26 Ark. Code R. 51-405
Partnership income must be allocated to the state where it was actually earned All partnership income from activities carried on within Arkansas shall be allocated to Arkansas. For example, a partnership comprised of two (2) partners earned $100,000.00 during the tax year. One partner resides in Arkansas and the other in Louisiana. $30,000.00 of the partnership's income is allocable to activity carried on in Arkansas by, or on behalf of, the partnership. Each partner's distributive share of the partnership's income is 50%. Therefore, the Arkansas based partner would report $15,000.00 in gross income on his resident Arkansas individual income tax return and the Louisiana based partner would report $15,00.00 in gross income on his nonresident Arkansas individual income tax return.
Because a portion of the partnership's income was allocable to Arkansas, the partners will need to file a partnership tax return (AR1050) with the State of Arkansas.
26 Ark. Code R. 51-405