CA SALT Workaround - Qualifying entity

An otherwise qualifying entity cannot make the election if any of the partners/shareholders are a partnership.

But it's OK if a partner is an S-Corp?

This article says you can't do it if any partner/shareholder is a DRE. Spidell didn't say anything about that.
https://www.cohnreznick.com/insights/sa ... california

For tax years beginning on or after Jan. 1, 2021, and before Jan. 1, 2026, qualified entities can make an irrevocable election annually on an original, timely filed return to pay the tax on a qualified owner’s share of net income of the qualified entity. Qualified entities include partnerships, limited liability companies with multiple members treated as a partnership, and S corporations. Disqualified entities are pass-through entities that have a partnership or a disregarded entity as an owner publicly traded partnerships, and entities that are permitted or required to be in a combined reporting group.

So let's say you have a partnership (Partnership A) with two partners. One is an individual (Clark), the other is a partnership (Partnership B).

Partnership A cannot make the election.

However, Partnership B will be able to as long as all of it's partners are individuals.

So Clark loses out. Correct?

What if Clark and his wife, Ellen, form a partnership (Partnership C) and transfer their Partnership A interest into Partnership C. Now Partnership C can make the election?

The tax preparer lobby group continues to make it rain.