Since the State and Local Tax (SALT) deduction was limited to $10,000 for individual taxpayers in the federal Tax Cuts and Jobs Act, at least 22 states have enacted a Pass-Through Entity Tax (PTET), permitting pass-through entities, rather than their owners, to pay the state tax on their income and to deduct the full amount of the tax expense for federal purposes. As with everything else in the state tax world, each state takes its own approach to the design and implementation of its PTET, creating new compliance challenges for pass-through entities and their owners.
This two-hour course, taught by Elizabeth Pascal of Hodgson Russ LLP, looks at some of the similarities and differences of these PTETs and some of the questions arising as taxpayers look to take advantage of the potential federal benefits of the SALT deduction workarounds. We will also look at some of the practical and implementation issues in various states as well as questions that still remain with respect to the availability of resident credits and the federal deduction for PTET.
Publication Date: May 2022
Designed For
All CPAs, enrolled agents, tax return preparers, tax attorneys, and other practitioners who prepare returns for pass-through entities and/or their owners will benefit from this webinar.
Topics Covered
- Section 1: The Federal SALT Deduction Cap (a quick review)
- Section 2: Overview of Pass-Through Entity (PTE) Taxes
- Section 3. PTET Examples
- Section 4. PTET in Focus: New York
- Section 5. Resident Credits
- Section 6. To Elect or Not to Elect?
Learning Objectives
- Describe how a PTET works and how recent PTETs differ from "legacy PTETs"
- Recognize and apply the calculation of the PTET for partnerships versus S corporations and how it might differ from state to state
- Describe how the resident credit for PTET functions
- Identify key issues in determining whether an entity should elect into a PTET
- Identify a state with no owner-level personal income tax on PTE income
- Identify the state who's rate is 5.9% and is effective for years after 2021
- Identify the state whose rate of tax is the sum of lowest county rate and highest state-wide rate
- Identify an example of income that does not have a source
- Identify the number of general approaches that states take for allowing their residents a credit for taxes paid to other states
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructors
Elizabeth Pascal
Liz concentrates her practice in tax law with a focus on New York State, New York City, and multistate tax issues. She assists individual and business clients with New York State and New York City audits, including residency, sales tax, unincorporated business tax, commercial rent tax, and corporate tax audits. Liz has also helped many clients successfully navigate New York State’s voluntary disclosure process. She works with each client to determine the optimal strategy to resolve tax issues, whether negotiation through the audit process, litigation, or tax planning.
Prior to joining Hodgson Russ, Liz served as an intern for U.S. District Judge William Skretny in the Western District of New York. Before entering law school, she was a professor of comparative politics and has taught at Connecticut College, Wesleyan University, and University at Buffalo.
Hodgson Russ LLP
Hodgson Russ has approximately 200 attorneys in offices in Albany, Buffalo, New York City, Rochester and Saratoga Springs, New York; Hackensack, New Jersey; Palm Beach, Florida, and Toronto, Canada.
We serve a wide range of clients, from multinational and privately held corporations to nonprofit organizations, governmental entities, and individuals. Our attorneys practice in every major area of law and use multidisciplinary work teams to serve the specific, often complex, needs of our clients.