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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.

103 minutes
Course Exam
Certificate of Completion
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Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Tax Cuts and Jobs Act ("TCJA") of 2017 - the SALT Cap

  • Overview of Early Workaround Strategies to the Federal SALT Cap
  • Understanding IRS Notice 2020-75
  • Current Developments in Federal Tax Legislation

Overview of Elective Pass-Through Entity Tax ("PTET") Regimes

  • Current States With Elective PTE Taxes
  • Flow-Through vs. No Flow-Through PTE Taxes

Understanding the Mechanics of Elective PTETs

  • Elective vs. Mandatory Regimes
  • Qualification Requirements - What PTEs and Owners May Make the Election?
  • Method and Timing of Making Elections
    • Notice and Consent Requirements
  • Quarterly Estimated Tax Payments and Nonresident Withholding Requirements
    • Impact on Cash Flows
  • Calculating the Tax Base and PTE Owner Credits

Collateral Issues and Considerations:

  • How to Deal With Tiered PTE Structures
  • Resident (or "Other State Taxes Paid") Credits
  • Allocation of Credits
  • Partnership/Operating Agreements

State-Specific Highlights and Recent Developments

  • California's PTET
    • Ability to Elect out
    • Nonrefundable Credit and CarryOver Provisions
    • TMT Dilemma and Amended Legislation
  • Connecticut's Mandatory PTE Tax
  • New York PTET
    • Recent Legislation and NYC PTET
  • New Jersey BAIT

Q and A

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

Applications have not yet been submitted for Delaware, Idaho, Kentucky, Maine, Oklahoma, South Carolina, and Wyoming CLE for this course. However, if you are interested in obtaining CLE for any of the listed states or have any additional credit questions please email us at [email protected] or call us at 866-352-9540.

This course was last revised on September 21, 2022.

Call 1-866-352-9540 for further credit information.

  • AIPB 2.0
     
  • This program is acceptable for 2.0 CPEC(s) towards the CB designation through the American Institute of Professional Bookkeepers (AIPB).
     
  • AK CLE 1.5
     
  • Alaska attorneys may receive 1.5 hours of continuing legal education for completing this program. Please contact the Alaska Bar Association or go to www.alaskabar.org for details regarding reciprocity with other states.
     
  • AL CLE 1.7
     
  • This course or a portion thereof has been approved by the Alabama State Mandatory Continuing Legal Education Commission for a maximum of 1.7 hours credit.
     
  • AR CLE 1.5
     
  • This course has been approved for 1.5 hours of CLE by the Arkansas CLE Board.
     
  • Arizona CLE 1.5
     
  • The Arizona State Bar does not pre-approve or pre-certify MCLE programs. However, records of this program and attendance will be maintained by Lorman Education Services for auditing purposes. This activity may qualify for up to 1.5 hours toward your annual CLE requirement for the State Bar of Arizona.
     
  • CA MCLE 1.5
     
  • Lorman Business Center, LLC. is a State Bar of California approved MCLE sponsor and this course qualifies for 1.5 CLE hours of participatory credit.
     
  • CT CLE 1.5
     
  • Neither the Connecticut Judicial Branch nor the Commission on Minimum Continuing Legal Education approve or accredit CLE providers or activities. This course has been approved for CLE credit in jurisdictions aside from CT and therefore it automatically meets the content and delivery requirements in Connecticut. Credit is based on a 60 minute credit hour and shall be awarded as follows: 1.5 CLE credit(s).
     
  • GA CLE 1.5
     
  • This program has been approved by the Georgia Commission on Continuing Lawyer Competency for 1.5 CLE hours.
     
  • HI CLE 1.5
     
  • This program was approved by the Hawaii State Board of Continuing Legal Education for 1.5 CLE credit hours.
     
  • IL CLE 1.5
     
  • This course was approved for a total of 1.5 hours of MCLE Credit by the Illinois MCLE Board.
     
  • IN CLE 1.7
     
  • This program has been approved by the Indiana Commission on Continuing Legal Education. Participating attorneys are eligible to receive up to 1.7 hours of Distance Education credit.
     
  • MO CLE 2.0
     
  • This course qualifies for self-study CLE credit in Missouri.
     
  • MS CLE 1.7
     
  • This program has been approved by the Mississippi Commission on Continuing Legal Education for a maximum of 1.7 credit hours.
     
  • NC CLE 1.5
     
  • This program has been approved by the North Carolina State Bar Board of Continuing Legal Education for 1.5 CLE hours.
     
  • ND CLE 1.75
     
  • North Dakota CLE policy does not allow for pre-approval of any self-study courses. This course may qualify for up to 1.75 hours of CLE credit.
     
  • NH MCLE 1.7
     
  • NH MCLE does not approve or accredit CLE activities for the NH Minimum CLE requirement. Lorman Education Services believes this Ondemand course meets the requirement of NH Supreme Court Rule 53 and may qualify for CLE credit(s). Program Length: 102 Minutes.
     
  • NJ CLE 2.0
     
  • This program has been approved by the Board on Continuing Legal Education of the Supreme Court of New Jersey for 2.0 hours of total CLE credit.
     
  • NM CLE 1.7
     
  • This program has been approved by the New Mexico Minimum Continuing Legal Education Board for 1.7 hours of credit.
     
  • NV CLE 1.5
     
  • This program has been approved by the Nevada Board of Continuing Legal Education for 1.5 CLE hours.
     
  • OH CLE 1.75
     
  • This course has been approved by the Ohio Supreme Court Commission on Continuing Legal Education for 1.75 CLE credit hours. Please note: No more than twelve (12) hours of self-study CLE credit for any biennial reporting period may be earned by an Attorney or Judge under Regulation 409.2. To fulfill CLE requirements for self-study, web-based programs, you must complete 100% of the polling questions during the program. Your hours will be filed electronically within thirty (30) business days by Lorman Education Services provided you fulfilled 100% attendance and polling questions answered.
     
  • PA CLE 1.5
     
  • This Distance Learning program has been approved by the Pennsylvania Continuing Legal Education Board for 1.5 hours of substantive law, practice and procedure CLE credit.
     
  • RI CLE 2.0
     
  • This program has been approved by the Rhode Island Mandatory Continuing Legal Education Commission for 2.0 hours of CLE credit.
     
  • TN CLE 1.7
     
  • This program has been approved as a distance learning format by the Tennessee Commission on Continuing Legal Education for a maximum of 1.7 hours of credit.
     
  • VT CLE 1.5
     
  • This self-study program has been approved by the Mandatory Continuing Legal Education Board of Vermont for 1.5 hour(s) of CLE credit. Please note: Attorneys may only claim 12 credits per compliance period in this format. This course is considered "Non-Moderated Programming without Interactivity".
     
  • WI CLE 2.0
     
  • This program qualifies for 2.0 hour(s) of ondemand CLE through the WI Board of Bar Examiners.
     
  • WV MCLE 2.0
     
  • This program has been approved by the West Virginia State Bar MCLE Commission for 2.0 MCLE hours.
     

To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

MP3 Download

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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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Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Product ID: 410078
Published 2022
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