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Mastering Multistate Taxation of S Corporations: State Variances in Recognition of S Elections, PTE Elections

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Friday, October 27, 2023

Recorded event now available

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This course will provide tax preparers and advisers with detailed guidance on the most pervasive issues facing multistate taxation of S corporations. The panel will detail those states that vary from automatic acceptance of the federal S-election, review the composite return requirements, and discuss calculations, adjustments, and filing requirements for those states where the S-election fails and a composite return is not available. The panel will also outline state variances in tax treatments of qualified subchapter S subsidiaries (QSSS) and pass-through entity (PTE) elections for multistate S corporations.

Description

Multistate taxation of S corporations presents significant challenges to tax preparers and advisers. Not all states follow the federal S-election tax guidelines, and some states do not recognize S corporations as PTEs in all circumstances.

In addition to the lack of conformity in filing requirements and status, various states have different treatments of nonresident shareholders and differing rules regarding composite returns and withholding.

Different states have different approaches to filing and withholding requirements when a resident S corporation has nonresident shareholders. While many states require composite returns, some states, such as Georgia, require all nonresident shareholders to consent to pay Georgia tax and require the corporation to file as a C corporation absent that consent.

Tax advisers must be fully aware of the filing and withholding issues that arise when an S corporation has a nonresident shareholder.

In addition to the overall lack of conformity between federal and states treatment of S corporations, there is divergence among various states on the recognition of QSSS. Several states do not recognize the QSSS, and tax advisers must understand the impact of nonrecognition.

Listen as our experienced panel provides a detailed exploration into the issues and opportunities related to the multistate taxation of S corporations.

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Outline

  1. Current landscape of state treatment of S corporations
    1. States with full conformity with federal S-election
    2. States with partial conformity with federal S-election
    3. States with intentional nonconformity with federal S-election
  2. S corporations with nonresident shareholders
  3. Pass-through entity elections for S corporations
  4. Apportionment and allocation questions
  5. Taxation of nonresident shareholders
  6. Composite return requirements

Benefits

The panel will review these and other key issues:

  • What are the current state-by-state mechanics for nonresident S corporations?
  • What are the composite return and consent rules in the case of S corporations with nonresident shareholders?
  • What are the major state trends for QSSS recognition?
  • What calculations, adjustments, and schedules need to be maintained in the case of multistate filings where one state does not recognize S corporation status?

Faculty

Homsi, Eric
Eric Homsi
Counsel
Crowell & Moring

Mr. Homsi is a counsel in the firm's Tax Group, resident in the New York office. His practice concentrates...  |  Read More

Rendziperis, George
George W. Rendziperis, JD
Managing Director, State and Local Tax
Hancock Askew & Co.

Mr. Rendziperis provides state and local tax advice to companies in the financial services, private equity, real...  |  Read More

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