jbutts07042003[at]hotmail.com wrote:
- quote -

You may be legally obligated to file returns in some of
those states. However, if the numbers you cited are real
ones (i.e., not missing a few zeroes <G> ), it isn't worth
your time to prepare and file the returns, or the states'
time to come after you for not doing so.

Just remember that in many states the statute of limitations
does not start to run until a return is filed. Therefore a
state could ask you questions many years from now. It's not
likely, but it's possible. Just hang on to all the paperwork
so that if questions do come up later, you'll have the
documentation to answer them.

Katie in San Diego

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Mark Rigotti wrote:

- quote -

Thank you for replying. Life is a live and learn situation.
Knowing what I know now, I would not have bought this
stock. However, my situation and your client's situation
are different. I sold all my stock last year. I had no
gains in any state nor will I ever have any gains even 15
years from now in any state. So I don't need to file any
state returns (based on the information I gave in my
original post), right?

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Story time here.

I have a client (we are both in MI) who has a rental on the
coast in NC. They used it for less than the allowed personal
use time each year and rented it out the rest of the year.
Always showed a loss.

The first year as a client I prepared a NC return showing
the loss and no tax due. They complained about the extra
$50 fee (yes a long time client)

Year 2 I did the same and they refused to pay the additional
fee and said do not prepare any more NC returns - ever.

Years go on and final in about year 15 the taxpayer sells
the rental property for a substantial gain. Because of
passive loss rules the suspended gains on the federal return
absorbed abour 50% or the $150,000 gain.

NC only allows loss carry forwards on filed returns.
Because of the statue of limitations We could only go back 3
or 4 years to claim prior losses. As I recall the
additional tax on the NC return was about $5,000 because
they did not want to pay the extra $50 per year.

Moral - so instead of paying me about $750 extra over 15
years they ended up paying NC about an extra $5,000.

Epilogue - They are now a client that actually listens to my
advice and follows it. They even call before consumating
any major financial transactions - just to be safe.

Rgs,

Mark

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I bought and then sold all shares in Terra Nitrogen in 2005.
I received my Schedule K-1 and included was a State
Schedule listing income for 20 states. However, it appears
to be a loss in all 20 states. So I assume I don't need to
file returns in any of those states, right?

Example
AR
Net Ordinary Income or Loss : -3
Net Section 1231 Gain or Loss : 0
Portfolio Interest Income : 0
Investment Income : 0
Alternative Minimum Tax Depreciation Adjustment : 3
Gross Receipts : 5

IA
Net Ordinary Income or Loss : -16
Net Section 1231 Gain or Loss : 0
Portfolio Interest Income : 1
Investment Income : 1
Alternative Minimum Tax Depreciation Adjustment : 11
Gross Receipts : 31

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >