Oregon K-1

[Lion EA]

My CT resident client has a K-1 from her dad's 1065 with Box 2 Net rental of about $4,700 that includes a loss on a TX residential rental and a gain of just over $6,000 on an OR commercial rental. I don't see any minimum amount of OR-sourced income to avoid filing a NR OR return. In addition, partnership sold the building, so 1250/1231 gain. And, no capital account or basis information. Dad gave each grown kid 15% of partnership the prior year. I do NOT file the partnership returns nor dad's returns.

This is the return that never ends: Fulbright son in Tajikistan, SE income before leaving, college daughter with 529 and multiple states, donated husband's car/Form 1098-C due to Alzheimer's, drug trial income, wife did Zoom classes for two out-of-state colleges, 5 K-1s with more than one revision including hand-written copies, etc. I may never finish this family; just from my end, a partnership, joint returns, and two grown kids with complexities no 19-year-olds should have!

Anyway, I DO have to prepare an OR NR return, right?

[Lion EA]

PS On the same K-1 is detail for TX property disposed of with a Rental loss of -1,359 and Section 1231 gain of 9,775. But TX doesn't have an individual income tax, right? So, no filing in TX. Just OR with all else falling on resident state of CT. I think the TX building was sold in 2021. The OR building is being sold now. I really have no confidence in this K-1 or the other K-1 from her dad's other partnership.

[Lee B]

Copied from Page 10 of Pub17:

 

"Nonresidents with rental property in Oregon

You don’t have to file an Oregon return if:

• Your only Oregon-source income is from rental property, and

• You have a loss from the rental activity for the year.

However, you must file Oregon returns for all applicable loss years if:

— You later sell the rental property in a fully-taxable transaction;

— The sale results in gain that would otherwise be taxed by Oregon;

— You have suspended passive activity losses from the rental activity; and

— You are deducting your suspended losses from that gain on your federal return."

[Lion EA]

That's more detailed than I was finding on their website. However, even the website said any OR-sourced income, and the rental was profitable this year. (I urge my clients to file in loss years also, so they have the suspended losses to release when they have income or sell the property or...)

I have NO idea of the history of this partnership/rental. Prior years reported losses on Line 1 and not Line 2, and never included any state-specific information. Even this year's K-1 doesn't have an OR version of a K-1. I saw "Residential Rental Texas" and "Commercial Rental Oregon" on Statement A--QBI Pass-through Entity Reporting.

Her dad's been hand-preparing and then mailing to my client, because he doesn't know how to convert to a .pdf to send electronically (she has a portal on her website). I don't think that bodes well for his ability to accurately prepare his partnership income tax returns! But, he's not my client.

My client talked about "investments" that her dad put in partnerships to then gradually increase the % to each child over time. She never mentioned two rentals. This K-1 is from X. X. XXX Investments, LTD, and now shows the TX and the OR rentals. The other is XXX Holdings, LTD, but has only financial investments. What's in a name?!

Yes, an OR NR return. I don't think I can charge enough for this set of returns, but I'm going to try!

Thanx, CBSLEE, for those details.

[DANRVAN]

On 8/17/2022 at 10:35 AM, Lion EA said:

Her dad's been hand-preparing and then mailing to my client, because he doesn't know how to convert to a .pdf to send electronically (she has a portal on her website). I don't think that bodes well for his ability to accurately prepare his partnership income tax returns! But, he's not my client.

 

On 8/16/2022 at 11:35 PM, Lion EA said:

I really have no confidence in this K-1 or the other K-1 from her dad's other partnership.

 

On 8/16/2022 at 10:53 PM, Lion EA said:

And, no capital account or basis information.

Hopefully by advising your client you need this information dad will cooperate.   

[Lion EA]

Been working on that for the past few years since the IRS made a point of basis for losses, sales, distributions, whatever. One of the two does have a capital account now. Baby steps.