Yes, if the S Corporation does business in VA & DC than you need to file the S Corp tax return in both VA & DC.
To the extent there is income in VA & DC, the shareholders may be required to file a personal tax return in VA & DC
Normally States require S Corporation to register in their State as a foreign corporation in order to transact business in that State. You may want to check with Department of State in each State to determine the requirements.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.
Yes, you would be required to allocate income and expenses to each state.
Most States allow apportionment using the three factors- sales, payroll or property.
This would involved detailed research for each particular state in question. I would suggest you to review the instructions to the tax return for each State for specific information.
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