S-corp elects for 2021 CA PTEE but did not pay in 2021

[hgtc]

S-Corp will elect CA PTEE for 2021.  But, they did not pay any amount in 2021.  So, federal tax return will not include this PTEE paid on 3/15/2022 to be included in 2021 form 1120S.

But, when I check the "election" box for this S-Corp, form 1120S Line 12, taxes and licenses, automatically add the unpaid PTE.  How can I adjust this error?

Is there somewhere in the module that I can override it?

Thanks.

[joshuabarksatlcs]

Your post referred to Lacerte tax.

I use Lacerte.  No such problem.  The PTE Tax doesn't flow to Line 12 of 1120S.  

If you use Lacerte, is it updated? 

This is all I can think of.

[hgtc]

Yes, my Lacerte is updated.  Taxpayer is in accrual basis.  Did not pay PTEE before 12/31/2021.

When checked “state accrual option 1”, unpaid PTEE due will carryover to form 1120S.

When use “option 2” and enter state taxes in “deduction “, form 1120S is fine.  But, Sch M-1 is off.

Do we have to do everything manually for this?  

[joshuabarksatlcs]

After sending my post, I thought about the accrual basis issue.   Was going to follow up after dinner.

I haven't worked on the accrual basis client with FTE Tax (have only two, info hasn't come it....).  Didn't research too deep the deductibility on 2021 federal return for accrual basis taxpayers. 

If you conclude it's deductible for 2021 for accrual clients, select Option 1.  I hope you share your conclusion on whether accrual clients can deduct the tax (to be paid in 2022) on 2021 Form 1120 .

Anyway, if you want to deduct it on federal for 2021, pick option 1.   

CA M-1 starts with Line 1 of 100S, therefore it starts with the net income AFTER the state tax deduction.  I imagine, on M-2, you would see the tax added back once and deducted once, because the state tax is non-deductible for CA but the non-deductible expense would still lower the basis.  I haven't tried it on Lacerte.  (This would be the same under Option 2 - if a state tax is manually entered the amount should be added back once and subtracted once.) 

Have to get back to my Bourbon...

[joshuabarksatlcs · Accepted solution]

By the way, Lacerte has this article

https://proconnect.intuit.com/community/state-taxes/help/california-pte-tax-in-a-100s/00/195467

If you don't click links in public forums, search in the community with:

PTE Tax CA accrual

It's the fourth or fifth article.