AB 150 Input - PTE California state tax payment & individual state credit

[LA CPA]

Where do you input California state tax payments for PTE Income in Lacerte? California passed AB 150, PTEs can now pay state taxes on their income (like a c corp) and it is business deduction on the federal return! On the CA k-1 you should receive a credit which is not refundable.  I dont see how to input into lacerte.

Thanks in advance. 

[sjrcpa]

You're trying to do this in the 2021 software?

I'd say it's not ready for prime time yet.

I don't think CA has figured out the nuts and bolts of it yet either - @George4Tacks, @abctax55,

@Just-Lisa-Now- ?

[LA CPA]

https://www.ftb.ca.gov/about-ftb/newsroom/tax-news/october-2021/pass-through-entity-elective-tax.htm...

Agreed! See link above the forms are not prepared yet. 

[sjrcpa]

I hope they stick to their timetable. Last year MD didn't release forms or guidance til around July, then pulled it back, then released new versions, etc. Then the software had to be updated/corrected. I don't think we could file a return with the PTE tax until September.

[abctax55]

@LA CPA 

I suggest you frequent the Spidell website, and sign up for their flash alerts (they are the gurus of all CA taxation).  Their message board has dozens of conversations/questions.

There is A LOT of uncertainty regarding this law, and the implementation of it.  AND whether it is truly a one size fits all is still to be determined; are you aware it doesn't offset CA's tentative minimum tax?

[rcordovacpa]

Re: CA AB-150: Will Lacerte automatically compute the 9.3% of net CA pass through income, or does the figure have to be manually input (with perhaps a diagnostic if the amount is not in accord with the proper percentage)?

[abctax55]

@rcordovacpa 

Probably.. maybe.

It's a bit difficult for Intuit to do the programming until the FTB responds to numerous unanswered questions. Please visit the (free) Spidell message board & read some of the AB 150 threads.

[rcordovacpa]

But once Lacerte perfects the programming for CA AB-150 will the software actually compute what the 9.3% withholding should be?

[George4Tacks]

To quote @abctax55 "Probably.. maybe."

[abctax55]

@rcordovacpa 

Only the programmers at Intuit can answer that.

*We* are just end-users of the software, like you.

[COGS]

Now that we have the 12/9 update, let's revisit the question.  I can see in the individual K-1 area "Credits And Witholding" you can put it in there.  In the Partnership and S Corp. Modules is there a place for it there yet?  If, that is not programed yet, do we have a way to mimic the way the AMT calc will work?  I have not really looked at this issue other than hearing that the AMT  issue for California is a very big issue.  So, jut putting it out there to see if there is a good way to punch through the impact of paying the tax at this point.

[bacajr]

I watched the Spidell seminar yesterday and they have the Schedule P completed. It shows the credit as code 999, but I could not replicate on my lacerte 2020 program. Any ideas?

[abctax55]

AB 150 is for 2021 returns.  There is no reason it *would* be in the 2020 software.

And 2021 software isn't 'ready for prime time' just yet; plus the FTB has yet to answer many, many questions regarding this new law.

I did hear of one suggestion to put the PET amount into any non-refundable credit category to possibly get an approximation for year end planning.

YMMV

[abctax55]

@COGS 

See my answer above re: a possible work around.

And technically, it is TMT (tentative minimum tax) not AMT.

[bacajr]

I attended the Spidell webinar the other day and they used a 2020 program to generate the credit. I have reached out to Spidell to confirm use of a 2020 software that generated the Schedule P, with code 999. 

[bacajr]

PTET is a non refundable credit, so it was appropriate to place it in that particular section. 

[COGS]

Well, I have been playing around putting in the credit.  The only client that did not get the full benefit and therefore generates a credit carry forward had a CA NOL carryforward that we could not carry back like we did with the Fed.  The NOL totally offsets all CA income including the $ million dollar cap gain from a partnership property sale.  But for those with income, I have not encountered the tentative minimum issue.  But we can't see Schedule P and I don't really know if I need to do something else.  

[abctax55]

I *think* CA (again) suspended NOL's... you should double check.

edit... found this on Spidell's message board:

https://www.caltax.com/search-results/313099/3/12/

[bacajr]

Hi all. I've been playing with the 2020 version. It generates the credit for a majority of my clients with the general information worksheet showing a carryforward. 

[COGS]

I misspoke.  It is suspended passive losses.

[COGS]

We have been playing around in 2021.  What is interesting is we have a new client with about 20 K-1s and overall income of about 1.5 Million.  We dropped in the credit on the K-1 credit area and lowered the federal income by that amount.  It was not giving him most of this credit.  We had another client with just one K-1 and the income as about the same.  He got the full credit.  We called Lacerte and they said if you have a bunch of K-1s the program is really unstable and will not compute correctly. 

[rcordovacpa]

I am curious - in your analysis of of the client with a large number of K-1's did you find that the CA Minimum Tax limited the PTE CA taxes withheld which could be used in 2021?

Also, did you find that Lacerte produced some manner of diagnostic related to AB-150?

[COGS]

What caused us to see that there was an error is that even though we can't see any state forms, we can see the CA worksheets.  In those there was a worksheet showing the adjustments that are the delta between fed and state K-1 income.  They were all showing largely zero federal income.  Interestingly, the tax summary pages look to have correct numbers. 

[George4Tacks]

I started to play with this today for California Partnership.

Screen 32.1 > CA Miscellaneous > Pass-Through Entity Elective Tax Calculation (Form 3804) > enter a 1 in the first box for each electing partner and Lacerte computes the 9.3%. That then shows up on the 565 line 25 and Line 15f (with note) of the K-1.

There does not seems to be an input for payment via 592-PTE, but you can enter a payment for the amount in Screen 37.011 near the bottom of CA Miscellaneous Info for form 3893[O] 

I believe all of this is a work in progress and input entry points may change. 

[CPATIM1]

On the individual module do you put the PTE CA tax withheld from a partnership on the K-1 input screen in the credit for state estimates/witholding paid on or before 12/31/21 for payments that were made in 2021?

Or is there a special box somewhere to just put PTE payments that I am missing?

[Chuck56]

Screen 42 for S corps

[kanchan-textax-u]

@George4Tacks  I have CA income of 78,505, however there is carry forward loss of 25,683, so the same is to be adjusted in  3804 Form, but in the form is showing income as 78,505, kindly let me know how to adjust the losses in 3804.

Kindly let me know

Thank you for help.

[George4Tacks]

@kanchan-textax-u see the response by @abctax55  on ‎12-10-2021 04:23 PM above

[kanchan-textax-u]

How can i go to the screens, how shall i know which is the screen 42

[kanchan-textax-u]

@George4Tacks @Chuck56 @LA CPA 

Kindly let me know.

Hi Sir, Hope you are doing well.

One quick querry, I have one client who opted and paid taxes under AB 150. Ex- My ca tax owed is 7000, however I paid 20000, so how to deal with the excess PTE credit,

And how much deduction I can take on federal return on 7000 or 20000

[abctax55]

@kanchan-textax-u 

Are you using Lacerte or not?  Lacertians use screen numbers for reference.

[kanchan-textax-u]

No i am using Proconnect.

[abctax55]

Proconnect is the umbrella of all Intuit software.

What are you actually using?  And are you a professional tax preparer?

[dbekkerman]

I wonder if the entering AB150 as the equal split between Q1-Q4 quarterly estimated payments (say to the state of California ... in my case) and set the resulting credit refund as rollover the credit to new year be a good resolution ? Since most of the time SALT limits to 10K and majority use standard deduction - should have no implications on Fed Return