tag:blogger.com,1999:blog-2135788133426971614.post8487271803847816869..comments2024-03-28T01:09:48.303-07:00Comments on 21st Century Taxation: Passthrough Entity SALT Cap Workaround is Messy!Professor Nellenhttp://www.blogger.com/profile/03288632402197167948noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2135788133426971614.post-16405252460863656092022-03-07T07:59:27.425-08:002022-03-07T07:59:27.425-08:00Thanks for your thoughts and input. Thanks for your thoughts and input. Monahttps://www.blogger.com/profile/05653494629031521826noreply@blogger.comtag:blogger.com,1999:blog-2135788133426971614.post-54852539325629100542022-03-06T20:24:10.186-08:002022-03-06T20:24:10.186-08:00Mona, that is a good question. I also read Notice ...Mona, that is a good question. I also read Notice 2020-75 as saying that the state PTE tax cannot be separately stated on the K-1s but must be part of the net income that is reported on the K-1. That does make sense since it is an entity level tax (of course, not the same as a tax on a C corporation that of course doesn't produce a tax credit for shareholders).<br /><br />Another question is whether for partnerships they can specially allocate the PTE to the participating partners (still embedded in the net income rather than separately stated) or does that make it look less like an entity level tax?<br /><br />I don't think we'll ever see regs from the IRS, after all, it has been 15 months since the notice was released.21st century taxation (Annette Nellen)https://www.blogger.com/profile/16822488200730640168noreply@blogger.comtag:blogger.com,1999:blog-2135788133426971614.post-10910747573070354612022-03-05T10:58:26.999-08:002022-03-05T10:58:26.999-08:00I am hoping you can provide some clarification reg...I am hoping you can provide some clarification regarding the federal deductibility on a form 1040 of state taxes (PTE tax) paid at the partnership/S corp level that has been computed on separately stated items. I read IRS notice 2020-75 and it says: <br /> <br />Based on the statutory and administrative authorities described in section 2 of this notice, the forthcoming proposed regulations will clarify that Specified Income Tax Payments (as defined in section 3.02(1) of this notice) are deductible by partnerships and S corporations in computing their non-separately stated income or loss.<br /> <br />Regarding a partnership with only separately stated K-1 items, is there a mechanism to deduct the PTE Tax against those separately stated income amounts (ie, interest income, capital gain income, rental income) or is the associated PTE tax deductible on schedule A as tax expense (subject to limitation) or is it a stand alone deduction on the face of the 1065/1120S for those entities with only separately stated income?<br /><br />Any guidance you have is appreciated.<br />Monahttps://www.blogger.com/profile/05653494629031521826noreply@blogger.comtag:blogger.com,1999:blog-2135788133426971614.post-1153167800190463392021-11-30T10:57:01.721-08:002021-11-30T10:57:01.721-08:00That is a good question. For the California PTE, i...That is a good question. For the California PTE, if not all S corp shareholders consent to participate, there seems to be a one-class-of-stock issue. The AICPA has offered a solution to the IRS for its regs (where are those promised regs?) - https://us.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/56175896-aicpa-comment-letter-notice-2020-75-s-corporations.pdf 21st century taxation (Annette Nellen)https://www.blogger.com/profile/16822488200730640168noreply@blogger.comtag:blogger.com,1999:blog-2135788133426971614.post-6537225671796162872021-11-30T10:54:39.581-08:002021-11-30T10:54:39.581-08:00I have been wondering how the entity level tax pas...I have been wondering how the entity level tax pass-through deduction and credit work with S corporation shareholders if a shareholder can elect to participate or not. Does the income get "specially allocated" among the shareholders to account for their participation? If so, this seems contrary to allocation on a per share per day method.Anonymousnoreply@blogger.com