Multistate Partnerships: Navigating Various State Taxation Rules of Corporate Partners

Business vs. Nonbusiness Income Characterization, Aggregate vs. Entity Determination, and More

Recording of a 110-minute CPE webinar with Q&A

Conducted on Thursday, October 19, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers and professionals with a detailed and practical guide to critical state tax issues and trends impacting partners owning shares of multistate partnerships. The panel will discuss key questions such as whether the character of pass-through income is determined at partner or partnership level, and whether the pass-through income must be considered on an “aggregate” basis or at the “entity” basis.


Corporate partners in multistate partnerships face significant tax challenges. Critical among the problems tax advisers must resolve is determining whether a partnership creates nexus for a nonresident partner. This determination may materially impact filing obligations, including combined reporting and P.L. 86-272 positions, as well as the application of throwout and throwback rules.

Also crucial is whether the character of partnership income, e.g., business or nonbusiness, must be determined at the partnership level, or at the partner level. Very few states have issued any guidance as to where that income determination must be made, and those states that have addressed the question have split results. Because business income must be apportioned, while nonbusiness income must be allocated to the source state, the tax results vary from state to state as to the proper taxation of partnership income. Additional complexities arise depending on whether a state has adopted the "aggregate" or "entity" approach to apportionment of partnership income. These determinations may materially impact both the computation of state blended rates for provision calculations and whether the corporation must remit payment to a particular state.

Likewise, various states have adopted different reporting regimes when it comes to withholding or composite return obligations. Corporate tax professionals must know the complex rules to avoid negative tax consequences in multistate partnership scenarios.

Listen as our experienced panel offers a comprehensive view of states’ approaches to taxing corporations on multistate partnership income.



  1. Partnership Nexus
  2. Allocation vs. apportionment of partnership income
    1. Aggregate vs. entity approach
    2. Business vs. nonbusiness income—differing state approaches
    3. States taking a unitary approach
  3. State withholding


The panel will discuss these and other critical issues:

  • Nexus implications
  • States that require business/nonbusiness income determination at partner vs. partnership level
  • Determination of partnership income on aggregate basis vs. entity basis
  • Apportionment under the aggregate approach
  • Reconciling different states’ unitary factor analysis
  • State withholding
  • Recordkeeping/documentation/workpapers


Rimkunas, Dennis
Dennis Rimkunas

Jones Day

Mr. Rimkunas focuses his practice on tax planning and litigation relating to state and local tax matters for...  |  Read More

Wynne, Michael
Michael J. (Mike) Wynne

Jones Day

Mr. Wynne has more than 30 years of experience in state and local tax litigation, planning, legislative, and regulatory...  |  Read More

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