"SCorp" <ihans[at]hotmail.nospam.com> wrote

- quote -

The same tax treatment holds for the shareholders. Remember
though, that you have to indicate to the shareholders how
much of the muni interest is from the resident state and how
much is non-resident state. With shareholders in various
states, you generally attach a schedule to the K-1
allocating the dollars among the states.

How muni income is treated at your state level on the "S"
corporation is a matter of state law. As an example,
Louisiana doesn't recognize "S" status, so they owe tax at
the state level. And while LA state muni income would still
be tax exempt at the state, non-LA muni income would be
taxed by LA.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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SCorp wrote:

- quote -

Yes, at the federal level anyway. That's why it's reported
separately on Schedule K and K-1.

Whether the interest is excluded from state taxable income
depends on the state of residency of the taxpayer and the
state/locality which issued the bonds.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

And is this income still federal and state tax free when it
passes to the shareholders?

Thanks for your help.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

SCorp wrote:

- quote -

Try line 16a of Schedule K.

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"SCorp" <ihans[at]hotmail.nospam.com> wrote

- quote -

Tax exempt interest gets reported in several different (but
related) places. Schedule K, Line 16a. Also Schedule M-1,
Line 5a. And on the K-1, Box 16 coded with an "A"

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

If an S-Corp opens a municipal money market account to store
extra funds, does the tax exempt interest pass thru to the
shareholders as tax exempt income?

If so, how is it reported as tax exempt income? I didn't see
a special line on the Sched K.

Thanks for your help.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >