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Mail Bag #16: Delaware Partnership, ​State tax obligations, German with US K-1, Pension on FBAR, Retirement rollovers, US Visits 35

Delaware Partnership

I have the opportunity to invest in a Delaware limited partnership that will in-turn invest in a Swedish corporation (a tech startup). The DE partnership will have a minority stake in the business (I’m not sure how much) and a board seat on the Swedish co. But me, personally, I will have no control, will be a tiny indirect investor in the Swedish co (less than 5%) and my investment in the DE partnership is completely passive (I have no control rights)

As a limited partner in DE LP you will receive Sch K-1 like from other partnership and will report it on your annual tax return. The fact that DP partnership invest in a foreign company will be reflected on partnership tax return but you personally are not responsible for that filing.

State tax obligations

I am an American living permanently in NZ . I have no financial or property connection in my former state of Colorado. All my finances and property are in NZ. I am choosing to ignore the possibility of owing state taxes there. I haven’t lived there for over 18 years. I am about to retire this year and plan to stay in NZ. I filed tax returns with your company for the streamlining process a couple of years ago to get caught up on my previously non filed federal tax returns. I am up to date with my federal tax filing. Am I at risk of penalties with Colorado, considering my circumstances?

From the CO Dept of Revenue:

Living Out of the Country

Individuals who abandon their Colorado domicile and become permanent residents of a foreign country no longer have to file Colorado returns. However, they would have to file a Colorado tax return as a nonresident if they had Colorado-source income (e.g., rental income). Such individuals bear the burden of proving their abandonment of Colorado residency. Continued Colorado residency will be presumed if the individual has not severed all Colorado connections; for example, if the individual still carries a Colorado driver license, votes in Colorado by absentee ballot, and/or still owns a home in Colorado, or returns to Colorado. Thus, you may not file CO state return yet be prepared to provide the proof your abandonment of CO residency should the CO state tax department ever contact you.

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