New York PTET Elections and Other Imminent Tax Deadlines
Client Alerts | March 9, 2023 | Hedge Funds | Private Equity Funds
New York Pass-Through Entity Tax (“PTET”)
Due Date for Elections
The due date to make elections to pay the New York State and New York City PTET for 2023 is March 15, 2023.
March 15, 2023, is also the due date to elect to pay the New York City PTET for 2022, but such election is only available to pass-through entities that previously elected to pay the New York State PTET for 2022.
If you would like to elect to pay the PTETs for 2023 but have not yet formed an eligible entity, you should consider doing so before the March 15, 2023 deadline and make the PTET elections for the new entity, even if the business has not yet been started.
For example, if your business is a sole proprietorship, you would need to form an entity that is classified as a partnership (or S corporation) for tax purposes in order to make the PTET elections. Similarly, if you plan to start a new business in 2023, it might be prudent to form an entity now so that elections can be made for 2023.
As a reminder, the PTET elections generally allow a federal income tax deduction of state and local income taxes that could otherwise not be deducted due to the $10,000 limit on the deduction of state and local taxes for personal income tax purposes.
For our prior client alert on the New York PTET, please click here.
Section 475(f) Election
Due Date for Election
The due date to make an election to mark-to-market under Section 475(f) of the Internal Revenue Code for 2023 is March 15, 2023 (for partnerships which are calendar year taxpayers).
Mark-to-market elections can offer significant tax planning opportunities.
For more information regarding a mark-to-market election, please click here for our prior client alert on this topic.
Rollover of Gains into Opportunity Zone Funds
Taxpayers who realized gains in 2022 may still be able to rollover such gains into an opportunity zone fund and defer taxation on such gains until December 31, 2026. In addition, such taxpayers may be able to avoid taxation on the appreciation in the opportunity zone investments if the investments are held for at least 10 years.
For example, if you were a partner in a partnership that realized gains in 2022, you would generally be able to roll over the gain by September 11, 2023.
The opportunity zone rules can be very complicated, and you should consult with counsel and allow ample time to consider and implement this.
If you have any questions regarding the above, please contact your primary Kleinberg Kaplan attorney or a member of our Tax Department.