18005: OR - Pass-Through Entity Tax Election and Credit (PTE-E)

This is an election that allows an S corporation or Partnership to choose to pay tax at the PTE level, and then members of the PTE (shareholders/partners) are eligible for a credit equal to the PTE-E tax paid. Per the Oregon DOR,

"For tax years beginning on or after January 1, 2022, entities taxed as S corporations and partnerships may elect annually to be subject to the PTE-E tax at a rate of 9 percent tax on the first $250,000 of distributive proceeds and 9.9 percent tax on any amount exceeding $250,000. The law will expire if the federal SALT deduction limitation expires or is repealed.

Qualifying members of an electing PTE are eligible for a credit equal to 100 percent of the member's distributive share of the PTE-E tax paid."

The election is not able to be made at the pass-through entity level with the use of Drake22, however, the election and the payments can be made online through the Oregon DOR. Before making the election to make payments for the Pass-Through Entity Tax, the entity must register with the Oregon DOR. See the PTE-E Registration Page for more information.

If you need to record payments that were made for shareholders/partners through the OR DOR website on the S-corporation or Partnership return, do the following: 

1. Open the Oregon K1 screen for the first shareholder/partner. 
   • Select their name in the drop list. 
   • On line 19, enter the amount of PTE-E tax for that member. 
2. Page Down and repeat the steps for each additional shareholder/partner. 
3. Complete the OR > PDF screen (on the OR Other tab) indicating that you are going to attach a schedule or statement of the credit entry. 
   • The PDF attachment would need to be created outside Drake Tax. 
4. View the return and attach your PDF document. 

Note: An entity that has a net loss would not be able to pay the PTE-E tax as it is based on a percentage of the amount of distributive proceeds (9% of $0 would be 0).

1040 

To claim the PTE elective tax credit on the individual return for the shareholders/partners, in Drake Tax, go to the OR > CRE screen and enter the amount for code 900.

To claim the add back for the state taxes deducted on the federal PTE return, on the individual return for the shareholders/partners, in Drake Tax, go to the OR > Add2 screen and enter the amount for code 167.