Act 12 of the 2016 First Extraordinary Session extended the imposition of the franchise tax to additional types of entities. Starting with the 2017 Franchise tax period, an LLC for Louisiana franchise tax purposes is treated and taxed in the same manner that it is treated and taxed for federal income tax purposes. Income tax purposes, which is the most common situation, the LLC is treated as a partnership for Louisiana income tax purposes. If the LLC is considered a partnership for federal If the LLC is taxed as a corporation for federal income tax purposes, the LLC willīe taxed as a corporation for Louisiana income tax purposes. How are Limited Liability Companies (LLCs) taxed for Louisiana income and franchise tax purposes?Īn LLC is treated and taxed in the same manner for Louisiana income tax purposes as it is treated and taxed forįederal income tax purposes.The franchise tax is imposed on an S corporation in the same manner as it is for a C corporation. An S corporation is not exempt from franchise tax.
When electing the second method, the Subchapter S exclusion must not offset the net income to be reported on the corporation income and franchise taxes return.
In general terms, the portion of income that can be excluded is determined by the ratio of the number of issued and outstanding shares of the S corporation’s capital stock owned by Louisiana resident individuals to total number of issues and outstanding shares of capital stock.Shareholders who are nonresidents of Louisiana may elect to file the individual nonresident and part-year resident return to report their portion of the income derived from the activities of the S corporation or to allow the corporation to pay the tax at the corporate income tax rate on their portion of the income. Shareholders who are Louisiana residents are required to file a Louisiana individual income tax return to report their portion of the income derived from the activities of the corporation. Since the classification of a Subchapter S corporation is a determination made under federal law, any question regarding that classification must be referred to the IRS.A corporation classified by the IRS as an "S" corporation may exclude all or part of its income derived from the activities of the corporation, depending upon the domicile of the shareholders. For federal 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. Louisiana taxes Subchapter S corporations, known as S corporations or Sub S corporations, in the same manner as regular corporations, with one exception.
Fairs, Festivals, and Other Special Eventsįrequently Asked Questions Corporation Income and Franchise Taxes.
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