Pass-through entities are the hybrids of business taxation: they are business entities for which most of the tax liability is attributable to the amount of individual income tax imposed on partners, owners or shareholders. But states are applying corporate income tax concepts to pass-through entities that are operating in more than one jurisdiction, according to preliminary results of the Bloomberg BNA 2016 Survey of State Tax Departments.
This year Bloomberg BNA asked each state if it requires partnerships to apportion income using the same apportionment rules as those used by corporations. A majority of states have responded that they do, the preliminary results show. Among those states were Alabama, Pennsylvania and Virginia. North Carolina was also included in this group, but it noted that “… whether a corporate partner’s share of the partnership’s net income is classified as apportionable income or nonapportionable income depends on the facts and circumstances.”
Among the states that said they require partnerships to apportion income using rules for pass-through entities were Connecticut, Missouri and New Jersey.
California had a mixed response, noting that Cal. Code Regs. § 25137-1 provides for partnership apportionment rules. But that regulation uses the same standard for determining business or nonbusiness income that is used for corporations, the state noted.
The full and final results of the Bloomberg BNA Survey will be released on April 22.
Continue the discussion on LinkedIn: Should corporate income tax concepts be applied to pass-through entities operating in more than one state?
For more information about state tax issues, sign up for a free trial on Bloomberg BNA’s Premier State Tax Library.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)