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Financial Planning / Tax Strategies
|Subject: Re: State Tax Liability-Form 1041 K-1||Date: 12/11/2012 11:57 AM|
|Author: irasmilo||Number: 117112 of 122503|
I think you missed the point of my post. I am looking for some filed documentation that would indicate that this interest was in fact from US Savings bonds which is exempt from state income tax.
I don't know if the Form 1041 commonly uses e filing (like the 1040 Form) where descriptions and attached schedules are lost in the data flow.
I think you missed the point. E-filing doesn't remove descriptions and attached schedules. They are part of the e-file transmission. In the case of US Government interest, it is not separately reported in the 1040 e-file transmission since it isn't reported separately on the paper Form 1040 or Schedule B. The same is true for Form 1041. However, when there is an associated state e-file transmission with the federal 1040 (or 1041) the portion of interest due to US Government bonds, etc. is part of the state e-file data since it is part of the state paper return.
The state K-1 equivalent is where you show the adjustment. Whether it is reported directly as US Government interest or as an adjustment to the federal-reported interest is up to the specific state.
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