Multistate PTETs and Resident Credits

Author: Elizabeth Pascal, Hodgson Russ LLP

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2025 to receive credits

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