VA PTET
My thinking is that if the S corp elects to pay the shareholders VA tax at the S Corp level on a cash basis it will have no effect on the federal in 2022, but will reduce the 2023 tax.
For example At the federal level the taxable income is 100,000 in 2022 and 75,000 in 2023 before payment of VA 2022 tax. S Corp pays tax 100,000 X 5% and individual rate is 5%. 5% rate for simplicity.
What do you think?
2022 2023
S Corp
Federal
100,000 75,000
Less 2022 VA payment made in 2023 ( 5,000)
70,000
Virginia
100,000 70,000
Tax 5,000 paid by S Corp 5,000 add back for tax paid in 2022
75,000
1040
Federal
K-1 100,000
Virginia
VK-1 100,000
Tax due 5,000
Less credit (5,000) paid at S Corp level
VA tax due zero