July 31, 1979

You have requested a ruling as to whether a Massachusetts limited partnership, which has a non-resident partner and derives income from leasing activities in Virginia, qualifies for apportionment. You indicate that in Virginia partners' rather than partnership income is taxed, and an additional tax is imposed on partnership capital.

Section 17 of General Laws Chapter 62 states that non-resident partners' distributive share of partnership income is subject to the tax imposed on non-residents by Section 5A.

Section 5A provides for taxation of income of non-residents derived from sources within the Commonwealth and for the methods of determining the amount of such income. The income of partnerships with non-resident individual partners may be apportioned in accordance with the corporate income apportionment formula set forth in General Laws Chapter 63, Section 38 if the partnership is deriving income from business activities in another State and if such activities give that State the jurisdiction to levy an income tax or a franchise tax upon the partnership.

Based on the foregoing, it is ruled that a Massachusetts limited partnership, which has a non-resident individual partner, and derives income from leasing activities in Virginia, qualifies for apportionment of income in determining the non-resident's distributive share of income taxable in Massachusetts.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/JJW/LBS/jmp

LR 79-23