63-3022L. INDIVIDUALS WHO ARE OWNERS OF AN INTEREST IN A PASS-THROUGH ENTITY OR BENEFICIARIES OF A TRUST OR ESTATE. (1) Individuals who are not a resident of Idaho as defined in section 63-3014, Idaho Code, but who are owners of an interest in a pass-through entity, as defined in section 63-3006C, Idaho Code, transacting business in Idaho or who are beneficiaries of a trust or estate with income taxable in Idaho may have Idaho tax relating to income described in subsection (2) of this section reported and paid by the pass-through entity on a return, referred to in this section as a "composite return." Income subject to this subsection shall be taxed at the rate applicable to corporations. The option to file a composite return and pay tax for nonresident owners is in lieu of the backup withholding requirements of section 63-3036B, Idaho Code.

(2) The provisions of subsection (1) of this section apply to the share of any income, loss, deduction or credit of a pass-through entity required to be included on such individual’s Idaho return.

(3) For purposes of subsection (2) of this section, deductions, loss and credits allowed in computing the tax liability and income attributable to the individual owner shall be prescribed in the rules of the state tax commission pursuant to section 63-3026A, Idaho Code.

(4) If a corporation, partnership, trust or estate transacting business in Idaho does not comply with the provisions of section 63-3036B, Idaho Code, and also fails to file an Idaho income tax return reporting all of the items described in subsection (2) of this section or fails to pay any tax due thereon, such corporation, partnership, trust or estate shall be liable for tax on such items at the rate applicable to corporations. An entity may rely upon information provided by the individual indicating state of residency, as prescribed in the rules of the state tax commission.

(5) A pass-through entity that files a composite return as described in subsection (1) of this section shall include a statement with the return showing, and report on the K-1 to each individual whose income is included in the return, each individual’s share of the income reported on the return and the tax paid by the pass-through entity on each individual’s share of the income reported on the return. The statement shall be made on a form prescribed by the state tax commission and shall contain any other information required by it. If the individual filed an Idaho return, the individual shall include the income shown on the K-1 to that individual and shall be entitled to a credit for the tax paid by the entity on such income shown on the K-1 to that individual.

(6) "Individual" for purposes of this section means a:

(a) Natural person;

(b) Grantor trust as described in sections 673 through 677 or section 678 of the Internal Revenue Code;

(c) Qualified subchapter S trust as described in section 1361(d)(3) of the Internal Revenue Code; or

(d) Single member limited liability company that has not elected to be classified as a corporation and is treated as a disregarded entity for federal income tax purposes.

History:

[63-3022L, added 1996, ch. 340, sec. 1, p. 1141; am. 1997, ch. 57, sec. 6, p. 100; am. 1999, ch. 60, sec. 3, p. 157; am. 2000, ch. 38, sec. 1, p. 70; am. 2001, ch. 270, sec. 4, p. 983; am. 2010, ch. 37, sec. 2, p. 67; am. 2011, ch. 3, sec. 1, p. 6; am. 2012, ch. 187, sec. 1, p. 491; am. 2014, ch. 36, sec. 1, p. 61.]