Tax Accrual and State and Local Taxes

State and city taxes accrue to the federal return only when a "State and City Tax Accrual Option" is selected. Taxes computed on the New York return carry to page 1 of the federal return if "Deduct on Federal, Adjust balance sheet" is selected on the Return Options worksheet, Calculations Options section, State and City Tax Accrual Option field. This tax also accrues to the appropriate sections of the federal balance sheet.

State Tax Accrual Option "Deduct on Federal, Adjust Schedule M-1" carries state taxes computed on the New York return to page 1 of the federal return but does not accrue them to the federal balance sheet. If required, a Schedule M-1 book/tax adjustment is made.

State Tax Accrual Option "Tax to rental, Adjust balance sheet" accrues taxes to the balance sheet, but tax expense is carried to the rental schedule instead of Form 1120S, page 1.

State Tax Accrual Option "Tax to rental, Adjust Schedule M-1" accrues taxes to Schedule M-1, but tax expense is carried to the rental schedule instead of Form 1120S, page 1.

State Tax Accrual Option "Tax to Sch. K, Adjust balance sheet" accrues taxes to the federal Schedule K and to the federal balance sheet.

State Tax Accrual Option "Tax to Sch. K, Adjust Schedule M-1" accrues taxes to the federal Schedule K and to the federal M-1.

If a State Tax Accrual Option is not selected, state taxes computed on the New York return are neither carried to the federal return nor accrued to the balance sheet.

You can also suppress either entity (state or city) accrual by making an entry in the appropriate box on the State/City Generation worksheet under the Common State category.

State and City Income Taxes

All state and city/local taxes based on income entered on Business worksheet, Taxes and Licenses section (or accrued from state and city/local returns), and state income franchise taxes entered on Federal Income and Deduction category, Rental and Royalty worksheet, Expenses section carry as an addition to federal taxable income.

State and City Tax Refunds

Refund amounts entered on the Federal Income and Deduction category, Business worksheet, Income section, State and City Tax Refund fields, will be automatically deducted from the applicable state and city returns.

The state entered on the Federal General category, Basic Data worksheet, General section, state code field, is assumed to be the state from which the refund was received, if the state code on the Business worksheet, Income section, State field, is left blank.