§287.732.1. Qualified Subchapter S subsidiaries

A. Taxation of a qualified Subchapter S subsidiary. Except as provided in Subsection C of this Section, a corporation treated as a qualified Subchapter S subsidiary for purposes of the Internal Revenue Code shall be required to comply with this Part the same as any other corporation. The provisions of this Part shall apply as if the qualified Subchapter S subsidiary and its parent had been required to file income tax returns with the Internal Revenue Service as C corporations for the current and all prior taxable years in accordance with federal law.

B. Special adjustments by the secretary. In addition to the authority granted by R.S. 47:287.480, whenever a qualified Subchapter S subsidiary does not qualify for the exclusion provided by Subsection C of this Section, the secretary may require combined or consolidated reports or returns as may be necessary to properly reflect the taxable income earned in Louisiana. This authority shall not limit the secretary's authority to require use of the separate accounting method as provided by R.S. 47:287.94 when the apportionment method produces a manifestly unfair result.

C. Qualified Subchapter S subsidiary exclusion. An exclusion is allowed for corporations classified as qualified Subchapter S subsidiaries under federal law for the taxable year as follows:

(1) In computing Louisiana taxable income pursuant to this Part, a qualified Subchapter S subsidiary may exclude all of its Louisiana net income for the taxable year, provided that the S corporation that owns the stock of the qualified Subchapter S subsidiary files a Louisiana income tax return that includes all of the income of the qualified Subchapter S subsidiary in computing its net income for the taxable year.

(2) If the Louisiana taxable income of a qualified Subchapter S subsidiary qualifies for the exclusion provided in Paragraph (1) of this Subsection, the qualified Subchapter S subsidiary shall not be treated as a separate corporation, and all assets, liabilities, and items of income, deduction, credit, and any other items of the qualified Subchapter S subsidiary shall be treated as assets, liabilities, and items of income, deduction, credit, and other items of the corporation owning the stock of the qualified Subchapter S subsidiary.

(3) If the Louisiana taxable income of a qualified Subchapter S subsidiary is excluded for the taxable year under Paragraph (1) of this Subsection, the S corporation that owns the stock of the qualified Subchapter S subsidiary may exclude the percentage of the qualified Subchapter S subsidiary's Louisiana net income for the taxable year as provided in R.S. 47:287.732(B).

Acts 2002, No. 17, §1, eff. for taxable periods beginning after Dec. 31, 2002.