CT-34-SH Addback of NYC Tax for S Corps

The 2023 instructions for Form CT-34-SH, New York S Corporation Shareholders’ Information Schedule, include a significant change to the add-back rules for taxes on line 1a. The add-back rules apply to certain taxes that were deducted by the entity on its federal Form 1120S.

In addition to the taxes that have been previously included, the list of taxes to be added back now also includes any other income-based taxes imposed by other taxing jurisdictions (including New York City general corporation tax if the tax is computed using the entire net income base or the alternative tax base).

When an entity reports taxes on line 1a of Form CT-34-SH, the entity must also report the share of these taxes to each shareholder, using Schedule K-1 equivalent that is provided to the shareholders. Such taxes are then added back to New York State income on the personal New York tax returns of each of the shareholders.

As a result, shareholders of S corporations that are subject to the New York City general corporation must now add back their share of the New York City general corporation tax to the shareholders’ New York income on their personal New York income tax return.

The instructions for the Form CT-34-SH for 2022 and earlier tax years did not include this addback.