SALT CAP Workaround – An IRS Holiday Gift
The 2017 Tax Act made life harder on individuals living in high tax states (such as New York, New Jersey, and California) by limiting the deduction for state and local taxes (“SALT”) to $10,000. In an attempt to circumvent this restriction, several states have adopted a new pass-through entity tax imposed on partnerships, LLCs, and S Corps, which is deductible in computing the entity’s taxable income passed through to its partners or shareholders. The state…