Possible Tax Implications for 2021
With the goal of providing relief to small businesses “facing unprecedented economic hurdles due to COVID-19,” in Assembly Bill 150 California enacted a pass-through entity tax for 2021 (link). Numerous other states have similar bills.
Commonly referred to as the SALT cap workaround, this bill allows pass-through entities to pay and fully deduct California income tax of the partners/shareholders.
If you plan to make the election for 2021 taxable year, it is important for you to contact your tax advisor for actions prior to year-end.