What is the calculation of Maryland Form 511, line 2 in an 1120S return using CCH® ProSystem fx® Tax interview view?

  • Article Type:
  • QA
  • Last Modified:
  • 08/11/2021

Question

Maryland Electing Pass-Through Entity Deduction
 

Environment

  • CCH® ProSystem fx® Tax
  • CCH Axcess™ Tax
  • 1120S
  • S Corporation
  • Maryland
  • Interview View 

Answer

Beginning on release 2020.040110 (Axcess 2020-4.11) available August 13, 2021:

State and local taxes based on income (trade/business, rental farm, etc.) will now be included in the calculation of Form 511, line 2.  An override for this calculation is available on Interview Form MD1, Box 46.

Prior to this release:

MD electing PTE instructions, page 5 and 6 discuss how Form 511, line 2 should be derived, specific to 1120S, Schedule K, lines 1-10, plus taxes based on net income included on 1120S, page 1, line 12. Currently, the MD tax Federal deduction addback is calculated when it is derived from the tax payment input on STPAY-1.
  1. Go to Interview Form 2A, box 33 and enter a code of 1 or 2.
  2. Go to Interview Form A-3, boxes 70-121, and remove inputs for state code MD.
  3. Go to Interview Form 2, box 92, select option N to allow the STPAY-1 input to carry back to Fed.

Notes

  • For Cash Basis taxpayers:
    • If the 1120S, page 1, line 12 taxes paid to MD deduction is different than the taxes paid including accrued taxes input on STPAY1, boxes 31-55, then an input may be needed on Interview Form L-3, box 94 to balance the Federal Schedule L.
    • If not choosing to use Form 2A box 33, the documented work around on release 2020.04010 is to pink override MD 511, line 4, and utilize input overrides on MD2, 30 and 32 flow to MD K-1 with the correct amounts.
  • On release 2020.04010, A-3 box 70-71 DO NOT get added back to 511, line 2.
    • The Calculation of MD 511, line 2 does not currently consider this Fed deduction input that is not first used for reducing taxes due on the Form 511, line 12. 
    • This input is expected to be included in the calculation of Form 511, line 2 on release 2020.04020, available August 22nd, 2021.
  • Preparers have often asked support about the system calculating a MD K-1, line B5 Addition. 
    • When the addback is calculated as included on MD 511, line 2, and Sch. K-1, Part A, line 1 then it is not included as addition on line B5.

Additional Information

N/A

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