Kelly Creed, CPA, Tax Stockholder in the Oakland office.
Kelly CreedCPA / Tax Partner / Co-Managing Director of Taxview bio

Pay Your Pass-Through Entity Elective Tax This Year


RINA Alert - October 26, 2021 | Volume 19, Issue 19

At the end of August, RINA sent out an alert informing our clients that the passage of Assembly Bill 150 creates an elective tax that allows California taxes on certain pass-through income to be paid at the entity level allowing owners to be able to avoid the Federal $10,000 deduction limitation on State and Local Taxes (SALT) which they would have faced if they, and not the entity, paid taxes on the income.
This Pass-through Entity (PTE) Elective Tax is commonly referred to as the SALT cap workaround and the Franchise Tax Board is developing the following tax forms for qualified entities to make the PTE elective tax payments and for qualified taxpayers to claim the tax credit:

  • Pass-Through Entity Elective Tax Payment Voucher (FTB 3893) – Available November 1, 2021
  • Pass-Through Entity Elective Tax Calculation (FTB 3804) – Available January 2022
  • Pass-Through Entity Elective Tax Credit (FTB 3804-CR) – Available January 2022

For the 2021 taxable year, the elective tax is due on or before the due date of the original tax return. However, if you pay by the end of this year, you will be able to deduct it on your 2021 return – otherwise, you will have to wait until next year to claim the deduction.
If you have any questions or concerns, please reach out to your RINA professional.

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