Small Business/Sub-S

A Kansas corporation return must be filed by all corporations doing business within or deriving income from sources within Kansas who are required to file a Federal Income Tax return, whether or not a tax is due. Corporations which elect under subchapter S of the Internal Revenue Code not to be taxed as a corporation must file a Kansas Small Business Corporation return. S corporations are generally exempt from tax. Each shareholder includes the income, or loss, from the S corporation on his or her income tax return.

Banks and saving and loan associations allowed to file as a small business corporation at the federal level are not allowed to file as a small business corporation at the Kansas level. Those entities are required to file a Privilege Tax return to report any income or loss. The federal level shareholders income, or loss, which is included in their individual federal income tax returns is to be subtracted from federal adjusted gross income so as to not allow that income.