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.
This year I faced an issue with one federal Form 1120-S and two state returns (Virginia and California). I would like to know how you handled this situation, especially with prorating income and expenses in ProSeries.
I could not find any area similar to the 1040 where you can create two states on an 1120-S or make an allocation. Could you please help me with this? And what did you do to depreciation adjustment? I have to file CA s-corp as final return.
Thanks, @sjrcpa. I need to know how to prepare this in ProSeries. I understand that I need to prorate each state’s share, but practically, I do not know how to do this in the software. This is the most important step for me to be able to move forward and e-file the return.
Thank you, but I need to file the tax returns: one federal and two state returns (California and Virginia). The financial figures for each state are completely clear, including the portion of sales and the expenses related to each state. Please let me know whether you have experience handling a situation like this with one federal and two state filings for an 1120-S. The periods of activity for each state did not overlap, and one was after the other and VA's activity started when the company terminated in CA .
Thanks @sjrcpa If a S-Corp provides online accounting services remotely to clients in ten states, does the S-Corp need to file ten state tax returns based on the clients’ locations?
Hi @HOPE2 Great to see you in the Community and thanks for posting. If you know what forms you need for the return and what lines the amounts need to fall on then ProSeries Support would be able to remote in and assist with this.
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