KPMG: State-level passthrough entity tax; election considerations and upcoming deadlines (February 21, 2022)

KPMG reports State-level passthrough entity tax; election considerations and upcoming deadlines (February 21, 2022). It’s summary begins as follows:

In response to the federal $10,000 cap on state and local tax itemized deductions, many states have enacted legislation allowing a passthrough entity to elect to pay the tax and provide an owner a credit or deduction for the tax paid by the passthrough entity.

There are several considerations in determining whether a passthrough entity can take advantage of this election.

Preliminarily, a passthrough entity must consider whether it is eligible to make the election. Some states allow passthrough entities with only individual owners to make the election. For example, Oregon allows partnerships and S corporations with only individual owners or passthrough entity owners held by individual owners to elect to pay the tax.

Other states disallow passthrough entities with partnership owners to make the election. For example, Minnesota does not allow a partnership or S corporation that has an owner that is a partnership, non-disregarded limited liability company, or corporation to elect to pay the tax.

To see the full report, click here: “State-level passthrough entity tax; election considerations and upcoming deadlines”.

Posted by Jessica Ji, Associate Editor, Wealth Strategies Journal.

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