wakeacct104
Level 2

Wanted to close this out since i wasted hours on this today...
This from the D-403A instructions for NC partnership returns. Proconnect is right to exclude PTE from partnership, Multi-member LLC or s-corp owners because they are passthrough entities.  NC changed the law to allow Partnerships with partnership or S-corp owners to elect PTET, but any income that is allocated to Partnership MMLLCs or S-Corps are excluded from the PTE tax calculation. If you have a partnership with only Partnership or S-corp owners, like i am dealing with today, you're out of luck.  Here's the details from D-403A. 

Can a Partnership Elect to Pay Income Tax at the Entity Level?

For tax years beginning on or after January 1, 2022, an eligible partnership that is required to file a partnership income tax return can elect to pay North Carolina income tax at the entity-level (a “Taxed Partnership”). An eligible partnership is defined as a domestic partnership, a foreign partnership, or an LLC classified for federal income tax purposes as a partnership. Important:

The following partnerships are not eligible to make the election to be a Taxed Partnership:

• A publicly traded partnership that is described in section 7704(c) of the Code.

• A partnership that has at any time during the taxable year a partner who is not one of the following:

(1) An individual. (2) An estate. (3) Any of the following: a. A trust described in section 1361(c)(2) of the Code. b. A trust if such trust does not have as a beneficiary any person other than an individual, an estate, a trust, or an organization described in section 1361(c)(6) of Page 4 the Code. (4) An organization described in section 1361(c)(6) of the Code. (5) A partnership, including an entity classified as a partnership for federal income tax purposes, or an entity classified as a corporation for federal income tax purposes.

**Important: A Taxed Partnership cannot pay tax at the entity-level for a partner classified as a corporation or a partnership. As such, the distributive share of the partner’s income (loss) cannot be included when calculating the Taxed Partnership’s North Carolina taxable income on which the Taxed Partnership pays entity-level tax.**

All I can say is: Thanks for nothing North Carolina 😞