Nonresident Members of Resident Partnerships; Resident Members of Nonresident Partnerships

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  1. When one or more of the individual members of a partnership doing business in this state are nonresidents of this state, the nonresidents shall be taxable on their share of the net profits of the partnership.
  2. When one or more of the individual members of a partnership doing business outside this state are residents of this state, the residents shall include in their individual returns their distributable share, whether distributed or not, of the net income of the partnership for the taxable year.
  3. Notwithstanding any other provision of this chapter to the contrary, the distributive share of a nonresident member of a resident limited partnership or other similar nontaxable entity which derives income exclusively from buying, selling, dealing in, and holding securities on its own behalf and not as a broker shall not constitute taxable income under this chapter. For purposes of this subsection, a resident limited partnership or similar nontaxable entity shall not include a family limited partnership or similar nontaxable entity the majority interest of which is owned by one or more natural or naturalized citizens related to each other within the fourth degree of reckoning according to the laws of descent and distribution. This subsection shall not apply to a person that participates in the management of the resident limited partnership or other similar nontaxable entity or that is engaged in a unitary business with another person that participates in the management of the resident limited partnership or other similar nontaxable entity.

(Ga. L. 1931, Ex. Sess., p. 24, § 19; Code 1933, § 92-3117; Ga. L. 1937, p. 109, § 10; Ga. L. 1937-38, Ex. Sess., p. 150, § 6; Code 1933, § 91A-3615, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1987, p. 191, § 2; Ga. L. 1997, p. 450, § 2; Ga. L. 2005, p. 159, § 12/HB 488.)

Cross references.

- Partnerships generally, T. 14, C. 8.

Editor's notes.

- Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, provides that this Act is applicable to taxable years ending on or after March 11, 1987, and that a taxpayer with a taxable year ending on or after January 1, 1987, and before March 11, 1987, may elect to have the provisions of that Act apply.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by that Act.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that provisions of the federal Tax Reform Act of 1986 and of the Internal Revenue Code of 1986 which as of January 1, 1987, were not yet effective become effective for purposes of Georgia taxation on the same dates as they become effective for federal purposes.

Ga. L. 2005, p. 159, § 1/HB 488, not codified by the General Assembly, provides that: "This Act shall be known and may be cited as the 'State and Local Tax Revision Act of 2005.'"

Law reviews.

- For article commenting on the 1997 amendment of this Code section, see 14 Georgia St. U.L. Rev. 271 (1997).

JUDICIAL DECISIONS

Legislative intent.

- Former Code 1933, § 92-3117 (see now O.C.G.A. § 48-7-24) was enacted to eliminate any doubt as to taxation of net income of a resident of this state who had an income from business or property not located in Georgia. However, former Code 1933, § 92-3111 (see now O.C.G.A. § 48-7-28) was broad enough to cover such income. Head v. Maxwell, 60 Ga. App. 488, 4 S.E.2d 45 (1939).

As applicable to tax years 1992, 1993, and 1994, when a partnership did business in Georgia, the individual members were taxable on the partners' share of the net profits of the partnership - regardless of whether the individual members qualified as doing business in Georgia. Department of Revenue v. Sledge, 241 Ga. App. 833, 528 S.E.2d 260 (2000).

Deduction for fixed liability to make rebate to copartners.

- Fixed liability to rebate to copartners a percentage of the purchase price of goods offered for sale to such partners and to the public generally, when based upon the amount of merchandise purchased by the partner, rather than upon the partner's interest in the partnership or upon total sales, and when the rebate is actually paid during the taxable year, may be an ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business so as to be deductible from the gross income of the partnership in arriving at the net income of the partnership. Bessemer Auto Parts, Inc. v. State Revenue Comm'r, 110 Ga. App. 500, 139 S.E.2d 157 (1964).

RESEARCH REFERENCES

C.J.S.

- 85 C.J.S., Taxation, § 1992.

ALR.

- Nature of interest of special partner for purpose of income tax, 45 A.L.R. 1381.

Income tax on gain or loss realized by partner upon sale of his interest in partnership, 144 A.L.R. 354.

Wife's share of income of partnership of which husband is also a member as taxable to husband or wife, 164 A.L.R. 1144.

What constitutes doing business, business done, or the like, outside the state for purposes of allocation of income under tax laws, 167 A.L.R. 943.

State income tax treatment of partnerships and partners, 2 A.L.R.6th 1.


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