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Deductions,” rather than in non-
How will the separately stated ordinary business Is the PTE tax
income, will an additional disclosure
election be made be needed, since the return will not statute one that
and documented, comply with the notice? automatically
and what ■ What will the effect be on distribu- sunsets if the SALT
tions to defective grantor trusts that
documentation were expected to fund installment cap sunsets on
sale payments?
is needed to ■ (For tax practitioners only) Conflict Dec. 31, 2025, or
prove an owner of interest and malpractice risks in does it expire on

consented or not advising owners and entities, such as: Dec. 31, 2025,
• How to explain unknowns to a
to the election? client. regardless, or is it
permanent?
• How to advise entities and owners
who may have conflicting interests
is possible, the practitioner may and when the law is not 100%
not want to do that or may need clear.
contractual language. For example, • How to handle a situation where ■ Bell-Jacobs, et al., “Where Individual,
if the practitioner’s firm is also the not all owners consent or are Corporate, and Passthrough Entity
auditor for the taxpayer, perhaps the eligible. Taxation Meet,” 52 The Tax Adviser
practitioner may need to be more • How to deal with issues when not 392 (June 2021); and
careful about what information tax all owners consent or are not all ■ Multistate Tax Commission project
preparers would have if they entered eligible to get a state tax credit, on state taxation of partnerships.
into a client account. as this situation likely causes a This column’s list of taxpayer and
■ What is the likelihood of interest in violation of an S corporation’s practitioner considerations for whether
the SALT cap workaround, assuming one-class-of-stock requirement to elect into a state PTE tax will be
the entity and at least one owner are and, for a partnership, it might updated on the AICPA website as more
“qualified”? violate the partnership agreement considerations are included. The SALT
■ If the SALT cap is raised by and cause other tax and legal TRP and the SALT Deduction PTE
Congress, does that change the issues for the entity and owners. Tax Task Force will continue to moni-
willingness of qualified taxpayers tor developments, update resources, and
(owners) to consent to (or continue) Resources keep members informed. ■
the election? The SALT TRP is continuing to
■ Do owners have sufficient tax they monitor the situation and has developed
individually owe on their share of several tools for state CPA societies and
PTE net income so that they are AICPA members, including:
above the SALT cap? ■ AICPA map of states with adopted Contributors
■ In which states should an entity with or proposed PTE-level taxes;
Moshe Bell-Jacobs, J.D., is senior
income taxed in multiple states pay ■ AICPA SALT Roadmap — State
manager of State and Local Tax, Wash-
the optional state PTE tax? and Local Tax Guide;
ington National Tax at RSM US LLP
■ How and when should amended ■ AICPA issue paper on state PTE-
in the Washington, D.C., area and is
returns and audits be handled? Like level tax implementation issues (Oct.
the chair of the AICPA State and Local
the comprehensive partnership audit 4, 2018);
Tax Technical Resource Panel. Eileen
rules, does the partnership/operating ■ AICPA summary of state PTE-level
Reichenberg Sherr, CPA, CGMA, MT, is
agreement specify who handles these? tax implementation issues (Oct. 4,
a director of tax policy and advocacy at
■ Does the partnership/operating 2018); and
the AICPA. For more information about
agreement require a distribution to all ■ AICPA comments to the IRS on
this column, contact thetaxadviser@
partners? Notice 2020-75 and forthcoming
aicpa.org.
■ If the PTE tax deduction is proposed regulations (Oct. 26, 2021).
reported on Schedule K-1 in “Other See also these resources:
www.thetaxadviser.com September 2022 29