§ 143.411 RSMo — Resident partner modifications — nonresident partners, composite returns — withholding required, when, amount

1. Any modification described in sections 143.121 and 143.141 which relates to an item of partnership income, gain, loss, or deduction shall be made in accordance with the partner's distributive share, for federal income tax purposes, of the item to which the modification relates. Where a partner's distributive share of any such item is not required to be taken into account separately for federal income tax purposes, the partner's distributive share of such item shall be determined in accordance with his distributive share, for federal income tax purposes, of partnership taxable income or loss generally.

2. Each item of partnership income, gain, loss, or deduction shall have the same character for a partner under sections 143.005 to 143.998 as it has for federal income tax purposes. Where an item is not characterized for federal income tax purposes, it shall have the same character for a partner as if realized directly from the source from which realized by the partnership or incurred in the same manner as incurred by the partnership.

3. Where a partner's distributive share of an item of partnership income, gain, loss, or deduction is determined for federal income tax purposes by a special provision in the partnership agreement with respect to such item, and the principal purpose of such provision is the avoidance of tax under sections 143.005 to 143.998 , the partner's distributive share of such item and any modification required with respect thereto shall be determined in accordance with his distributive share of the taxable income or loss of the partnership generally (that is, exclusive of those items requiring separate computation under the provisions of Section 702 of the Internal Revenue Code).

4. The director of revenue shall permit partnerships to file composite returns and to make composite payments of tax on behalf of its nonresident partners not otherwise required to file a return. If the nonresident partner's filing requirements result * solely from one or more interests in any other partnerships or subchapter S corporations, that nonresident partner may be included in the composite return.

5. If a partnership pays or credits amounts to any of its nonresident individual partners on account of their distributive share of the partnership income for a taxable year of the partnership, the partnership shall either timely file with the department of revenue an agreement as provided in subsection 6 of this section or withhold Missouri income tax as provided in subsection 7 of this section. A partnership that timely files an agreement as provided in subsection 6 of this section with respect to a nonresident partner for a taxable year shall be considered to have timely filed such an agreement for each subsequent taxable year. A partnership that does not timely file such an agreement for a taxable year shall not be precluded from timely filing such an agreement for subsequent taxable years. A partnership is not required to deduct and withhold Missouri income tax for a nonresident partner if:

(1) The nonresident partner not otherwise required to file a return agrees to have the Missouri income tax due paid as part of the partnership's composite return;

(2) The nonresident partner not otherwise required to file a return had Missouri assignable federal adjusted gross income from the partnership of less than twelve hundred dollars;

(3) The partnership is liquidated or terminated;

(4) Income was generated by a transaction related to termination or liquidation; or

(5) No cash or other property was distributed in the current and prior taxable year.

6. The agreement referred to in subdivision (1) of subsection 5 of this section is an agreement by a nonresident partner of the partnership to:

(1) File a return in accordance with the provisions of section 143.481 and to make timely payment of all taxes imposed on the partner by this state with respect to income of the partnership; and

(2) Be subject to personal jurisdiction in this state for purposes of the collection of income taxes, together with related interest and penalties, imposed on the partner by this state with respect to the income of the partnership. ­­ ­

7. The amount of Missouri income tax to be withheld is determined by multiplying the partner's distributive share allocable to Missouri that is paid or credited to a nonresident partner during the taxable year by the highest rate used to determine a Missouri income tax liability for an individual, except that the amount of the tax withheld may be determined based on withholding tables provided by the director of revenue if the partner submits a Missouri withholding allowance certificate.

8. A partnership shall be entitled to recover for a partner on whose behalf a tax payment was made pursuant to this section, if such partner has no tax liability.