How does Louisiana tax a corporation that is classified by the IRS as an “S” (small business) corporation?
Louisiana taxes “S” corporations in the same manner as regular corporations, with one exception. For income tax purposes an “S” corporation will determine its items of income and expense in the same manner as if it were a regular “C” corporation for federal income tax purposes. However, a corporation classified by the IRS as an “S” corporation may be entitled to an exclusion of part or all of its income for Louisiana income tax purposes, depending on the percentage of shares owned by Louisiana resident individuals. In general terms, the portion of income that can be excluded is determined by the ratio of outstanding shares owned by Louisiana resident individuals to total shares outstanding. For franchise tax purposes the “S” corporation is taxed in exactly the same manner as a regular “C” corporation. Since the classification of a corporation as an “S” corporation is a determination under federal law, any question of classification must be referred to the IRS.
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- How does Louisiana tax a corporation that is classified by the IRS as an "S" (small business) corporation?
