State Taxation on the Sale of Pass-Through Entity Interests

This webinar will explain the issues practitioners encounter when reporting and taxing the sale of an interest held in a pass-through entity (PTE). Our panel of SALT veterans will discuss how types of owners, residency, and various state approaches (or lack thereof) impact these calculations, including examples of taxation in specific states.

Determining how and if the 50 states and D.C. tax income is difficult enough. SALT professionals are responsible for matching income from the sale of PTEs into existing, nonexisting, and vague state criteria.

Most states separate income into business (apportionment) and non-business (allocable) income categories. However, even states that use these classifications differ in their definitions of business and non-business income. Add to this problem the fact that owners of these entities may be residents or nonresidents, individuals or entities, or even more problematic, tiered entities.

A new consideration is the prospect of paying tax on the sale at the entity level. Many states have adopted entity-level taxes to circumvent the SALT cap. Paying tax at the entity level on these sales could significantly reduce the tax burden for these entities' owners.

Listen as our panel of SALT experts discusses the standard methods states employ to tax the sale of partnership and S corporation interests. They will discuss determining nexus, sourcing issues, and asset sales vs. stock sales, as well as how the new ability to pay tax at the entity level in many states impacts state taxation of the sale of PTEs.