South Carolina S Corp Active Trade or Business election

[fletch11653]

I am trying to facilitate the 3% active trade or business election. I am a Maryland preparer and the numbers flow through easy with Lacerte on the MD return. For SC there is no State Tax  deduction from the Federal input that adds back the amount to the ordinary business income to be taxed on Form I435. The only thing I see is on the SC1120S line 7 (Income taxed to Shareholders) is the state tax amount deducted on the Federal return which does not appear on the SC K-1. Any other way to facilitate this properly?

[Karl · Accepted solution]

I am dealing with this issue now.  Did you ever find a resolution?  My thinking is that, presuming it's a cash basis taxpayer, you pay the SC entity tax from I-435 by the due date of the return (i.e., in the next tax year).  Then you input the amount paid next year on S-Corp Screen 15 Deductions Code 38 State Tax.  Thoughts?

Bummer that it isn't listed on the "General Info" page as a carryover amount though.

[fletch11653]

Hi there,

You are correct as far as cash basis and the following year entering in screen 15 code 38 the tax paid but it looks like in order to get Form I-435 column C  to include the add back for the state tax deduction you have to go to screen 48.331 code 13 to enter in the proper income to be taxed?