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RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Question regarding doing business in multiple states.

Resolved Question:

Client owns a Maryland S Corporation and are residents of MD. Their S Corporation does business or provides services in both Virginia and DC. Does the S Corporation have to file a return in either VA or DC? Do they have to file a personal return in either VA or DC?

Submitted: 9 years ago.
Category: Tax
Expert:  RD replied 9 years ago.

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.

Customer: replied 9 years ago.

Does this mean they would have to allocate income and expenses to each state to determine the amount of income? If yes is there a formula for doing this other than by percentage of sales?
Thank you.

Expert:  RD replied 9 years ago.

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 involve 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.

Customer: replied 9 years ago.

Thank you, ***** ***** wanted to first ask you if I need any additional information how would I get in touch with you?

Expert:  RD replied 9 years ago.

You can either post a question and request me on the post or send me an email from your just answer account.

Let me know if you have any question.

RD and other Tax Specialists are ready to help you