State Taxation of Pass-Through Entities: Recent Nexus Developments, SALT CAP Pass-Through Entity Workarounds

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, May 6, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide SALT professionals and advisers to flow-through entities with a detailed and practical guide to the critical state tax issues and trends impacting members and shareholders in multistate flow-through entities. The panel will discuss determining the character of pass-through income, the latest nexus issues in states, reconciling conflicting state treatment, and the new entity-level taxes implemented by several states to bypass the SALT deduction CAP.

Description

Most states follow federal pass-through treatment and tax the individual partners or shareholders. However, many states do not; many impose entity-level taxes. In addition to these taxes, some states impose franchise taxes and fees (CA and NY) and there are local jurisdictions that also impose entity-level and franchise taxes (DC and NYC). Staying on top of the ever-changing state tax structures is a never-ending challenge for SALT practitioners.

First, tax practitioners must determine whether an entity has nexus in each applicable state to determine if filing, registering, or remitting taxes is required. Advisers must consider where the entity was organized, does business, and derives its income (or losses), and the residence of each investor. Business and nonbusiness income need to be identified and separated so that earnings can be allocated or apportioned. Payroll, inventory, and assets must be identified and segregated by state for states using factor-based presence tests.

Additionally, seven states have recently implemented, or are in the process of implementing, entity-level taxes to circumvent the federal SALT deduction CAP. Knowing whether and when to elect in is another--and a new--consideration for SALT advisers and multistate entities. Altogether, the multiple owners, states, taxes, and concerns can be overwhelming for state and local tax preparers.

Listen as our panel of SALT experts explains recent state nexus developments, the most common methods of determining taxable income for partnerships and S-corporations, handling nonresident owners, the current status of states implementing PTE level taxes, and best practices for tracking and determining state taxable income.

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Outline

  1. Flow-through entities
  2. Determining nexus
  3. Determining state taxable income
  4. Other entity-level taxes
  5. New PTE level taxes to circumvent the SALT CAP
  6. Recent developments

Benefits

The panel will review these and other essential matters:

  • Recent state nexus developments
  • Business vs. nonbusiness income
  • Apportioning and allocating income
  • Recently enacted state PTE taxes to avoid the SALT CAP
  • Other entity-level taxes
  • Documenting and determining state taxes

Faculty

Roberts, Stacey
Stacey L. Roberts, CPA
State and Local Tax Director
TaxOps

Ms. Roberts finds the singular state and local tax (SALT) area fascinating and is energized by the daily challenges to...  |  Read More

Vorndran, Judith
Judith B. Vorndran, JD, CPA, MSBA

Partner
TaxOps

Ms. Vorndran helps clients and tax professionals navigate the morass of state and local tax issues with the goal of...  |  Read More

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