Frequently Asked Questions
Does a corporation that made the federal election to be taxed in accordance with the provisions of 26 U.S.C. Subtitle A, Chapter 1, Subchapter S have to make the pass-through entity tax election under LA R.S. 47:287.732.2?
No, the corporation would need to look at the tax implications to decide whether to make the election. Technically an S Corporation is a pass-through entity but Louisiana income tax law does not recognize Subchapter S corporation status. An S corporation is required to file income tax in the same manner as a C corporation. However, in certain instances, all or part of the corporation income can be excluded from Louisiana corporation income tax through the S corporation exclusion of net income. In this instance the income tax is paid by the shareholders and the pass-through entity tax election under LA R.S. 47:287.732.2 does not need to be made.
Revised Statute 47:287.732.2 allows Subchapter S Corporations, and other flow-through entities taxed as partnerships for federal income tax purposes, to elect to pay Louisiana income tax at the entity level. An individual who is a shareholder, member, or partner of the entity is allowed to exclude the income taxed at the entity level that is included in their federal adjusted gross income. Once the election is made, it is effective for the entire taxable year for which it was made as well as all subsequent taxable years until the election is terminated. To make the Pass-through entity tax election, the entity must make the election on Form R-6980, Tax Election for Pass-Through Entities, and must receive LDR acceptance of the election. See Louisiana Administrative Code (LAC) 61:I.1001 for requirements to make the election and the instructions for the required documentation. The election can be made during the taxable year prior to the taxable year in which the election is first effective, during the taxable year in which the election is first effective, or on or before the 15th day of the fourth month after the close of the taxable year in which the election is first effective. For the 2021 tax year, the deadline to make the election is April 15, 2022. (New question & answer posted on January 3, 2022.)