Arkansas Rental- Black Bart

[sea-tax]

Black Bart or anyone from Arkansas that feels like they want to help me

I have a Non-resident taxpayer who state of residency is Washington that owns two rental properties in Arkansas. One rental has a net $3000 profit and the other has a $3900 net loss and on the federal return due to passive activity limits they have no federal taxable rental income. They have no other Arkansas income.

Question:
Do they have to file a Arkansas State income tax return?

Prior preparer has never filed state returns and based on what I read in the filing requirements of the Tax Book state return it says "Nonresidents. Must file if they received any taxable income from Arkansas sources"
Based on this it appears they would not file becuase the net state income is a loss.

Question:
Do you agree or am I just over thinking this?

Any insight from Arkansas preparers would be appreciated.
Thank you

[Gary]

Ma

I've been preparing a client's return for 8 years and he has a rental in MA. The TaxBook says the same thing for MA, so I never filed a MA return for him. I just found out that he is required to file, even though he has a loss every year. I just prepared 8 years of MA returns for him. I hope he doesn't get penalized. Does anyone know if there is a website that lists the filing requirements for each state in cases like this?

[Snaggletooth]

Gross Receipts

Many states have a filing threshold in terms of gross revenue in addition to a threshhold for income.

My best guess (if Arkansas is like other states) would be to file the return. If it is as you say, he will owe no
taxes anyway.

Bart or Thomtax could probably say for shore.

[S T]

I often file the non resident states returns even if not required on rental property - one of the thoughts was what would transpire, when the property was sold, maybe accumulating loss carryovers for that State (rental property State) that have not been used and what about the accumulated depreciation factor.

Other issue goes as Snags mentionned "gross" versus "net".

Sandy

[thomtax]

Per Arkansas DFA, a non-resident with rental property in Arkansas is required to file an Arkansas return, as they put it, -No matter what. It appears as if we want our paper work.

Hope this helps.

LT

[sea-tax]

Thank you all-

Thomtax I have a client who is a real "I need to see it in writing instead of take your word for it kind a guy" You have anything in a form instruction or pub that you could point me to. Thanks

[thomtax]

Look at page 15 of this pdf

http://www.dfa.arkansas.gov/offices/incomeTax/individual/Documents/LongBooklet_2012.pdf

Note that the instructions for LINE 18 say if you had income from rent - It does not say profit from rent and also says that you need to include Federal Schedule E.

Sadly for out of state preparers Arkansas provides very little in written instructions. They pretty much go with the feds and have you send them a copy of the federal schedule, even though you start from scratch in preparing an Arkansas return.

If you wish to call the DFA Individual Income Tax, the number is 501-682-1100 to see if they can provide you with something.

Sorry I can't find more for you.

LT

[Lion]

And, remind your client that he will want to have suspended losses in AK so that when he sells the rental, often at a profit due to depreciation, he will have the losses released to use in that year with the sale profit.

[sea-tax]

Thomtax and Lion thank you so much for the info really appreaciate it have a great tax season!

[Black Bart]

Sea-tax

Just sent you a private message.