Press Room: Article

July 29, 2010

State Tax Issues Related to Flow-Through Investments Part Two

This article is the second part of a three-part series on tax opportunities and issues facing nonresident owners of multistate flow-through entities (i.e., partnerships, limited liability companies, etc.). The focus of Part Two is how the flow-through entities’ income is reported by the nonresident owner (corporate or individual), including compliance and withholding issues.

Various states impose entity level taxes on flow-through entities (i.e., Michigan, Texas); however, most states “flow-through” the imposition of tax to the ultimate owners. At the flow-through entity level, the determination of state taxable income may not be as complicated; however, the challenges arise when the ultimate owners have one or more flow-through investments and must determine their own state taxable income.

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