PNWC's Government Contracting Update

State Income Tax Paid by S-Corp or LLC Shareholders | PNWC’s Government Contracting Update

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FAR (Federal Acquisition Regulation) 31.205-41 provides criteria on which taxes are allowable and which taxes are not allowable under Government contracts (see Allowability of Taxes Under Government Contracts). State income taxes required to be and are paid (or accrued) in accordance with GAAP (Generally Accepted Accounting Principles) are specifically called out as allowable costs.

Source: PNWC’s Government Contracting Update: State Income Tax Paid by S-Corp or LLC Shareholders

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