AB-150 Archives - Roger Rossmeisl, CPA

28 Feb 2022

SB 113 Provides Additional Relief from SALT Deduction Limits

Back in 2017, the Tax Cuts and Jobs Act was signed into law which instituted a cap on the amount of state and local taxes (SALT) that individuals could report as Itemized Deductions on Schedule A. Starting with the 2018 tax year, the maximum SALT deduction available was $10,000. Previously, there was no limit. Since then, roughly 20 states have come up with workarounds intended to negate, or at least mitigate the effect of the SALT limitation. In 2021 California passed AB 150, which provides that, in the taxable years 2021-2025, a so-called "qualified entity" (a S corporation, partnership, or LLC taxed as a partnership or S corporation) to make an election to pay a new pass-through entity (PTE) elective tax equal to 9.3% of its...

28 Nov 2021

Recent FTB Clarifications on Pass-Through Entity Tax (AB-150)

Roger Rossmeisl, CPA

Automotive, Small Business Tax Briefs

Recent FTB Clarifications on Pass-Through Entity Tax (AB-150)

Recent pass-through entity (PTE) tax (AB-150) clarifications from the Franchise Tax Board (FTB) underscore that detailed planning is critical when considering this credit. For an overview of AB-150, also see our initial 8/15/21 post on this subject: "California AB-150 Provides SALT Cap Workaround". PTE Election The election to pay the tax is: made annually, is irrevocable, and can only be made on an original, timely filed return, including extensions PTE Tax Due Date (2021 Tax Year) For the initial year the PTE tax credit concepts exists (2021) the tax is due by original due date of the 2021 tax year return, without regard to extensions. For calendar-year taxpayers, that is March 15, 2022. Logistics of PTE Tax Payments / K-1 Recipient Credits Prior to the original due date of the tax...

15 Aug 2021

California AB-150 Provides SALT Cap Work-Around

Roger Rossmeisl, CPA

Automotive, Small Business Tax Briefs

California AB-150 Provides SALT Cap Work-Around

While Congress develops legislation that would eliminate, and/or otherwise mitigate, the current TCJA implemented state and local tax (SALT) limit on an individual taxpayer's ability to take the itemized deduction for state and local taxes, California has just passed legislation which offers a work-around that will allow many Californians to mitigate the effects of the current $10,000 federal limitation on SALT deductions. On 7/16/2021, Governor Newsom signed into law AB-150, which provides a means by which certain pass-through entities (Qualified Entities) can make an election to pay California income tax (at the entity-level) on behalf of their owners, for which their consent must be given. The benefits yielded could be substantial for pass-through entity owners for which work-around makes sense. Curiously the IRS has approved these...

SB 113 Provides Additional Relief from SALT Deduction Limits

Recent FTB Clarifications on Pass-Through Entity Tax (AB-150)

California AB-150 Provides SALT Cap Work-Around

ROGER ROSSMEISL, CPA

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