Doing a 2021 S-corp with CA and HI. The company biz was affected by Covid, stopped operation as of 12/31/2020. No sales for all of 2021. There was a misc income, writing off AP about 100k, assume no expenses. The company HQ is in CA, so all the income should be attributed to CA. However, the 100K income is flowing to HI N-35 regardless, resulting a tax due for the withholding tax. We did not make extension payment by 4/20. I am using Lacerte.
Is there a way to not have the 100k flow to N35 as income? I am not sure if this is a Lacerte issue or this is just how it should be reported for HI. Doesn't seem fair because company has no presence in HI for all of 2021, no physical presence, no payroll, no sales.
Thx in advance.