17957: NC - Election to be a Taxed Pass-Through Entity (PTET)

For 2022, North Carolina law allows certain pass-through entities to make an election to pay NC income tax at the entity level. If the S-corporation or partnership makes this election, they are then called a "Taxed PTE." This is similar to the Pass-through Entity Tax (PTET) that other states have enacted, but NC does not have a special PTE form at this time. To make this election in Drake22, data entry is as follows: 

1120-S

• Go to NC > screen 401 > check the box Election to be a Taxed S Corporation.
  • You will see changes on the applicable lines of Form NC 401S and the NC 401 K1 for each shareholder.
  • Note: When the tax is paid by the S corporation, nothing goes on Schedule K-1, line 8 per the NC DOR. 
• To calculate estimates, use one of the following options:
  • The NC > PTE screen.
  • The ES screen. On the right side of the screen, select ST: NC and Type: NP. 

1065 

• Go to NC screen 1 > and check the box Taxed Partnership.
  • You will see changes on the applicable lines of Form NC 403 and the NC 403K1 for each partner.
• To calculate estimates, use the PTE screen. To calculate estimates, use one of the following options:
  • The NC > PTE screen.
  • The ES screen. On the right side of the screen, select ST: NC. 

1040

You may need to make an entry on the NC > screen ADDS > Line 14. Per the Instructions: 

"Line 14. Taxed Pass-Through Entity Loss. Effective for tax year 2022, North Carolina law allows an eligible S corporation and an eligible partnership to elect to pay North Carolina income tax at the entity level (collectively a “Taxed PTE”). If you are a shareholder or a partner in a Taxed PTE, enter your share of North Carolina loss from the Taxed PTE. Note: The Taxed PTE must report this amount to you on your 2022 North Carolina K-1."

You may need to make an entry on the NC > screen DEDS > Line 38. Per the Instructions: 

"Line 38. Taxed Pass-Through Entity Income. Effective for tax year 2022, North Carolina law allows an eligible S corporation and an eligible partnership to elect to pay North Carolina income tax at the entity level (collectively a “Taxed PTE”). If you are a shareholder or a partner in a Taxed PTE, enter your share of North Carolina income from the Taxed PTE. Note: The Taxed PTE must report this amount to you on your 2022 North Carolina K-1."