What Effect Does Pass-Through Entity Election Have? The key benefit to a PTE election is the full federal deductibility of the entity’s state income taxes paid with a PTE tax. While the income and tax reported is dependent on each state’s rules, there is no federal limit to the amount...
Partnerships or S Corporations) by enacting a pass-through entity-level income tax (either elective or mandatory). In most instances, the state also provides owners (shareholders or partners) of pass-through entities a state tax benefit in the form of ...
The first of these efforts to gain approval from the IRS is a state-imposed entity-level tax on pass-through entities (PTEs), such as partnerships or S corporations. The pass-through entity tax (PTET) applies to taxpayers with pass-through business income who would normally pay state t...
On June 23, 2021, Colorado Governor Jared Polis signed HB 21-1327, enacting an annual elective pass-through entity-level tax, effective for tax years beginning January 1, 2022. This change allows pass-through entity shareholders to take advantage of the full federal deduction for state income ...
An S-corp is not a business entity type but a tax election that LLCs or corporations can make with the IRS. An S-corp’s income taxes flow through to its owners. For example, if Bob’s gift shop elects S-corp taxation he would file Form 1120-S as an information tax return. He...
Pass-through taxation is a tax structure where the owners or shareholders of a business receive profits and losses and report them on their tax returns; the business entity itself doesn’t pay tax, avoiding double taxation at a corporate level. The pass-through tax structure has advantages and...
LLC pass-through taxation is when an LLC avoids "double taxation". Instead, the profits and losses flow through to the owners tax return.
Most small-business owners use the popular LLC entity. To take advantage of this new lower pass-through rate, the LLC owner must make an S-corp tax election by notifying the IRS. Then the LLC owner can distribute a portion of the business income as a reasonable salary and a portion can...
The election of the president is the only one in the federal government not based on popular vote. All U.S. registered voters indirectly elect the president through the Electoral College, a body of enfranchised people. The U.S. Constitution established the Electoral College. Question #27: In ...
We celebrate the federal holiday on July 4 to commemorate the Declaration of Independence, the official document that formalized the break between the U.S. and Great Britain, which was signed on the same day in 1776. Every July for nearly 250 years, Americans nationwide have celebrated the nat...