SALT Cap Pass-Through Workaround Holds Up After New IRS Rules

Tax professionals noted that recent rules tied to the $10,000 cap on state and local tax deductions are perhaps most notable for what they don’t say.

The rules (T.D. 9907), officially published on Tuesday, address a safe harbor for businesses donating to a charitable fund in exchange for a state tax credit. The IRS didn’t reference a strategy enacted by Connecticut, New Jersey, and other states that allows owners of pass-through entities to blunt the impact of the SALT cap by paying income tax at the entity level instead of on their personal taxes.

Lawmakers in ...