§287.732. S corporations

            A. Definitions. As used in this Section, the following words and phrases shall have the meanings ascribed to them in this Subsection unless the context clearly indicates otherwise:

            (1) "Code" means the Internal Revenue Code of 1986, as amended, and applicable regulations as promulgated by the Department of Treasury.

            (2) "Department" means the Department of Revenue.

            (3) "Income attributable to the state" means items of income, loss, deduction, or credit of the S corporation apportionable and allocable to this state pursuant to this Part.

            (4) "Income not attributable to the state" means all items of income, loss, deduction, or credit of the S corporation other than income attributable to the state.

            (5) "Pro rata share" means the share determined with respect to an S corporation shareholder for a taxable period in the manner provided in Section 1377(a) of the Code.

            (6) "S corporation" means a corporation for which a valid election under Section 1362(a) of the Code is in effect.

            (7) "Secretary" means the secretary of the Department of Revenue.

            B.(1) S corporation requirements. An S corporation shall not be subject to the income tax imposed by this Part but shall be required to file an annual informational corporation return of income in accordance with this Section.

            (2) Each shareholder's pro rata share of an S corporation's income attributable to the state, and each resident shareholder's pro rata share of income not attributable to the state, shall be taken into account by the shareholder in the manner and subject to the adjustments provided in Parts III and VI of this Chapter, as applicable, and Section 1366 of the Code. These amounts shall be subject to the tax levied pursuant to Parts III and VI, as applicable, of this Chapter.

            (3) Persons carrying on business as shareholders of an S corporation shall be liable for income tax only in their separate or individual capacities.

            C. Returns. (1) An S corporation incorporated or doing business in this state shall file with the department an annual informational return, on a form prescribed by the secretary, on or before the due date prescribed for the filing of corporation returns in R.S. 47:287.614. The return shall report the name, address, and social security or federal identification number of each shareholder, income attributable to the state, and the income not attributable to the state with respect to each shareholder as defined in Paragraphs (A)(3) and (4) of this Section, and such other information as the secretary may require.

            (2) S corporation items of income, loss, deduction, and credit taken into account by a shareholder pursuant to Paragraph (B)(1) of this Section are characterized as though received or incurred by the S corporation and not its shareholder.

            D. Tax credits. For taxable periods beginning on or after January 1, 2026, any credit previously earned by a taxpayer taxed as an S corporation for federal income tax purposes and subject to the provisions of this Section shall flow-through to the shareholders in accordance with the provisions of R.S. 47:1675(F).

            E. Basis and adjustment. (1) The initial basis of a resident shareholder in the stock of an S corporation, and in any indebtedness of the corporation owed to that shareholder, shall be determined as of the later of the date the stock is acquired, the effective date of the S corporation election, or the date the shareholder became a resident of this state, as provided under the Code.

            (2) The basis of a resident shareholder in the stock and indebtedness of an S corporation shall be adjusted in the manner and to the extent required by Section 1011 of the Code. However, any adjustments made, other than for income exempt from federal or state income taxes, pursuant to Paragraph (B)(2) of this Section shall be taken into account.

            (3) The initial basis of a nonresident shareholder in the stock of an S corporation, and in any indebtedness of the corporation to that shareholder, shall be zero. The basis of a nonresident shareholder in the stock and indebtedness of an S corporation shall be adjusted as provided in Section 1367 of the Code, except that adjustments to the basis shall be limited to the income taken into account by the shareholder pursuant to Paragraph (B)(2) of this Section.

            (4) The basis of a shareholder in the stock of an S corporation shall be reduced by the amount allowed as a loss or deduction pursuant to Paragraph (F)(3) of this Section.

            (5) The basis of a resident shareholder in the stock of an S corporation shall be reduced by the amount of any cash distribution that is not taxable to the shareholder as a result of the application of Paragraph (G)(2) of this Section.

            (6) For purposes of this Section, a shareholder shall be considered to have acquired stock or indebtedness received by gift at the time the donor acquired the stock or indebtedness, if the donor was a resident of this state at the time of the gift.

            F. Carryforwards. (1) Carryforwards and carrybacks to and from an S corporation shall be restricted in the manner provided in Section 1371(b) of the Code.

            (2) The aggregate amount of losses or deductions of an S corporation taken into account by a shareholder pursuant to Paragraph (B)(2) of this Section may not exceed the combined adjusted bases, determined in accordance with Subsection D of this Section, of the shareholder in the stock and indebtedness of the S corporation.

            (3) Any loss or deduction that is disallowed for a taxable period pursuant to Paragraph (2) of this Subsection shall be treated as incurred by the S corporation in the succeeding taxable period with respect to that shareholder.

            (4)(a) Any loss or deduction that is disallowed pursuant to Paragraph (2) of this Subsection for the S corporation's last taxable period as an S corporation shall be treated as incurred by the shareholder on the last day of any post-termination transition period.

            (b) The aggregate amount of losses and deductions taken into account by a shareholder pursuant to Subparagraph (a) of this Paragraph may not exceed the adjusted basis of the shareholder in the stock of the corporation determined in accordance with Subsection D of this Section at the close of the last day of any post-termination transition period and without regard to this Subsection.

            G. Distributions. (1) Subject to the provisions of Paragraph (3) of this Subsection, a distribution made by an S corporation with respect to its stock to a resident shareholder is taxable to the shareholder as provided in Parts III and VI of this Chapter, as applicable, to the extent that the distribution is characterized as a dividend or as gain from the sale or exchange of property pursuant to Section 1368 of the Code.

            (2) Subject to the provisions of Paragraph (3) of this Subsection, any distribution of money made by a corporation with respect to its stock to a resident shareholder during a post-termination transition period is not taxable to the shareholder as provided in Parts III and VI of this Chapter, as applicable, to the extent the distribution is applied against and reduces the adjusted basis of the stock of the shareholder in accordance with Section 1371(e) of the Code.

            (3) In applying Sections 1368 and 1371(e) of the Code to any distribution referred to in this Subsection, all of the following shall apply:

            (a) The term "adjusted basis of the stock" means the adjusted basis of the shareholder's stock as determined in accordance with Subsection D of this Section.

            (b) The accumulated adjustments account maintained for each resident shareholder must be equal to, and adjusted in the same manner as, the corporation's accumulated adjustments account defined in Section 1368(e)(1)(A) of the Code, except that the accumulated adjustments account shall be modified in the manner provided in Paragraph (E)(2) of this Section.

            H.(1) Payment of tax. If any resident or nonresident shareholder fails to make timely payment of the taxes imposed on the shareholder by this state with respect to the shareholder's share of the income of the S corporation, the secretary may collect the payment directly from the S corporation through any collection remedy authorized by R.S. 47:1561.

            (2) The payment referred to in Paragraph (1) of this Subsection shall be in an amount equal to the maximum tax rate provided for individuals or trusts and estates, where applicable, multiplied by each delinquent resident or nonresident shareholder's share of the S corporation's income attributable to this state, as reflected on the S corporation's return for the taxable period, plus any interest or appropriate delinquency penalty.

            (3) Any amount paid by the S corporation to the state pursuant to this Subsection shall be considered to be a payment by the resident or nonresident shareholder on account of the income tax imposed on the resident or nonresident shareholder for the taxable period. To the extent that the payment made on behalf of the resident or nonresident shareholder exceeds the income tax liability of the resident or nonresident shareholder, that resident or nonresident shareholder shall be entitled to a refund, or may elect to utilize such excess as a credit against amounts that may be paid by the S corporation on his behalf with respect to subsequent taxable periods.

            (4) An S corporation shall be entitled to recover its payment pursuant to this Subsection, including any interest or penalty due, from the resident or nonresident shareholder on whose behalf the payment was made.

            Acts 1986, 1st Ex. Sess., No. 16, §1, eff. Dec. 24, 1986; Acts 1989, No. 622, §1, eff. Jan 1, 1991; Acts 2002, No. 17, §1, eff. for taxable periods beginning after Dec. 31, 2002; Acts 2019, No. 442, §1, eff. June 22, 2019; Acts 2025, No. 382, §1, eff. June 20, 2025.

            NOTE: See Acts 2019, No. 442, re: applicability.