A technical memorandum issued by the New York Department of Taxation and Finance addresses New York’s new elective pass-through entity-level tax (PTET), which was enacted under New York’s 2021-2022 Budget Act in response to the $10,000 cap on the federal individual income tax deduction for state and local taxes.

The PTET is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income for tax years beginning on or after January 1, 2021. If a partnership or New York S corporation elects to pay the PTET, partners, members, or shareholders of an electing partnership or New York S corporation who are subject to tax in New York under Article 22 (personal income tax) may be eligible for a PTET credit on their New York State income tax returns. Among other issues, the memo addresses who may make the election, the election period, how to calculate pass-through entity taxable income, how to calculate the PTET and underlying estimated payments, and how to calculate and claim the PTET credit.

 

Please contact us for further details and to discuss how this may be beneficial to you and your business.

 

 

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