PTE Tax Minnesota

[taxtime202311]

I have an scorp in Minnesota.  I did not pay any PTE tax this year and I have an extension on my s corp return. I am looking to elect PTE for 2022.

1. How do I know what the PTE tax amount should be?  If my K1 income without PTE is 100K should I then include a state tax payment of $9,850 (MN uses .0985%) on line 12 of the 1120 (which then flows to K1 line 1)?  This would then make the new K1 income as ($100,000 - $9,850).

2. Is there an upper limit of how much PTE tax I can pay?  Minnesota refunds any overpayment, so this seems like a backdoor way to reduce federal tax bill.  What am I missing?

[DaveF1006]

Please refer to this Minnesota website regarding PTE taxes.  You are correct in stating that PTE taxes are assessed at a flat rate of 9.85%.  There is no upper limit.

1. You would report the PTE tax as a state income tax paid by going to:
2. Federal taxes>deductions>business expenses>taxes and licenses>
3. State income Taxes

if you are the only shareholder that's issued a K-1, a net income amount of $90,150 will appear on line 1 of your k-1. This may reduce your federal tax bill but is a legitimate expense to educe your taxable income and perfectly legal within the tax code.

[taxtime202311]

Thanks for your response.  

In terms of an upper limit... is there an upper limit?  Can an s corp overpay the Minnesota PTE tax?  Is there an IRS regulation limiting this or is it like all things what is reasonable?