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Member of a CA Composite \ Group return. Can they opt out ?

  • 1.  Member of a CA Composite \ Group return. Can they opt out ?

    Platinum Most Valuable Member
    Posted 12-17-2018 23:21
    My client is a Partner in a law firm which filed a CA " group" return form 1067A.
    The partner believed that the law firm would be his only CA source Income. However, a subsequent K-1 from another partnership( Partnership # 2 ) showed it too had CA source income.
    We had to declare the income from the Partnership #2 , and file a CA individual return. On that return, we also declared the composite income from partnership # 1 allocable to our client, and also took credit for the composite tax paid on behalf of our client on the composite return.

    Was this the proper way to go ?

    CA refused to allow the tax credit for taxes paid on the composite. They claimed the partnership should have filed a FORM 592 on behalf of this partner. Is that correct?

    I have read the instructions, but need a practical knowledge of experience, and I have none in this subject matter.

    Can anyone make a comment to help me sort this out.

    A happy Holiday to All


    Abby

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    Abby Alhante
    KURCIAS & ALHANTE, CPAs LLC
    Melville NY
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  • 2.  RE: Member of a CA Composite \ Group return. Can they opt out ?

    Posted 12-20-2018 10:17
    Did you get any responses to this?  I have faced similar situations and I am curious to see.  I have not seen any responses on-line

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    Donald Rifkin
    DONALD W. RIFKIN, CPA CFP PC
    Hackensack NJ
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  • 3.  RE: Member of a CA Composite \ Group return. Can they opt out ?

    Platinum Most Valuable Member
    Posted 12-21-2018 16:57
    hi Don

    i have not received any response here yet,but we are on to an answer.

    i spoke with CA DOR.

     i am out of the country on Vacation till Dec 28.   upon my return,  i welcome sharing what i have learned, which is not yet complete, and pooling our knowledge.  i will tell you that i do anticipate that the taxpayer will be  entitle to elect to take a credit  for tax paid on their behalf by the partnership....


    is your issue also with CA.  ?

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    Abby Alhante
    KURCIAS & ALHANTE, CPAs LLC
    Melville NY
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  • 4.  RE: Member of a CA Composite \ Group return. Can they opt out ?

    Posted 12-27-2018 10:41
    Abby-   Yes, we have had this situation with CA and also with other states.   Frankly, it is often unclear if a partnership files composite returns or not.   Sometimes it's well labelled, sometimes not.   We always assume no composite was filed and we log in the non-resident income and the non-resident tax paid.  Most often it results in a refund and as far as we know the taxpayers gets the refund.

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    Donald Rifkin
    DONALD W. RIFKIN, CPA CFP PC
    Hackensack NJ
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  • 5.  RE: Member of a CA Composite \ Group return. Can they opt out ?

    Platinum Most Valuable Member
    Posted 01-02-2019 16:30
      |   view attached
    Thank you all for participating...

    Unfortunately , we have been told by CA    and  found the same in the instruction to a " Group Return" that once a member, always a member of the group.

    So, for CA my client will not be able to file a return and include the composite income , nor a credit for his allocable amount.  .
    additionally, it cost more money to be a member of the group, for the rate was higher.

    Citation attached.

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    Abby Alhante
    KURCIAS & ALHANTE, CPAs LLC
    Melville NY
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    Attachment(s)

    pdf
    CCF_000320.pdf   70K 1 version


  • 6.  RE: Member of a CA Composite \ Group return. Can they opt out ?

    Posted 01-03-2019 08:55
    see publication FTB 1067. 

    --
    Gerald S. Cohen, CPA
    cell 516 455-0643