Foreign taxes paid deductible on MO tax returns?
I am preparing a multi-state S corporation tax return in Lacerte tax software. Without any overrides or modifications Lacerte is including the foreign taxes paid as a deduction on the Missouri tax returns. For MO purposes I am preparing forms MO-1120S, MO-PTE, E-234, and RD-108. I am trying to connect with Missouri tax preparers as I am sure you must deal with the situation frequently.
Summary of key amounts
Federal income 12,625
Foreign taxes paid 37,547
State income taxes on federal return 11,183
Apportionment percentage 3.091%
Form MO-PTE
The instructions state to start with the amount from federal Schedule K line 18 on line 1. This amount includes a deduction for the foreign income taxes. If an adjustment were to be included on line 2, it would flow from form MO-1120S line 3 and also on form MO-NRS in Other Adjustments. This does not seem correct as the foreign taxes have not been reduced in federal ordinary income on line 1 of form MO-NRS. Should the correct amount on line 1 be 12,625 making the Balance on line 4, 23,808?
Form E-234
Lacerte is reporting -13,739 on line 7 which is the amount from Schedule KJ line 18 plus state income taxes. In Section A-1 on line 13 Lacerte is including a deduction for foreign income taxes paid. Is this correct?
Form RD-108
Lacerte is calculating the same amount, -13,739 from Schedule C – Profit (or Loss) From Business or Profession. Included in Other Deductions on line 18 are the foreign taxes paid. This form needs to be electronically filed which makes any overrides to the amount on line 20 of Schedule C a critical diagnostic.
I would appreciate any help available including if I need to modify data entry to accommodate adjustments.
Thank you.
modify data entry to accommodate adjustments.
Thank you.
