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Unitary Combined Reporting Rules for Multistate Partnerships: Reconciling Conflicting State Tax Requirements

State Requirements for Flow-Through of Apportionment Factors, Permissible Allocations, Corporate Partner Treatment

Note: CLE credit is not offered on this program

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

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Conducted on Thursday, January 9, 2020

Recorded event now available

or call 1-800-926-7926

This course will provide partnership tax advisers with a thorough and practical guide to the unitary reporting rules for partnerships with income or operations in multiple states. The panel will discuss critical 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.


One of the more challenging areas of multistate tax practice is the taxation of partners in partnerships conducting activities in more than one state. Navigating various states' treatment of partnerships, and particularly their nonresident partners, can result in unforeseen tax consequences and compliance burdens. Tax advisers must resolve several critical issues to accurately report partnership income, most notably various state approaches to unitary filings.

Determining whether the partnership's activities create nexus within the state, attributing the character of partnership income as active business income or passive investment income, and deciding whether the partnership elects to file a composite return or withhold tax are just some of the challenges faced by tax advisers. Reconciling various states' approaches to taxation of multistate partnerships and partners creates additional complexity in both tax reporting and planning.

As a result of recent tax reform, more states are moving toward an entity-level tax, rather than a flow-through tax assessed at the individual owner or shareholder level, in order to avoid the SALT cap. Connecticut’s pass-through entity tax, for example, was effective January 2018 and is mandatory. These changes affect unitary filing for partners. 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.

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



  1. Allocation vs. apportionment of partnership income
  2. Business vs. nonbusiness income--differing state approaches
  3. Aggregate vs. entity approach
  4. Unitary vs. non-unitary filing rules
  5. States providing the option of a composite return
  6. The state requiring withholding on nonresident partners


The panel will discuss these and other critical questions:

  • Which states require business/nonbusiness income determination at partner vs. partnership level
  • Which states require unitary filings, and under what thresholds?
  • Determination of partnership income on aggregate basis vs. entity basis
  • Apportionment under the aggregate approach
  • State withholding


Arasu, Elil
Elil Shunmugavel Arasu

Managing Director, GWDC SALT Practice Leader

Ms. Arasu has more than 15 years of state tax consulting experience within a public accounting environment and...  |  Read More

Capizzi, Kimberly
Kimberly Capizzi, CPA

Senior Manager

Ms. Capizzi works in the firm’s State and Local Tax Practice with more than 12 years of experience in public...  |  Read More

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