AB 150: PTET SALT Cap Workaround FLEXCAST

Overview

The TCJA imposes a $10,000 limitation for deducting state and local taxes (SALT). California has finally joined a growing list of states that have implemented a workaround using passthrough entities in order to minimize the impact of the limitation. For taxable years 2021 through 2025 AB 150 allows qualified passthrough entities to pay and deduct a passthrough entity tax. Taking advantage of this workaround can help your clients reduce their federal tax liabilities. However, there are limitations that may affect the utilization of this credit on their personal California state income tax returns. Your clients are asking if they should consent or not consent to the Passthrough Entity Tax election. Should they?

Highlights

SALT Deduction Cap Workarounds. IRS Notice 2020-75. Build Back Better Act. PTE Taxes. AB 150. Credit Ordering. Governor’s Proposed Budget.

Prerequisites

None.

Designed For

CPAs, financial professionals, enrolled agents and attorneys.

Objectives

Identify qualified passthrough entities. Figure out the timing issues regarding electing and paying. See how the limitations to the utilization of the PTET Credit may affect your clients. Which clients cannot take advantage of AB150. Learn about potential changes to AB150.

Preparation

None.

Notice

This is a FlexCast (no exam required) and may be viewed only Monday - Saturday, 5am - 5pm PT. You may take up to one year from the date of purchase to complete the course. Pause your FlexCast and resume at a convenient day during the hours above. Partial credit for 2+ credit courses: If you are unable to complete the course in one sitting, partial credit can be awarded (minimum of one credit). To earn the remaining credits, you must return later and start the course from the beginning. Use chat to ask questions of a subject matter expert during the program.