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Different Schedule C for Fed and State

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Level 2

Is it possible to prepare a different Schedule C for Fed than State?

Under MA rules about PPP, the treatment of the forgiven loan is different than the IRS rules. 

Under IRS rules, the forgiveness amount is not included in income, and the expenses used for forgiveness excluded also.

Under MA rules (TIR 20-9), the forgiveness amount IS included in income, and the expenses used for forgiveness are INCLUDED.

Can we use ProSeries to prepare the Schedule C for Fed differently than the Schedule C for MA?

Thank you.

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Level 12

Unless MA comes out with a state-specific Schedule C, I think the only way you can do it is to prepare the Federal.  File the Federal.  Then change the Schedule C to file State.

Maybe I'm missing something, but I think that MA rule is rather odd.  Won't it have the same result as the Federal way?

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Level 15

MA is odd because Massachusetts General Laws has a static conformity date of Jan 1, 2005 for personal income tax, unless otherwise stated, but rolling conformity for corporate tax, unless otherwise excepted.  These are the causes for disparities between the treatments of the same items depending on whether the taxpayer is an individual or a body corporate.

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Still an AllStar
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Level 2

To Itonewbie,

Thanks for your response. 

The TIR actually cites those conformity dates as the reasons for MA treatment of PPP issues.

Thanks again.

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Level 15

NP, @HudsonCPA!

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Still an AllStar
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Level 2

Yes, the bottom line to Sch C will be exactly the same.

I worry if I don't present MA Sch C correctly, there could be audit problems in the future.

I've tried to stir interest in this issue with the MA Society of CPAs, but other softwares (specifically Pro FX) apparently allow separate State and Fed Sch C so this is not an issue for CPAs using those softwares.

It would be great if ProSeries had the facility to allow separate State and Fed Sch C.  This can't be the only instance of different treatments of business issues at State and Fed level (bonus depreciation is one example of different treatments.)

Thanks for your response.

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Level 12

@HudsonCPA wrote:

This can't be the only instance of different treatments of business issues at State and Fed level (bonus depreciation is one example of different treatments.)


 

In my State (Minnesota), the State uses the Federal forms but then adds a separate form for adjustments from Federal (such as Bonus depreciation).  And I suspect that is the case is many other states.  So in those cases, there is no need for a separate Schedule C.

It is EXTREMELY unlikely that ProSeries will add that capability.  So unless MA comes out with a separate form, it seems likely your only option is to do as I suggested above.

 

While I wouldn't want to suggest doing it against MA rules, personally, I wouldn't be overly concerned about audit potential if it were done wrong.  If audited, what is going to happen?  They switch a few numbers and end up with the same result.

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Level 11

Line 6a of the Massachusetts Form 1 instructions ask for a copy of Schedule C. Line 6b asks for a copy of U.S. Schedule F.  To me this indicates they plan on issuing their own Schedule C. And indeed, for 2019 they had their own Schedule C.

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