(a)(1) The portion of a nonresident partner's distributive share of partnership income that is derived from or connected with sources within this state shall be determined in accordance with the provisions of section 12-711.
(2) The portion of a nonresident shareholder's pro rata share of S corporation income that is derived from or connected with sources within this state shall be determined in accordance with the provisions of section 12-711.
(3) The portion of a nonresident beneficiary's share of trust or estate income that is derived from or connected with sources within this state shall be determined in accordance with the provisions of section 12-711.
(b) In determining the sources of a nonresident partner's income, no effect shall be given to a provision in the partnership agreement which: (1) Characterizes payments to the partner as being for services or for the use of capital; or (2) allocates to the partner, as income or gain from sources without Connecticut, a greater proportion of his distributive share of partnership income or gain than the ratio of partnership income or gain from sources without this state to partnership income or gain from all sources, except as authorized in subsection (c) of this section; or (3) allocates to the partner a greater proportion of a partnership item of loss or deduction connected with sources within this state than his proportionate share, for federal income tax purposes, of partnership loss or deduction generally, except as authorized in subsection (c) of this section.
(c) (1) The character of partnership or corporation items for a nonresident partner or S corporation shareholder shall be determined in accordance with section 12-715.
(2) The effect of a special provision in a partnership agreement, other than a provision referred to in subsection (b) of this section, having the principal purpose of avoidance or evasion of tax under this chapter shall be determined under subsection (c) of section 12-715.
(d) The commissioner may, on application, authorize the use of such other methods of determining a nonresident partner's portion of partnership items derived from or connected with sources within this state, and the modifications related thereto, as may be appropriate and equitable, on such terms and conditions as he may require.
(June Sp. Sess. P.A. 91-3, S. 63, 168; May Sp. Sess. P.A. 92-5, S. 10, 37; May Sp. Sess. P.A. 16-3, S. 201.)
History: June Sp. Sess. P.A. 91-3, S. 63, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 added Subsec. (d), effective June 19, 1992, and applicable to taxable years of taxpayers commencing January 1, 1992; May Sp. Sess. P.A. 16-3 amended Subsec. (a) by replacing references to regulations adopted by the commissioner with “in accordance”, effective January 1, 2017, and applicable to income years commencing on or after January 1, 2017.