IRS Form 1099, 1099-NEC, and Form 1099-MISC: Advanced Issues and Updates

California Pass-through Entity Tax AB 150 (OnDemand Webinar)

$149.00

SKU: 410308EAU

Description

Gain an understanding of the CA PTET regime and how best to answer your clients questions.The passthrough entity tax (PTET) is intended to provide California taxpayers with relief from the current limits on the federal deductibility of state and local tax (SALT) deductions on individual income tax returns. The annual election is optional and effective for tax years beginning January 1, 2021, and is set to expire on December 31, 2025, unless there is a legislative fix that occurs at the federal level before expiration.Specifically, the new tax rules allow a passthrough entity (PTE), such as a partnership or Scorporation, to make California tax payments on behalf of its owners. This effectively allows individual owners of the PTE to bypass the 10,000 limitation on the deduction of state and local taxes imposed on individual taxpayers by the Tax Cuts and Job Act of 2017. This is mechanically achieved by electing to have the PTE pay an entitylevel tax of 9.3, which in turn, is passed through proportionally to the electing owners of the PTE as a credit on their individual tax returns. Moreover, the PTE is not subject to the SALT limitation imposed on individuals. As a result, it is allowed to take a full federal deduction for the California tax payments made on behalf of its electing owners, which proportionately reduces the electing partners’ allocable share of income from the PTE and reduces the federal tax liability for the electing owners. This approach was blessed by the IRS in Notice 202075. However, many issues should be carefully considered before recommending this election to your clients. These issues include the interplay of the PTE credits with existing California tax credits and withholding, estimated tax payment, and composite return regimes. Your clients are looking to you for answers to their questions regarding the nuances of the CA PTET regime. This presentation will prepare you with the background needed to lead those conversations.

Date: 2023-01-30 Start Time: End Time:

Learning Objectives

Pass-Through Entity Tax Background
• Understand the History and Development of the PTET Regime
• Quantify the Federal Tax Benefit of Making a PTET Election
• Identify Recent Legislative Changes Affecting the Mechanics of the PTET Election

Identify Cases Where PTE Owners Can Take Advantage of the CA PTET
• Determine Who Is Considered a Qualified Entity and a Qualified Taxpayer
• Calculate the Qualified Net Income for Purposes of the CA PTET
• Understand the Mechanics and Ramifications of Making a CA PTET Election and the Potential Impact on the Utilization of Other CA Tax Credits

Identify Potential Tax Planning Opportunities
• Review Potential Flowthrough Entity Considerations and Potential Tax Credit Limitations, Nonresident, and Credit Allocation Issues
• Recognize How the CA PTET Works in Conjunction With the CA Minimum Tax
• Understand the Relationships Between the PTET Credit, Composite Returns, and Estimated Tax Payments/Withholding Regimes

Determine the Timing for CA PTET Election Timing and Payments
• Identify When and How the PTET Must Be Made
• Understand How the CA PTET Is Reported on the Flowthrough and Individual Tax Returns
• Analyze the Impact of the PTET Deduction for Accrual-Basis and Cash-Basis Taxpayers

CLE (Please check the Detailed Credit Information page for states that have already been approved) ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.

Marc Armstrong-Gerber Kawasaki