Qualified Subchapter S Subsidiary

​To accommodate filing of a single return, Minnesota conforms to the federal treatment that allows a parent S corporation to elect to treat its subsidiary as a qualified subchapter S subsidiary (QSSS).

The parent files Form M8, S Corporation Return and reports income, deductions, and credits for both companies.

No Minimum Fee Requirement for QSSS

The Minnesota Department of Revenue changed its position regarding the minimum fee for QSSSs.

Each designated filer is no longer being required to pay a minimum fee for each separate QSSS based on their Minnesota factors.

All of the parent and QSSS Minnesota factors are combined into one, which results in one minimum fee being paid by the designated filer. (See Revenue Notice 13-01.)

How to File

If the parent S corporation has nexus with Minnesota, use the parent’s federal and state tax ID numbers when filing Form M8.

If the parent does not have nexus, use the QSSS’s federal and state tax ID numbers.

Either way, you must include a complete copy of federal return Form 1120S.

If you’re including a QSSS on your Minnesota return, check the Qualified Subchapter S Subsidiary box on the front of Form M8.