USA Partnerships

Leo

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I recently prepared a partnership return that had income in several states. I noticed that the net income from the partnership included In all the state K1s did not equal to the total net income shown on the federal schedule K or the federal K1.

I believe is wrong because I figure the total net income for all the states should equal to net income showing up on schedule k or federal K1.

Then I noticed some of the state K1s did not
Include capital gains but in the federal K1 they were included which could explain the difference in net income between the state k1s and federal k1s. So, the question is could there be a reason why there's a difference between the federal and state net incomes or are they supposed to be the same all of the time? Thanks!
 

Drmdcpa

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There are many reasons why income allocated between the states does not equal Federal income. Each state has its own laws.

One quick example is that interest income belongs only to the home state, generally, unless it is actually earned in accounts in the other state. I say generally because certain states, like CA, want their share of just about everything.

Another reason is some states have no income tax. Others do not tax certain types of income.

Do not rely on your software to properly complete all the states. I have one return with activity in 21 states, at least 21 for 2016. It takes maybe 2 hours to prepare the return and more than 2 days to review it.

Most of the review consists of reminding myself of the different quirks in the different states and checking for any changes in those states.

It would be best if you reviewed the partnership instructions and tax laws in each of the respective states.
 
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Leo

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There are many reasons why income allocated between the states does not equal Federal income. Each state has its own laws.

One quick example is that interest income belongs only to the home state, generally, unless it is actually earned in accounts in the other state. I say generally because certain states, like CA, want their share of just about everything.

Another reason is some states have no income tax. Others do not tax certain types of income.

Do not rely on your software to properly complete all the states. I have one return with activity in 21 states, at least 21 for 2016. It takes maybe 2 hours to prepare the return and more than 2 days to review it.

Most of the review consists of reminding myself of the different quirks in the different states and checking for any changes in those states.

It would be best if you reviewed the partnership instructions and tax laws in each of the respective states.
There are many reasons why income allocated between the states does not equal Federal income. Each state has its own laws.

One quick example is that interest income belongs only to the home state, generally, unless it is actually earned in accounts in the other state. I say generally because certain states, like CA, want their share of just about everything.

Another reason is some states have no income tax. Others do not tax certain types of income.

Do not rely on your software to properly complete all the states. I have one return with activity in 21 states, at least 21 for 2016. It takes maybe 2 hours to prepare the return and more than 2 days to review it.

Most of the review consists of reminding myself of the different quirks in the different states and checking for any changes in those states.

It would be best if you reviewed the partnership instructions and tax laws in each of the respective states.
Totally understand what you say - thanks for clearing that up for me!
 

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