresident in Investors & landlords

K1 LTCG reporting for nonresident

frog918 — Wed, 01 Apr 2020 09:34:21 GMT

I receive an Idaho K1 for an S corp. in which I hold a 12.5% share. It's for what remains of an old ranch. In years past the ranch handled the state reporting in Idaho for the 8 shareholders, and each sharerholder reported the K1 data on their individual 1040's. In 2019 that has changed. A parcel of land was sold resulting in a long term section 1231 capital gain of about $70k (my share). This, along with a negative $2.5k in ordinary income (rental) income. Per the instructions from the accounting firm, I filed a nonresident Idaho return, listing only the K1 data since the gain was realized in Idaho , from an Idaho entity and reported on an Idaho K1. I also inputted the information to my federal taxes. My question is , do I have to also report the LTCG on my Hawaii taxes, since its already been reported on the Idaho return (and the federal)?

Re: K1 LTCG reporting for nonresident

Irene2805 — Wed, 01 Apr 2020 16:18:35 GMT

Yes - You have to include the K-1 information in your HI return. Theinstructions for HI N-11 state:

An individual who was a Hawaii resident for the entire year is subject to income tax on his or her entire income, computed without regard to source in the State.

However, HI should calculate a credit for taxes paid to another state.

Re: K1 LTCG reporting for nonresident

frog918 — Wed, 01 Apr 2020 19:30:02 GMT

thanks. that confirmed my take on it... It just seems that hawaii claims a right they shouldn't have..... to tax transactions involving entities and land in a different state. Hawaii has no connection to the land or any of the processes involved in its ownership, designation, documentaion, access, or use. I'm not at all surprised however. c'est lavie....