Bradley Partner Bruce Ely Quoted in Bloomberg Tax on IRS Guidance Allowing SALT Cap Workarounds
November, 2020 - United States of America
Bradley attorney Bruce Ely was quoted in Bloomberg Tax on new IRS guidance that approves a path around the controversial SALT cap enacted as part of the TCJA. States including New Jersey and Connecticut already softened the blow of the $10,000 SALT cap with provisions for pass-through businesses like partnerships and S corporations, which are taxed normally at the owner level. Following the guidance, more states are expected to pass laws letting businesses avoid the limit on personal tax deductions for state and local taxes. The IRS said in a notice that forthcoming proposed rules will allow a workaround, which involves an entity-level tax that is offset by a corresponding individual income tax credit.
Ely estimated that as many as four more states could enact workarounds in upcoming legislative sessions. He expects Alabama to introduce a bill when its Legislature meets in February.
“Right now I’m going to go back to my legislators and show them this notice,” Ely said. “There is no concern now about the validity of these taxes.”
The original article "SALT Cap Workarounds May Catch On in More States After IRS OK," appeared in Bloomberg Tax on November 10, 2020.
