State tax filing

these are not deductible by the S-Corp.  rather they represent distributions to shareholders. s/h's treat these as like estimated tax payments to that state. each state probably has a place on its k-1 prepared in Turbotax to reflect these payments.

 

the problem comes in is these are distributions.  in an S-Corp distributions are supposed to be proportional to the % of the stock held.  no problem if just 1 s/h. but if more than one this can result in disproportionate distributions, it needs to be corrected as soon as possible.  disproportionate distributions could indicate a second class of stock which would void the S election.