Common questions and answers regarding Indiana pass-through entity tax with a 1065 return type using CCH® ProSystem fx® Tax and CCH Axcess™ Tax.

  • Article Type:
  • QA
  • Last Modified:
  • 01/18/2024

Question

What are some common questions and answers regarding Indiana PTE election with a partnership return?

Environment

  • CCH® ProSystem fx® Tax
  • CCH Axcess™ Tax
  • Partnership - 1065
  • Indiana - IN
  • Worksheet View – WSV
  • Interview Forms – IVF
  • State And Local Tax – SALT
  • Pass-through Entity Tax – PTET

Answer

New for Tax Year 2023: How do I prepare Indiana Schedule PTET with a 1065 return type using 2023 CCH® ProSystem fx® Tax and CCH Axcess™ Tax?

QuestionAnswer
-Form Name
  • IN-PTET
  • For tax year 2022, the Pass Through Entity Tax will be reported on the entity’s composite schedule.
-State Links
Election for PTE
-Is an Election Required?
  • Yes
  • The annual election to opt into the Indiana Pass Through Entity Tax must be made on an annual basis on the IN-PTET form prescribed by the Indiana Department of Revenue. Starting with tax years beginning after Dec. 31, 2022, the election may also be made on the entity’s annual return.
-Made when?
  • For tax year 2022, the election may be made after March 31, 2023, and before Aug. 31, 2024.
  • If the 2022 return is filed by April 18, 2023, a pass-through entity can amend their return and make the election.
  • If the 2022 return is filed after April 18, 2023, the election must be made on the original return.
  • For 2023 and tax years thereafter, the election may be made at any time during the taxable year or the entity’s timely filed return, including extensions.
-Good for?
  • The entity must make an election to pay the Pass Through Entity Tax each year.
  • An election for one year does not carry over to the next.
-How do we make this election?
  • The election must be made by an authorized person from the eligible electing entity. An authorized person is any individual with the authority from the electing entity to bind the electing entity or sign returns on its behalf.
-Separate Form needed?
  • When a PTE is requested, the composite will show the PTE calculation. 
    -Residents will now go on the composite with a code 15.  
    -The tax will be calculated as 3.23 percent for the election year ending in 2022.   
    -The tax will be calculated as 3.15 percent for the election year ending in 2023.  
    -The state PTE taxes paid will show on the K-1 Part 1 line 11 IN State Tax Withheld.
    -The first line on the Schedule Composite will show as below when a PTET is selected. 
-Option  to Opt-Out?
  • No. The election is made by the entity, and any owners of the entity are bound by the election. However, certain owners of a pass-through entity (banks and international banking facilities) are not subject to the Pass Through Entity Tax.
  • A qualifying owner must be either the direct or indirect owners of a qualifying entity, or the beneficiary of an estate or trust. An owner shall not include banks and trust companies, national banking associations, savings banks, building and loan associations, savings and loan associations, and international banking facilities.

    Note: In the case of a beneficiary of an estate or trust or the owner of a qualifying entity if the entity does not make a PTET election, the credit is limited to the credit passed through from an entity that makes an election. In other words, if a trust owns an interest in a partnership, the beneficiaries can only claim the credit of PTET paid by the partnership and only to the extent the trust passes through the PTET.

Generation of State PTE Return
-How do we generate the form above?
  • Worksheet: Common State/City > State PTE Generation > State PTE Return Generation > Indiana - Generate State PTE return checkbox
  • Interview: Federal > PTE-ST1, Box 86
-Is this a separate filing from the main form, part of the main form, or filed on it's own?
  • There is an override on Indiana > Other > Indiana Composite Return and Nonresident Tax Withheld  > " Total composite withholding IT-6WTH payments " (IN1, Box 87).
Estimates
-Are there estimates for this form?
  • There is an override on Indiana > Other > Indiana Composite Return and Nonresident Tax Withheld  > " Total composite withholding IT-6WTH payments " (IN1, Box 87).
-Can you apply an overpayment from the current year form?
  • Please review the government form instructions linked at the top of this article.
Interest/Penalties
-Do interest/penalties apply?
  • Please review the government form instructions linked at the top of this article.
-Is there an underpayment penalty?
  • Please review the government form instructions linked at the top of this article.
Additional PTE Information
Common State > State PTE Generation worksheet >Grid 23  (Interview PTE-ST1, boxes 300-364)
-Does this section apply to this state?
  • Not at this time
Additional Input Available
- Does new input options under State and City Tax Refund flow to the state?
  • N/A
- Does new input options under Taxes and Licenses flow to the state?
  • N/A
- Does new input options under Rent/Royalty flow to the state?
  • N/A
- Does the new input options under Farm flow to the state?
  • N/A
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