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Ezel / Tax Rulings / TX
TX 9804281L Franchise Tax (PRIOR TO 01/01/2008) 1998-04-02

Did Virginia residents owe a Texas individual income-tax return for their distributive share from a partnership doing business in Texas?

Short answer: No. Although the Virginia residents held individual interests in a partnership doing business in Texas, the Comptroller said Texas did not impose an income tax on individuals. They therefore did not have to file a Texas income-tax return for their distributive share of the partnership's income or losses.

Apply this to your situation

This page answers the general question as of 1998. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1998
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. STAR indexed this letter only by tax type, so the public subject title here follows the body. The response addresses only individual income-tax filing for the stated partnership share and does not decide any entity-level Texas tax. Different or additional facts could change the response. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Virginia residents did not owe a Texas individual income-tax return for their distributive share from a partnership doing business in Texas.

The individuals held partnership interests, and the partnership conducted business in Texas. The Comptroller explained that Texas did not impose an income tax on individuals, so the residents did not file a Texas income-tax return for their share of partnership income or losses.

What this means for you

Individual partners living outside Texas

The partnership's Texas business did not create an individual Texas income-tax return under the facts addressed in this letter.

Tax professionals

The answer was limited to the individuals' income-tax filing question. The letter did not analyze the partnership's own Texas tax obligations.

Common questions

Q: Was the partnership doing business in Texas?
A: Yes, based on the submitted information.

Q: Did the partners report their distributive share on a Texas individual return?
A: No.

Citations and references

  • The ruling identifies no statute or rule by section number

Source

Original ruling text

April 2, 1998

Dear **:

In your letter of March 16, you inquired about your liability for income taxes
in Texas.

You indicate that you are residents of Virginia that individually have a
partnership interest in Angeles Partners X. Based on the information you
submitted, the partnership is doing business in Texas.

The State of Texas does not impose an income tax on individuals. Therefore,
you are not required to file an income tax return in Texas for your
distributive share of income or losses from the partnership.

This response is based on the facts presented and current law. If there are
different or additional facts, the response may change.

If you have any questions, contact Tax Policy Division. You may call toll free
1-800-531-5441, or our regular number is 512/463-4600. My extension is 3-4662.
You may write me at Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Bob Jeffcoat
Tax Policy Division

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