Form K-120s - Kansas Partnership Or S Corporation Income Booklet - 2013 Page 8
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16Amended
adjusted or disallowed, you must provide the department with a copy of the adjustment or denial letter.
If you did not file a Kansas return when you filed your original federal return, and the federal return has since
Returns
been amended or adjusted, use the information on the amended or adjusted federal return to complete your
(continued)
original Kansas return. A copy of both the original and amended federal returns should be enclosed with the
Kansas return along with an explanation of the changes.
Federal Audit. Any taxpayer whose income has been adjusted by the Internal Revenue Service must file an
amended return with Kansas and include a copy of the Revenue Agent’s Report or adjustment letter showing
and explaining the adjustments. These adjustments must be submitted within 180 days of the date the
federal adjustments are paid, agreed to, or become final, whichever is earlier. Failure by the taxpayer to notify
KDOR within the 180 day period shall not bar KDOR from assessing additional taxes or proceeding in court
to collect such taxes. Failure by the taxpayer to comply with the requirements for filing returns shall toll the
periods of limitation for KDOR to assess or collect taxes.
Capital
Any adjustment, provided by Kansas law, which applies to a capital gain received by the partnership or
corporation and reported by the individual partners or shareholders on their individual federal income tax
Gains
return, is to be made by each partner or shareholder on his Kansas individual income tax return.
If, during the taxable year, the partnership or corporation received a gain from the sale of property or other
capital assets for which the tax basis for Kansas is higher than the tax basis for federal, each partner or
shareholder must be notified of his share of the difference in basis and whether the gain qualified as a long
or short term capital gain.
Any partnership or corporation which has a partner or shareholder who is a nonresident of Kansas must
advise such partner of those capital gains and losses incurred from assets located in Kansas because the
nonresident partner or shareholder is subject to tax on gains realized from the sale or exchange of property
located in Kansas.
If such computations result in a net capital loss to Kansas, the loss is limited to $3,000 ($1,500 for married
individuals filing separate returns) on the partner’s or shareholder’s Kansas individual income tax return.
Capital transactions from Kansas sources to which the above instructions apply include: a) Capital gains
or losses derived from real or personal property having an actual situs within Kansas whether or not connected
with the trade or business; b) capital gains or losses from stocks, bonds and other intangible property used
in or connected with a business, trade or occupation that is carried on within Kansas; and, c) respective
portion of the partnership or corporate capital gain or loss from a partnership or corporation of which the
partnership or shareholder is a member, partner or shareholder, or an estate or trust of which the partnership
or corporation is a beneficiary. See instructions for Part III - Apportionment Formula .
Partnerships, S corporations and limited liability companies with nonresident owners are required
Nonresident
to withhold Kansas income tax at the rate of 4.8% on the Kansas taxable income (whether distributed
Owner
or undistributed) of their nonresident partners, members or shareholders. Pass-through entities with
Withholding
nonresident owners must complete Form KW-7/KW-7S and pay the withheld funds on or before the due date
of the income tax return for the pass-through entity, including extensions. These forms and additional
information about this requirement are available from our web site at .
Definitions
Business Income. For tax years commencing after December 31, 2007, “business income” means: 1)
Income arising from transactions and activity in the regular course of the taxpayer’s trade or business; 2)
income arising from transactions and activity involving tangible and intangible property or assets used in the
operation of the taxpayer’s trade or business; or 3) income of the taxpayer that may be apportioned to this state
under the provisions of the Constitution of the United States and laws thereof, except that a taxpayer may elect
that all income constitutes business income. Business income is apportioned to Kansas generally using the
average of the three factors of property, payroll, and sales. For instance, business income received from
another partnership is included in your apportionable income and your share of that partnership is multiplied
times the property, payroll and sales both in Kansas and everywhere of that partnership to add to your entity’s
property, payroll and sales both in Kansas and everywhere. The apportionable income is then multiplied by
the resulting factor. Any deviation from using the three factor method requires alternative qualifications. All the
apportionment methods are listed in this section.
K.S.A. 79-3279 provides that the use of the three-factor method formula of property, payroll, and sales be
used to apportion income to Kansas. Direct or segregated accounting methods will not be allowed unless the
taxpayer has petitioned the Secretary of Revenue for use of direct or segregated accounting, and the petition
is approved. Direct or segregated accounting will not be allowed only because that is the method used in
another state or because partnership income is received from other entity.
Unitary Business. A multistate business is unitary when the operations conducted in one state benefit or are
benefited by the operations conducted in another state or states. The essential test to be applied is whether or not
the operation of the portion of the business within the state is dependent upon or contributory to the operation of
the business outside the state. If there is such a relationship, the business is unitary. Stated another way, the test
is whether various parts of a business are interdependent and of mutual benefit so as to form one business rather
than several business entities and not whether the operating experience of the parts are the same at all places.
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