Multistate Tax Treatment of Multi-Tier Partnerships: Ingesting PTET in a Multi-Tier Entity

A significant challenge for tax advisers to tiered partnerships is determining various states' tax treatment of tiered entities, mainly when a lower-tier partnership is located in a different state than the upper-tier owner. Because of the inconsistency in various state treatments, tax advisers often face complex, sometimes conflicting, rules in determining how the upper-tier entity resident state will treat pass-through items of income and loss from lower-tier entities.

Advisers to upper-tier partnerships must determine how the entity's lower-tier pass-through items are treated in the resident state. Ascertaining whether the lower-tier partnership's apportionment factors flow through to the upper-tier entity materially affects the partnership's income/loss calculations.

Likewise, navigating various states' withholding requirements and determining when a lower-tier's resident state allows--or mandates--composite filings is also a crucial and difficult task. Tax advisers need to fully grasp the significant factors in determining various states' tax treatment of multi-tier partnerships when the lower-tier partnership is a nonresident.

Listen as our experienced panel offers a practical guide to navigating multistate complexities and approaches to taxing tiered partnerships with nonresident lower-tiers.

1. Identifying multi-tier partnerships with multistate filing requirements
2. How to determine whether lower-tier apportionment factors flow through to an upper-tier partner
3. Withholding requirements
4. Composite return rules and exceptions for multi-tier partnerships

The panel will discuss these and other vital questions:

• Which states allow lower-tier partnership's apportionment factors to flow through to the upper-tier partner?
• How does the presence of a tiered partnership impact withholding requirements for nonresident partners?
• Impact of a partnership's status as a tiered entity on composite return requirements
• What states allow tax attributes to flow through to the upper-tier partnership?
• The ability to use Multi-Tier entities and, if applicable, the allocations from MTPs to mitigate SALT
• How the SALT interacts with the PTET regimes
• Restructuring and other transactions to make your Multi-Tier entity eligible for the PTET of the applicable state

Learning Objectives

After completing this course, you will be able to:

• Ascertain the reporting and withholding requirements and taxation of multistate tiered partnerships
• Determine when a partnership operating in a foreign state has nexus with that state
• Verify whether a state taxes pass-through entity owners or both pass-through entity owners and the entity
• Discern the differences between apportionments and allotments
• Recognize how ownership type impacts state taxation of pass-through entities
• Identify state requirements for filing composite returns

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex state income tax forms and schedules for pass-through entities; supervisory authority over other preparers/accountants. Knowledge and understanding of withholding requirements, composite returns, nonresident filing, and payment of taxes by pass-through entities; familiarity with tiered partnership structures

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.