Discussion:PC vs. scorp & multi state filings
From TaxAlmanac
| Revision as of 21:46, 13 October 2009 KatieJ (Talk | contribs) (Ideally you woul) ← Previous diff |
Revision as of 00:18, 14 October 2009 JR1 (Talk | contribs) (PC is a state de) Next diff → |
||
| Line 21: | Line 21: | ||
| There is no individual income tax in WA, TX, or FL, and Florida would require filing by a C corp but not an S corp. TX would require either an S or a C corp to file a return, and either would be subject to the "gross margin" tax. Some of the listed states, such as California and New Jersey, impose fixed-dollar minimum taxes on C and S corporations.}} | There is no individual income tax in WA, TX, or FL, and Florida would require filing by a C corp but not an S corp. TX would require either an S or a C corp to file a return, and either would be subject to the "gross margin" tax. Some of the listed states, such as California and New Jersey, impose fixed-dollar minimum taxes on C and S corporations.}} | ||
| + | |||
| + | {{ForumReplyPost|UserID=JR1|Date=October 14, 2009|Text=PC is a state designation usually, and has nothing to do with IRS status. PC can be C or S, which is all that matters. A PSC is by def a C corp owned by service pros, and subject to obscene rates if you don't zero out the profits, forcing salary on all income. But perhaps avoiding multi state 1040's...pick your poison. Both are poison.}} | ||
Revision as of 00:18, 14 October 2009
Discussion Forum Index --> Advanced Tax Questions --> PC vs. scorp & multi state filings
Discussion Forum Index --> Tax Questions --> PC vs. scorp & multi state filings
Cestrobeck (talk|edits) said: | 13 October 2009 |
| New client is an attorney and a partner in a multistate firm. He receives a K1 with multi-state attachments, and is required to file a personal return in each state. Prior CPA set up an scorp to run his partnership income through to reduce his taxes; now collegues are saying he needed to be a PC, not an Scorp, and that there are issues with states recognizing the scorp election. His K1 will now be issued to the Scorp, which will have multistate returns to file, I imagine.
I am aware that some states do not recognize the scorp elections, though I don't know which ones (I will have to research this, but any input would be appreciated!). Help me with the reprecussions of PC vs scorp -- I know some of you out there deal with this type of thing! Unfortunately, I've come in after the fact and am trying to catch up. Should we revoke the scorp election and revert to a corp? What are the reprecutions of not filing as a PC since he obviously should have -- and then does the scorp election negate that need? What is the best scenario for this client? States with K1s in 2008 K1 are CA, CT, FL, GA, IL, MA, ME, MI, MN, MO, NJ, NY, PA, TX, VA, WA. | |
| 13 October 2009 | |
| well, the advantage of the S corp is that he avoids the PSC treatment of a C corp. | |
| October 13, 2009 | |
| As much as I HATE C corps...I'm beginning to wonder now about the multi-staters...eliminates the 1040 fiasco at least. | |
| 13 October 2009 | |
| I don't see why your client cannot be a P.C. with an S-election. Am I missing something? If your client could make the proper filings with the Secretary of State of the State in which he incorporated to fix his problem of not originally incorporating as a P.C., then why can't you leave the S-election in place, rather than revoking it and defaulting to a C-corp? | |
| 13 October 2009 | |
| Some of those states do not have a filing requirement, one being WA, and I do not believe TX or FL do either. You might want to check on the rest, it will make your job a little bit easier. | |
| 13 October 2009 | |
| Ideally you would zero out the corporation's taxable income with salary. The beauty of putting a corporation (S or C, either way) between the partnership (probably an LLP) and the individual is that the partnership income is apportioned among the states where it does business, but the salary from the corporation is sourced to the place or places where the stockholder/employee performs his/her services. The corporation, whether C or S, probably has a filing requirement in all the states, but if no source income from the other states flows through to the stockholder, there's no filing requirement in the nonresident states for the individual.
There is no individual income tax in WA, TX, or FL, and Florida would require filing by a C corp but not an S corp. TX would require either an S or a C corp to file a return, and either would be subject to the "gross margin" tax. Some of the listed states, such as California and New Jersey, impose fixed-dollar minimum taxes on C and S corporations. | |
| October 14, 2009 | |
| PC is a state designation usually, and has nothing to do with IRS status. PC can be C or S, which is all that matters. A PSC is by def a C corp owned by service pros, and subject to obscene rates if you don't zero out the profits, forcing salary on all income. But perhaps avoiding multi state 1040's...pick your poison. Both are poison. | |
