I have a client who lives in Colorado, and just formed a Nevada S-Corporation. Two of the officers/shareholders are Canadian citizens, and live in Canada. They are applying for an ITIN, so it can be used on their K-1. One of the officers/shareholders is a California resident, and one is a Colorado resident.
Am I correct in thinking that the Corp still will have to pay Colorado income tax, since that is the address of record; (The Colorado officer is using his personal address for the Corp address.)?
Also – will the Corp need to file a Non resident Colorado tax return? Or a Non-resident NV income tax return?
I’m confusing myself the more I research the issues.
First of all, you cannot have a foreign shareholder so with Canadian citizen shareholder, you can’t make an S election. So you will be a C corporation. The corporation will have to file a California return if they have any activity in CA – having an officer in CA generally will require the corporation to file. I don’t know Colorado rules. But basically they will have to file in any state that they have nexus or are doing business. But first, you’ll have to deal with the Canadian shareholders if you want to be an S corporation.