1. Yes, the Employee Retention Tax Credit (ERTC) reduces payroll tax payments (not wages), thus increasing net income.
2. The ERTC would have been claimed on the company's Form 941 quarterly payroll tax reports as a credit for employer taxes. Report the actual taxes paid during the tax year. The credit taken is reported on Schedule K1, Line 13g (Code P Other Credits).
For more info, see Reporting CARES Act Employee Retention Credit on Form 1120-S
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