How a pass-through entity tax deduction can affect an M&A deal
A pass-through entity tax deduction can have a significant impact on a merger and acquisition. Mike Monaghan, Tony Israels, and Jennifer Keegan explain how a PTET election can change the math when assessing the value of an M&A transaction.

The IRS provided guidance on the federal tax treatment of PTET payments in November 2020. However, questions remain regarding the tax implications of PTET elections, particularly in M&A transactions. The effect a PTET election has on a transaction depends on many factors, including the applicable state PTET law, timing of the PTET deduction, type of PTE entity involved, and whether assets or ownership interests are being sold or purchased.