Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

North Carolina Pass-through entity tax - partnership

jlawrimore
Level 2

North Carolina partnership with nonresident and resident partners.  Electing to pay NC tax at entity level... program computing the NC tax on income allocated to nonresidents but not calculating tax on resident partners.  This doesn't appear to be correct...has anyone completed a partnership return electing to pay tax at entity level in North Carolina?  Is ther program correct or needs to be corrected?

6 Comments 6
fdznavcpa
Level 3

I'm having the same issue but with all nonresident partners when electing to be a Taxed Partnership.  The Share of Tax Credits being allocated to each partner is not correct.

fdznavcpa
Level 3

I contacted support and they were not able to find a solution on the phone and are suppose to get back to me with a fix....I hope

dbtaxsolutions
Level 5

Was there a solution to this?  It is currently also calculating it for non resident, but not for resident. 

0 Cheers
fdznavcpa
Level 3

I never did get an answer

0 Cheers
jlawrimore
Level 2

I don't remember whether the program updated after I posted the original post, but it is computing NC tax on all income apportioned to NC.  It does not list any NC tax under the partner number on line 25, Part 4, but the NC tax on all income apportioned is listing under the Partner's Total column.

0 Cheers
wakeacct104
Level 2

Wanted to close this out since i wasted hours on this today...
This from the D-403A instructions for NC partnership returns. Proconnect is right to exclude PTE from partnership, Multi-member LLC or s-corp owners because they are passthrough entities.  NC changed the law to allow Partnerships with partnership or S-corp owners to elect PTET, but any income that is allocated to Partnership MMLLCs or S-Corps are excluded from the PTE tax calculation. If you have a partnership with only Partnership or S-corp owners, like i am dealing with today, you're out of luck.  Here's the details from D-403A. 

Can a Partnership Elect to Pay Income Tax at the Entity Level?

For tax years beginning on or after January 1, 2022, an eligible partnership that is required to file a partnership income tax return can elect to pay North Carolina income tax at the entity-level (a “Taxed Partnership”). An eligible partnership is defined as a domestic partnership, a foreign partnership, or an LLC classified for federal income tax purposes as a partnership. Important:

The following partnerships are not eligible to make the election to be a Taxed Partnership:

• A publicly traded partnership that is described in section 7704(c) of the Code.

• A partnership that has at any time during the taxable year a partner who is not one of the following:

(1) An individual. (2) An estate. (3) Any of the following: a. A trust described in section 1361(c)(2) of the Code. b. A trust if such trust does not have as a beneficiary any person other than an individual, an estate, a trust, or an organization described in section 1361(c)(6) of Page 4 the Code. (4) An organization described in section 1361(c)(6) of the Code. (5) A partnership, including an entity classified as a partnership for federal income tax purposes, or an entity classified as a corporation for federal income tax purposes.

**Important: A Taxed Partnership cannot pay tax at the entity-level for a partner classified as a corporation or a partnership. As such, the distributive share of the partner’s income (loss) cannot be included when calculating the Taxed Partnership’s North Carolina taxable income on which the Taxed Partnership pays entity-level tax.**

All I can say is: Thanks for nothing North Carolina 😞