S CORPORATION
Federal Income Tax Returns The S corporation generally is not separately taxed. The S corporation files Form 1120-S and supporting forms and schedules, including Schedules K (Form 1120-S) and K-1 (Form 1120-S). Individual shareholders report their share of the S corporation’s income, deductions, and credits on their individual Form 1040, using information on Schedule K-1. Minnesota Income Tax Returns S corporations file Form M8, S Corporation Return, with copies of federal Form 1120-S and supporting forms and schedules. The S corporation may have to pay a minimum fee based on property, payroll, and sales attributable to Minnesota. If the S corporation has items of income, credits or modifications that are different from the federal return it must also issue Schedule KS to its shareholders and include copies with Form M8. If the S corporation has nonresident individual shareholders, it may pay composite income tax on their behalf using Schedule KS. Individual shareholders who are not included on the composite income tax may be required to complete Form M1, Individual Income Tax Return. If there are nonresident individual shareholders who will not be included in the composite income tax, generally the S corporation is required to withhold income tax (called nonresident withholding) on behalf of such shareholders and remit it with Form M8 by using Schedule KS. If the S corporation is making a pass-through entity tax election, it must file Schedule PTE with its Form M8 and file on or before the extended due date for the return. Limited Liability Company Under IRS Treasury Regulations the organizers of a Limited Liability Company (LLC) can choose how the LLC will be taxed. Generally, a LLC with one member may be taxed either as a corporation or as a sole proprietorship. LLCs with two or more members may be taxed either as a partnership or as a corporation. Note: For LLCs with one member, this decision will also impact whether the LLC needs a tax identification number. A Minnesota LLC will receive the same tax treatment for state purposes that it receives for federal purposes. Persons considering forming a LLC are advised to consult with a tax professional regarding state and federal tax treatment. See the section “Choosing the Form of Business Organization – Tax and Non-Tax Considerations” in this Guide.
TAX CREDITS AND INCENTIVES
Minnesota Tax Credits and Incentives • Research and Development Tax Credit: Provides a credit of 10 percent of qualifying expenses up to $2 million, and 4 percent for expenses above that level. Qualifying expenses are the same as for the federal R&D credit - defined in Section 41 of the Internal Revenue Code - but must be for research done in Minnesota. (Minn. Stat. § 290.068)
221
Made with FlippingBook - Online Brochure Maker