Reporting S-Corp loss in PA tax return

[seshadri1]

The S-Corp owned by my wife had a loss in 2020. This was subtracted in the income for the federal return based on what was entered as business income in Schedule K-1. However the same negative amount that was entered in the PA state return as taxable business income in schedule RK-1 was ignored in calculating the total PA taxable income.  What needs to be done to fix this? 

[tagteam]

Have you tried Forms Mode?

[seshadri1]

When I go to forms and open form PA-40, in item 4, "Net income or less from the operation of business" section, it shows the negative amount only in line for RK-1 Shareholder worksheet, but not in the total for item 4.  In item 9, Total PA taxable income, it is again excluded, I guess because the description states "Do not add any losses reported on lines 4, 5, or 6" .   I am wondering if PA doesn't permit losses from S Corps and if we'll be hit with a profit based on the PPP loan forgiveness that took place in 2021.