Contact UsIs an individual eligible for a pass-through entity tax (“PTE”) deduction when the business is operated in a single-member LLC?
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Tax Professional Answers
Charles Levun, J.D.
Great question!
No, only a recognized partnership (i.e., two or more members) or an S corporation is eligible to make a deductible state income tax payment and pass through the payment to its owners as a tax credit for state income tax reporting purposes. (See Notice 2020-75.) In fact, we commonly explore with clients whether it makes sense to convert a single-member LLC to a multi-member LLC (e.g., via a small gift to a spouse or other family member) to obtain the PTE benefits.
You can see answers to similar flow-through questions on our website at www.taxforums.com/qa-corner#
Also, we cover this topic and many other flow-through tax planning topics at our TaxForum programs, which include:
Tax Planning Forum – our advanced course with the most recent structuring techniques for closely held businesses (www.taxforums.com/tax-planning-forum)
Fundamentals of Flow-Through – an intermediate course that provides a solid foundation for using flow-through entities (www.taxforums.com/fundamentals-of-flow-through)
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5 weeks ago
No, only a recognized partnership (i.e., two or more members) or an S corporation is eligible to make a deductible state income tax payment and pass through the payment to its owners as a tax credit for state income tax reporting purposes. (See Notice 2020-75.) In fact, we commonly explore with clients whether it makes sense to convert a single-member LLC to a multi-member LLC (e.g., via a small gift to a spouse or other family member) to obtain the PTE benefits.
You can see answers to similar flow-through questions on our website at www.taxforums.com/qa-corner#
Also, we cover this topic and many other flow-through tax planning topics at our TaxForum programs, which include:
Tax Planning Forum – our advanced course with the most recent structuring techniques for closely held businesses (www.taxforums.com/tax-planning-forum)
Fundamentals of Flow-Through – an intermediate course that provides a solid foundation for using flow-through entities (www.taxforums.com/fundamentals-of-flow-through)