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District of Columbia Notice regarding other state tax credit

October 31, 2016 • Anonymous • Log In to Post Comments

Hi All! I wanted to inquire regarding additional guidance on what appears to be an FTB error. I have an individual client who is a partner in a large partnership with multiple states. For years, we have been claiming the OSTC on the CA return with no issues. For the 2015 return, the FTB has disallowed his OSTC for DC, saying the client must be a dual resident of DC in order to claim the OTSC. We file an unincorporated business tax return for the partnership, which the FTB requested to see. Our client is not a dual resident and should not have to be a dual resident in order to claim the credit, if the necessary unincorporated business tax return was filed.

The income was genereated in another state and the tax was already paid to that other state by the partnership, so the partners should be able to claim their respective percent of tax paid to DC, in my opinion. Their view appears to be in contradiction to their own instructions. Any guidance on this issue would be much appreciated as the FTB seems to provide no support or justifiable reason for disallowing the credit. 

Thanks for your input! 


I would contact the tax practitioner hotline. There have been some problems with processing Schedule S returns, particularly with group returns.


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