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Coach
Don’t work in SALT so this may be completely off base, but if you didn’t file, how would you carryforward your loss to offset income in the future?
That’s a good point!
It depends. Are the k1 loss the only income/loss you received from either states? Do you know if the entity filed composite tax returns for GA and NC? If they already did, you are not required to file those states. You can find those information in your k-1 package, they usually also have a footnote to disclose if they filed composite return on your behalf. If you receive other income from those states, you may want to file to utilize the loss.
The technical answer is yes, you generally need to file in the state if you receive a k-1. From a practical perspective though if you only have allocated losses there really isn’t a tax underpayment risk out there at all. If these state k-1s are items you expect to receive each year going forward you might want to go ahead and file to start your NOL carryforwards. If this is just a one off allocation or something the risk of not filing your loss returns is not large and it may be worth passing.