I have an S Corp that is going to start doing business in another state (DE). He lives in MD. The two states do not have reciprocity.
Obviously his P&L will need to be tracked on a state by state level. Is the income allocated to DE at the S Corp level? I have spent too much time in Proseries trying to figure out how to allocate some of the S Corp income to DE vs MD. I would imagine this must be done at the S Corp level and not at the individual level, correct?
S-Corp is a pass through entity, so it pays no tax on income. You would allocate income from K1 to each state. Some states allow a SALT cap workaround may enable them to indirectly deduct state and local taxes they've paid beyond the $10,000 SALT cap. If you elect that option (if available in your states), then you have to allocate on the 1120S.
Yes, MD has a Pass through entity (PTE) tax that is paid at the S Corp level. How do you elect on the 1120S to allocate the income to MD or another state? That is what I can't figure out.
That would be on the state forms. No allocation on the federal 1120-S. I am not familiar with MD, but I'm sure someone will jump in from MD. When you send the K1's you will need to send instructions to each shareholder the state breakdown of income.
I don't do MD returns, but it is common to have each state pick up a share of income based on a percentage of things like sales, payroll, and assets located in each state the company does business in.
@IRonMaN Before I could give you a thumbs up on your most recent Amtrak post, it was indeed mopped up as your prophesied, I.E. it appears you are the Nostradamus of the Intuit Accountants Community.
