DRS: 12-719-1, Group returns for nonresident partners, S corporation shareholders and trust or estate beneficiaries

DRS has reproduced this regulation. This is an unofficial copy. Official copies of regulations ONLY are available from the Commission on Official Legal Publications. 111 Phoenix Avenue. Enfield, CT 06082. colp@jud.state.ct.us Copies of DRS forms and publications are available at http://www.ct.gov/drs

Conn. Agencies Regs. ß 12-719-1. Group returns for nonresident partners, S corporation shareholders and trust or estate beneficiaries.

(a) A partnership doing business in Connecticut or having income derived from or connected with sources within Connecticut may file a group Connecticut nonresident income tax return (Form CT-G) on behalf of its qualified nonresident partners who elect to file such return. A Form CT-G may be filed for a taxable year by a partnership with 10 or more qualified electing nonresident partners. The qualified electing nonresident partners shall have the same taxable year.

(b) A "qualified electing nonresident partner" is one who meets all of the following conditions:

(1) The partner was a nonresident individual for the entire taxable year;

(2) The partner did not maintain a permanent place of abode in Connecticut at any time during the taxable year;

(3) The partner (or his or her spouse, if a joint federal income tax return is or shall be made) did not have income derived from or connected with Connecticut sources other than the partnerís distributive share of partnership income derived from or connected with sources within Connecticut;

(4) The partner waives the right to claim any Connecticut personal exemption and any Connecticut personal credit;

(5) The partner does not have Connecticut alternative minimum tax liability for the taxable year; and

(6) The partner elects to be included in a Form CT-G by completing and delivering to the partnership a Form CT-2NA (Election to be Included In a Group Return) prior to the filing of the Form CT-G by the Partnership. By making such election, which shall be binding upon the partnerís heirs, representatives, assigns, successors, executors and administrators, the partner expressly consents to personal jurisdiction in Connecticut for Connecticut income tax purposes and waives his or her right to request, on his or her own behalf or with others making such election, an extension of time to pay Connecticut income tax.

(c)(1) A partnership filing a Form CT-G on behalf of its qualified electing nonresident partners shall show the exact name and address of the partnership as shown on its Form CT-1065, the taxable year of the partnership and the taxable year of such partners on the Form CT-G. It shall be signed by a partner having the authority to act as an agent for all qualified electing nonresident partners. The Form CT-2NA, which shall constitute written evidence of such authority and of the election by the partner to be included in the group return, shall be filed by each qualified electing nonresident partner with, and shall be maintained on file by, the partnership and be subject to inspection by the Department. The due date of the Form CT-G is the fifteenth day of the fourth month following the close of the taxable year of the qualified electing nonresident partners. In addition, the partnership shall include with the return a schedule showing each qualified electing nonresident partnerís:

(A) Name, in alphabetical order, and address;

(B) Social security number;

(C) Distributive share of partnership income derived from or connected with sources within Connecticut (as determined under Part VII);

(D) Distributive share of partnership income derived from or connected with sources outside Connecticut (as determined under Part VII);

(E) Connecticut income tax. The tax is computed by multiplying the partnerís distributive share of partnership income derived from or connected with sources within Connecticut by the highest rate of tax in effect for the taxable year; and

(F) Connecticut estimated tax paid, if any (see ß12-720(a)-5 of Part VIII).

(2) In addition to supplying the above information with Form CT-G, the partnership shall attach to its Form CT-1065 a list showing the name and social security number of each partner who shall be included in the Form CT-G for the taxable year within or with which the taxable year of the partnership ends.

(d) The filing of a Form CT-G shall be considered to be a group of separate returns meeting the individual filing requirements imposed by the Income Tax Act. The Department retains the right to require the filing of a Form CT-1040NR/PY by any of the partners. However, a qualified electing nonresident partner may not revoke an election to.be included in a Form CT-G, or elect to be included in a Form CT-G, after the fifteenth day of the fourth month following the close of such partnerís taxable year.

(e) The Form CT-G is not invalidated for a particular taxable year if, after the due date for that return, the partnership fails to maintain 10 or more qualified electing nonresident partners for that taxable year. For example, if a partnership filed a timely Form CT-G on behalf of 12 qualified electing nonresident partners for taxable year 1994 and subsequently three of the partners file a superseding or correcting Form CT-1040NR/PY on or before April 15, 1995, the Form CT-G is not invalidated for taxable year 1994 solely for failure to maintain 10 or more qualified electing nonresident partners. However, if a partnership does not have 10 or more qualified electing nonresident partners in subsequent years, a Form CT-G may not be filed for such years.

(f) The provisions of this section also apply to S corporations and trusts or estates, and wherever reference is made herein to:

(1) "partnership," such reference shall be construed to mean "S corporation" or "trust or estate;"

(2) "partner," such reference shall be construed to mean "S corporation shareholder" or "beneficiary;"

(3) "nonresident partnerís distributive share of partnership income derived from or connected with sources within Connecticut," such reference shall be construed to mean each nonresident shareholderís pro rata share of S corporation separately computed income or loss derived from or connected with sources within Connecticut and each nonresident beneficiaryís share of items of trust or estate income or loss; and

(4) "Form CT-1065," such reference shall be construed to mean "Form CT-1120SI" or "Form CT-1041."

(g) While this section pertains to Section 12-719 of the general statutes, for purposes of supplementary interpretation, as the phrase is used in Section 12-2 of the general statutes, the adoption of this section is authorized by Section 12-740(a) of the general statutes.

(Effective November 18, 1994.)