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okay, let's try again:

i am in CA.
another partner is in WI.

as i understand it, if i form the partnership in CA, then the WI partner, according to CA law, will have to file nonresident tax returns for CA. since it's a partnership there is pass-thru taxation. and since they probably have to pay WI state tax on the income they probably can avoid paying CA state tax on the income. however, they still have to go through alot of paperwork.

if i form in WI, then the WI partner will not have to file a nonresident tax return. i will have to file a WI nonresident tax return myself, possibly; i will pay CA state income tax on any income received thru the partnership. the partnership may have to register as a foreign partnership if it does business in CA.

in either scenario both partners have to pay federal income tax.

my question is not about decreasing the taxes i pay. instead, i want to know if by forming the partnership in another state i can reduce the number of tax forms my partners have to fill out.

since the partnership is for the purposes of directing investments, where it does business is open to interpretation, i think.

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