N.H. Admin. Code § Rev 302.01

Current through Register No. 1, January 2, 2025

Section Rev 302.01 - Business Organizations Filing as S Corporations for Federal Income Tax Purposes

(a) A corporation which qualifies and files as an S corporation, for federal income tax purposes pursuant to sections 1361 through 1379 of the IRC, shall be treated the same as a corporation which files as a regular corporation for federal income tax purposes.

(b) A corporation qualified as a subchapter S subsidiary for federal income tax purposes pursuant to section 1361(b) of the IRC shall:

(1) Be treated as an S corporation as provided in (a) above, for purposes of the business profits tax;

(2) Maintain sufficiently detailed records to determine the business profits tax liability of the corporation at the corporate level; and

(3) File its own business tax return unless it is part of a combined return.

(c) The following modifications shall be made to federal Form 1120S to arrive at the net profit from all business activity:

(1) The ordinary income or loss from trade or business activities on page one of federal Form 1120S shall be increased or decreased by all necessary adjustments including, but not limited to, on schedule K of federal Form 1120S for the amounts of:

a.Gross income or loss from real estate rental activities less expenses for such activities;

b.Gross income or loss from other rental activities less expenses for such activities;

c.Interest, dividend or royalty income;

d.Short-term and long-term capital gains;

e.Net gain or loss under section 1231 of the IRC; and

f.Any S corporation income, loss or expenses not included in federal Form 1120S; and

(2) Expenses allowed to a C corporation may be deducted.

(d) In a year wherein sections of the IRC pertaining to formation or termination of an S corporation are applicable, and the business organization is required to file a federal S corporation short-year return and a federal regular corporation short-year return for the same tax year, the corporation shall, for purposes of business profits tax complete and file Form NH-1120, Corporate "Business Profits Tax Return" with the department.

(e) Form NH-1120 shall be accompanied by both federal returns.

(f) The method selected to allocate income between the short S corporation and regular corporation tax years for federal purposes shall not alter the amount due under RSA 77-A.

(g) A taxpayer shall determine the basis of stock held in an S corporation for business profits tax purposes by:

(1) Calculating the basis amount as if the stock were that of a regular corporation; and

(2) Not using basis adjustments which follow federal conduit rules for taxation of partnership-type interests.

(h) Liquidations of S corporations shall follow the same rules of the IRC as liquidations of regular corporations for business profits tax purposes.

(i) No part of this section shall be construed as allowing a greater deduction from income or inclusion to income than would be allowable for regular corporations.

N.H. Admin. Code § Rev 302.01

#2651, eff 3-22-84; ss by #2722, eff 5-23-84; ss by #4192, eff 12-23-86; amd by #4438, eff 6-22-88; ss by #5490, eff 10-19-92; ss by #6853, eff 9-23-98; ss by #8709, eff 8-25-06

Amended byVolume XXXV Number 06, Filed February 12, 2015 , Proposed by #10758, Effective 1/16/2015, Expires1/16/2025.