Have an LLC client that owns 45% of two other LLCs. My client's members are NH residents,
In preparing the VT return I have entered the amounts from the two other LLCs K-1VT Line 1 in the VTAdj screen on the line "Income from pass- through entities directly allocated to Vermont - Business Income" This amount shows up on Form BI-472 on Line 13 like I would expect.
In preparing the VT return I have entered the amounts from the two other LLCs K-1VT Line 7 in the VTDepr screen on the line "Depreciation adjustment to ordinary business income(loss)". It seems to be the only way to get the 168(k) adjustment on each member of my client's K-1VT and also on BI-471 Line C.
However, the entry in the depreciation adjustment also magically appears on Form BI-472, Line 1 Ordinary business income.
This affects the Nonresident estimated tax requirement calculated on the Form BI-472. I guess that makes sense. But, I note that the two other LLC's do not make any adjustments on the BI-472 for the 168(k) depreciation adjustment when calculating the Nonresident estimated tax requirements on the K-1VTs issued to my LLC client.
The 168(k) adjustment in 2018 was negative. VT has sent a notice asking for $8,000 regarding the 2018 return with no explanation (as well as not responding to previous inquiries regarding the discrepancy). I am curious as to the impact, if any, the 168(k) adjustment has on the Nonresident estimated tax requirement.
In the end, it doesn't matter, since any increase in payment gets refunded to the members of my LLC client. Other than interest and penalties.