S-Corps and New York

If you form a Limited Liability Company (LLC) which has elected to be taxed as a sub-chapter S or S-Corp or you form a corporation which has elected to be taxed as a sub-chapter S or S-Corp at the federal level, keep in mind the following as it relates to New York.

New York State does not automatically treat your Federal S election as a sub-chapter S or S-Corp for NYS tax purposes. You must file NYS Form CT-6 - Election by a Federal S Corporation to be Treated As a New York S Corporation and meet the following qualifications: (1) Be a federal S corporation, (2) Be a general business corporation taxable under Article 9-A or be the parent of a QSSS that is taxable under Article 9-A of the New York State Tax Law. Insurance corporations taxable under Article 33 or any corporation taxable under Article 9 can't elect to be a New York S corporation, and (3) Get consent to the New York S election from all of the corporation's shareholders.

Furthermore, New York City does not recognize the Federal or New York S election. As such, your sub-chapter S or S-Corp in NYC will be subject to the NYC General Corporation Tax.

Before forming a legal business entity and/or making changes to your entity classification, consult with your CPA and legal counsel.