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My client is an S Corp incorporated in Virginia, they have some income sourced from NYC sources. Should we file both NYS and NYC tax returns for the year?

rajeswarinvl
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itonewbie
Level 15

Generally yes.  But as you may be aware, NYS does not automatically recognize federal election for S corp.  NYC, on the other hand, does not recognize s corp election at either the federal or state level altogether.  This means your client's S corp will likely be subject to NYC CGT.

Luckily, VA Admin Code permits credit to be claimed for state income tax paid by an s corp to another state that does not recognize the federal S election and attributes such taxes to the individual shareholders.

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itonewbie
Level 15

Generally yes.  But as you may be aware, NYS does not automatically recognize federal election for S corp.  NYC, on the other hand, does not recognize s corp election at either the federal or state level altogether.  This means your client's S corp will likely be subject to NYC CGT.

Luckily, VA Admin Code permits credit to be claimed for state income tax paid by an s corp to another state that does not recognize the federal S election and attributes such taxes to the individual shareholders.

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Still an AllStar
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