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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12656
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Bean counters! I'm self-preparing my 2014 1102S (six month

Customer Question

Hi all bean counters!
I'm self-preparing my 2014 1102S (six month extension filed in March). We moved our business from VA to IL in mid-august and re-incorporated in IL Aug 18th. So, I have the Federal return ready to go but I'm not sure how to prepare the state returns. I know that if the US returns don't match the state returns, the states get their underwear in a wad. Do I need to do a form that splits sales as if I had sales offices in each state like a retail operation or is there another method to indicating partial year that will satisfy the states?
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.

OK, first, what''s your entity type? (S-Corp)?

... the S-COrp passes the income from the corp to the individual's 1040 via the 1120-S' K-1

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If this was an S-COrp, then it's as simple as doing an 1120-s for both (checking the final box on the one you've dissolved) so that you'll have two different K-1s flowing to schedule E and then to the 1040.

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Then, on the state front, the state returns use your Federal AGI as the starting point, so that income/loss effect on your personal AGI will already be there

Expert:  Lane replied 2 years ago.

Sorry, I see the 1120-S now

Expert:  Lane replied 2 years ago.

Both VA and IL DO use federal AGI as the starting point for their return

... YOu can read more about that here: http://taxes.about.com/od/statetaxes/a/states-based-on-federal-AGI.htm

Expert:  Lane replied 2 years ago.

See this from the Dept of revenue in Illinois:

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S corporations are subject to the Personal Property Tax Replacement Income Tax (replacement tax), but do not pay regular Illinois income tax. The regular income tax is paid at the shareholder's level. Generally, income from an S corporation is passed on to the shareholders. The shareholders must include this income in their federal adjusted gross income (for individuals) or taxable income (for other taxpayers). This is the starting point for Illinois income tax purposes and where regular income tax is paid.

Customer: replied 2 years ago.
we're S-Corp. So I would file two 1120S forms with US, one for VA and one for IL? Each apportioned the rev/cost for the appropriate time periods? Then just do the state forms based on the particular 1120S and make it the final on VA?
Expert:  Lane replied 2 years ago.

You have it!

Expert:  Lane replied 2 years ago.

Be sure to check the "final return" box on the VA 1120-S

Expert:  Lane replied 2 years ago.

1120-S that you file for the corp you had in VA, I should say

Customer: replied 2 years ago.
Perfect! Makes perfect sense. Thanks so much!
Expert:  Lane replied 2 years ago.

You're very welcome.

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Lane