Allocation of NY PTE Credit for S Corp

Technical topics regarding tax preparation.
#1
CO CPA  
Posts:
729
Joined:
17-Oct-2018 10:46am
Location:
Colorado (CO)
https://www.tax.ny.gov/pdf/memos/ptet/m21-1c-1i.pdf

The state provides instructions on how to arrive at PTE taxable income for resident and non-resident partners.

Assume two shareholders - 1 NY resident, 1 CA resident.

Assume $500k of S corp fed income.

$250k is allocated to NY resident subject to NY tax
$150 is allocated to NY non-resident based on apportionment
Total NY PTE taxable income is $400k
PTE tax @ 6.85% =$27,400

Per link at top, page 6, (and my software - Drake - is doing this as well):

If the electing entity is an S corporation, each eligible taxpayer’s PTET credit is
computed by multiplying the electing entity’s total PTET by the eligible taxpayer’s ownership
percentage.


Based on this, the NR is going to receive a lot more credit than he's going to owe in NY and the resident shareholder is short.

I'm assuming they did this to ensure proper S corp treatment (pro-rata allocation)? CA is allowing the allocation to the NR shareholder based on apportioned numbers (with a check-box in Drake)...maybe it's a use at your own risk checkbox.

It may not make sense to elect NY PTE for this S corp. Any thoughts?
 

Return to Taxation



Who is online

Users browsing this forum: Google [Bot], HowardS, itssewtaxing, JoJoCPA, JR1, lckent, MAPCPA60, msmith7305, sjrcpa, SumwunLost, TaxDude, Terry Oraha, Treetopclimes and 212 guests