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SALT Cap Work-Around: Elective Pass-Through Entity Taxes

 

Gain a better understanding of the advantages and pitfalls of state PTETs and making a PTET election.

The Tax Cuts & Jobs Act ("TCJA") of 2017 overhauled many critical areas of federal tax law. One such change which affected a large population of individual taxpayers was the $10,000 limit on state and local tax deductions, commonly referred to as the federal "SALT cap." Following enactment of the TCJA, individual taxpayers in many high tax states, such as California, New York, and New Jersey, to name just a few, experienced an increase in their federal personal income tax liabilities due in large part to limitations on the deductibility of state and local taxes for federal income tax purposes. In the early years following the enactment of the TCJA, states have attempted to contrive different strategies to help their highly-taxed constituents in working around the federal SALT cap. However, not until the IRS' guidance in Notice 2020-75, which was issued in late 2020, did a large number of states develop and adopt Elective Pass-Through Entity Tax ("PTET") regimes, which are still evolving today. This presentation will help taxpayers and tax practitioners, alike, in maneuvering through a sea of new and varied state legislation and taxing schemes in search of significant federal tax savings opportunities. We will provide an overview of these recently enacted state PTETs, and address the advantages and, in some cases, the pitfalls, of making a PTET election. We will also address some of the practical and ancillary issues that have arisen, based on what we've learned over the past year, when several states adopted these PTET regimes.

Agenda

Faculty

Christian J. Burgos, Esq.

Christian J. Burgos, Esq.

Marcum LLP

  • State and Local Tax (SALT) Partner with Marcum LLP in New York and California
  • A State and Local Tax professional with over 15 years of experience advising business and individual clients in multistate tax matters, which include, but are not limited to, multistate income/franchise and sales and use tax compliance, nexus analyses, apportionment studies, state tax provisions, restructurings and mergers and acquisitions
  • Has extensive experience representing business and individual clients before multistate taxing authorities in tax examinations and administrative appeals processes
  • Has also advised clients on a broad array of federal and state credit and incentives opportunities, with a primary focus on California state credits
  • Presently sits as an adjunct faculty member with California State University, Fullerton, where he teaches State and Local Taxation as part of the University’s Master of Science in Taxation (MST) program
  • Written several articles on topics on state corporate income and franchise taxation for trade periodicals, such as the AICPA’s The Tax Advisor
  • Memberships include The State Bar of California (Lic. No. 250741); and the United States Tax Court (Lic. No. 0725)
  • Is a Certified Member (“CMI”) of the Institute of Professionals in Taxation (IPT) in State Income Taxation (CMI No. 046)
  • J.D. and LL.M. in Taxation from Loyola Law School, Los Angeles; B.A. in Political Science from the University of California, Los Angeles
  • Can be contacted at 332-216-0760 or [email protected]
Jeremy Katz, Esq.

Jeremy Katz, Esq.

Marcum LLP

  • State and Local Tax (SALT) Manager with Marcum LLP in New York
  • A State and Local Tax professional with over 5 years of experience in a wide range of state and local income/franchise and sales/use tax matters
  • Memberships include The State Bar of New York and New Jersey; and member of the Institute of Professionals in Taxation (IPT)
  • J.D. and LL.M. in taxation from Villanova University School of Law; M.B.A. from Villanova University
  • Can be contacted at 954-804-1023 or [email protected]

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