- Pass-through entity (“PTE”) tax elections generally permit owners of entities treated as pass-throughs (partnerships, S corporations, and certain limited liability companies (“LLCs”)) to pay the tax at the entity level
- Such an election otherwise avoids limitations on the deductibility of state and local taxes for individuals
- Nebraska presents a unique opportunity to make a retroactive PTE election for the 2018-2022 tax years provided that such election is made by December 30, 2025
Background
PTE elections are a valuable option for taxpayer owners of eligible entities. Typically, such elections must be made during the taxpayer’s tax year or immediately thereafter. Nebraska presents taxpayers with a relatively rare opportunity to make retroactive elections.
Eligibility
Eligible entities include partnerships and S corporations, as well as LLCs taxed as partnerships or S corporations for federal purposes. Publicly traded partnerships and disregarded LLCs are not eligible.
Election Mechanics
The election is voluntary and can be made for any combination of the eligible years. To make the election, the entity must file Form PTET-ER (Pass-Through Entity Tax Election for Tax Years 2018 through 2022). A Nebraska entity return for that year must be on file before making a retroactive election. If the Nebraska pass-through entity tax return was not previously filed, it can still be submitted.
The Form PTET-ER must be completed before payment is made. Payment can be remitted electronically or by other approved methods. The retroactive election for each of these years can be made independently. The process does not require elections for all eligible years.
Deadline
The deadline for making this election is December 30, 2025.
How Forvis Mazars Can Help
Forvis Mazars can help you consider the implications of this retroactive election, understand the ramifications of it and assist you in determining whether such an election makes sense for you and in filing the election.