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

Determining Treatment of Lower-Tier Apportionment Factors, Meeting Withholding and Composite Return Requirements

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, June 27, 2023

Recorded event now available

or call 1-800-926-7926

This course will provide tax advisers and compliance professionals with a practical guide to navigating the multistate reporting complexities in multi-tiered partnerships. The panel will outline various state rules governing apportionment of income from lower-tier pass-through entities, withholding requirements, and composite return provisions. The panel will also discuss state approaches to honoring IRC 743(b) adjustments from the upper-tier to the lower-tier partnerships.

Description

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.

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Outline

  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

Benefits

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

Faculty

Weinberg, Jonathan
Jonathan Weinberg, J.D., LL.M.
Principal
WithumSmith+Brown

Mr. Weinberg has extensive experience with income/franchise tax, sales and use tax, real estate transfer tax, and...  |  Read More

Pedersen, Brian D.
Brian D. Pedersen
Managing Director
Alvarez & Marsal Taxand

Mr. Pedersen is a Managing Director with Alvarez & Marsal Taxand, LLC in Houston. He leads the firm’s State...  |  Read More

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