PTET question

[schirallicpa]

Have had a couple of clients utilize this but they were both making money.  What happens when a partnership is in the red and they elect to do this.  If the election is irrevocable, what tax do they have to pay?  

[Lee B]

Depends on the state. In my state, I believe no tax would be due and the PTET payments would be refunded.

[jklcpa]

https://www.tax.ny.gov/bus/ptet/faq.htm#:~:text=PTET is computed based on,or shareholder under Article 22.

If an electing entity has a current year loss, do they need to make any estimated payments for the current year?

The required annual payment is the lesser of 90% of the PTET shown on the return for the taxable year or 100% of the PTET shown on the return for the preceding year (assuming a PTET election was made in the preceding year). If the current year’s PTE taxable income and PTET is zero or less, then the lesser of the two is $0, and no estimated PTET payments are due.

Regardless of the amount of estimated tax payments made, or whether any estimated payments were made, any unpaid PTET must be paid by March 15 following the close of the calendar year in which its tax year ends.

If an electing entity had a loss in the previous year and reported PTET of $0, do they need to make any estimated payments in the current tax year?

The required annual payment is the lesser of 90% of the PTET shown on the return for the taxable year or 100% of the PTET shown on the return for the preceding year (assuming a PTET election was made in the preceding year). If the preceding year’s PTET was $0, the lesser of the two is $0, and no estimated PTET payments are due.

If no PTET election was made in the preceding year, the required annual payment is 90% of the PTET shown on the return for the taxable year.

Regardless of the amount of estimated tax payments made, or whether any estimated payments were made, any unpaid PTET must be paid by March 15 following the close of the calendar year in which its tax year ends.