Tax planning can be a difficult strategic process; this tax planning season is further complicated by the COVID-19 pandemic as well as the uncertainties surrounding the Presidential Election. This session will shed light on a number of significant considerations regarding NJ BAIT, nexus issues related to remote working, and PPP loan forgiveness as it relates to general high net worth planning.

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2020 YEAR-END TAX PLANNING FOR
LAW FIRMS AND ATTORNEYS
Presentation: November 18, 2020

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Housekeeping
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50 minute sessions
10 minutes Q&A (or however long it takes) session at
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Slides and recording will be emailed after the
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Disclaimer
 This content is for general informational purposes only and should not be
used as a substitute for individualized tax advice with a qualified tax
advisor. This content represents the views of the authors only and does not
necessarily represent the views or professional advice of WithumSmith +
Brown, PC.
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Presenters
Daniel Mayo , JD, LLM
Principal, National Lead, Federal
Tax Policy
Scott Paterson, JD, LLM
Senior Manager, Professional
Services
Edward Sadowski, CPA
Principal, Professional Services
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Current Political Landscape

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Political Landscape
 Biden has unofficially been declared the winner – Nevada and Pennsylvania put him over 270 electoral votes
 Biden 290 electoral votes – Trump 217; Georgia (16 votes) and North Carolina (15 votes) not yet called
 Trump is pursuing lawsuits in many states and has not conceded the election
 Most states have not certified their vote counts; recounts in some states are likely – e.g., Georgia already ordered a hand recount
 Voter turnout for both candidates set a new record, and Biden received the most votes ever cast for a U.S. presidential
candidate (over 74.4 million and counting)
 Obama received 69.4 million votes in 2008
 Senate – Republicans poised to retain control (currently 50:48)
 Democrats need to with both seats in Georgia’s January 5, 2021 runoff elections to get to 50:50
 House – Democrats retain control but with a slimmer majority (currently 218:202 with 15 seats undecided)
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Biden wins and Democrats
control House/Senate
• Progressive agenda, and
perhaps one of the most
progressive in U.S. history
Biden wins and Democrats
control the House, but not
the Senate
• With split Congress,
Biden will not be able to
enact more progressive
policy items (e.g.,
healthcare and climate
change)
• Center-left Biden
presidency; major
changes unlikely
• Expect more executive
orders and federal
regulations
Trump wins and
Republicans control Senate,
but not the House
• Status quo, with Trump
pursuing his “America
First” economic agenda
Trump wins and Democrats
control the House/Senate
• Unlikely outcome
Election Possibilities
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Biden’s Tax Proposals

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Raise highest marginal individual tax rate from 37% to 39.6% for taxpayers with income > $400K
Phase out §199A Qualified Business Income (QBI) for taxpayers with income > $400K
Phase out itemized deductions taxpayers with income > $400K
Increase rate of tax from 20% to 39.6% on long-term capital gain and qualified dividend income (QDI) for taxpayers earning > $1M in income
Cap the tax benefit of itemized deductions at 28% of value
Subject wages in excess of $400,000 to 6.2% Social Security portion of FICA (not clear whether he would tax wages between $137,700 and
$400,000)
Biden’s Individual Tax Proposals
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Increase maximum corporate tax rate from 21% to 28%
Possibly tighten the Opportunity Zone regime to encourage housing affordability and job creation
Repeal §1031 like kind exchange rules (possibly only for taxpayers with income > $400K)
Limit investors ability to use real estate losses (possibly only for taxpayers with income > $400K); not clear, but might limit PAL rules, depreciation rules and/or
loss limitation rules
Create an offshoring tax penalty, namely a 10% tax on profits of companies that manufacture products offshore and sell them back into the U.S.
Create new minimum 15% tax on global book income on companies with at least $100M in book income
Increase global intangible low tax income (GILTI) tax rate from 10.5% to 21%
Biden’s Corporate Tax Proposals
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Tax unrealized capital gain at death, and using ordinary income tax rates as discussed earlier
•Would eliminate the step-up in basis at death
•Not clear if there would be a spousal exemption
•Not clear if tax would be due at death or the assets would just take a carryover basis
Reduce lifetime exemption from $11.58M in 2020 (indexed for inflation) to $5M or $3.5M
Limit the ability to take valuation discounts, such as for lack of marketability
Biden’s Estate and Gift Tax Proposals
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Polling
Question #1
Has the 2020 election affected your 2021
personal or business plans?

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Year-End Planning

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General rule is to defer income and accelerate expenses
• Like-kind exchanges of real estate
• Invest capital gain in opportunity zones
• Rollover of QSBS gain
• Installment sales defers gain until payments are received
• Contribute to an HSA (individual limit is $3,550, family limit is $7,100)
o If 55 or older, the catch-up contribution amount is $1,000
Defer Income
General Year-End Tax Planning Ideas
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• Bunch itemized deductions so itemizing is preferable to the standard deduction (single $12,400/MFJ
$24,800)
o Date and mail checks in 2020
o Use credit cards to make payments – promising to pay does not make expenses deductible, but paying with
borrowed funds works
o Contribute to a donor advised fund now, and allocate funds to charities later
o Double up on charitable contributions and pay every other year
o Accelerate medical expenses into 2020 so they exceed 10% of AGI
o Pay in 2020 mortgage interest due in January 2021
o Pay in 2020 estimated state income tax payments due in early 2021
• But remember state taxes in excess of $10K are subject to the annual SALT deduction limitation
• Make a full-year contribution to an HSA (single $3,550; family $7,100), even if eligible in December 2020
Accelerate Expenses
Reevaluate reasonable compensation in S corporations (i.e., employment tax planning)
Reevaluate officer compensation in C corporations (i.e., to reduce double taxation)
General Year-End Tax Planning Ideas
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•Elect out of bonus depreciation
•Trigger gain now instead of later (sales, exchanges, distributions from C corp, etc.)
•Change accounting methods
•Don’t let the tax tail wag the planning dog – think in terms of accelerating something you would otherwise do, rather than doing
something you would not otherwise do
Accelerate business income if you think tax rates are going up
•Trigger long-term capital gain in 2020 rather than in 2021 or later
•Actual sales or constructive sales – e.g., short against the box; wash sale rules do not apply to gain
•IRA conversions (i.e., convert pre-tax retirement accounts to Roth (after-tax) accounts)
•Take a required minimum distribution (RMD) from an IRA/retirement plan, even though not required in 2020 under the CARES Act (or
reverse a previous one already made)
•Exercise stock options or make a §83(b) election on deferred compensation subject to restrictions
Accelerate personal income if you think tax rates are going up
•Do the opposite of the suggestions above
Alternatively, defer income if you think rates are going down
Election Year Tax Planning Ideas
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Taxation of PPP Loan

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Taxation of Receipt of PPP Loan
 Generally, no tax consequences on issuance of a note and receipt of loan
proceeds
 There is no accession to wealth because of the obligation to repay the loan
 This general rule applies to the receipt of a PPP loan – no tax consequences
until repayment or forgiveness
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Taxation of Loan Forgiveness
 Generally, cancellation of debt (COD) income gives rise to taxable income for
borrowers
 This is because the elimination of the repayment obligation creates an
accession to wealth
 Section 1106(i) of the CARES Act provides that any amount that would be
includible on the forgiveness of a PPP loan “shall be excluded from gross
income”
 Applies regardless of whether the income is characterized as COD income includible
under §61(a)(11) or as income otherwise includible under §61
 The CARES Act did not address the expense side of the equation
 The IRS addressed expenses in Notice 2020-32
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Taxation of Loan Forgiveness (cont’d)
Notice 2020-32
 Payroll costs, rent and utilities are deductible under §162, and interest on covered mortgages is deductible
under §163(a)
 The allowance of these deductions is subject to exceptions, including §265
 Under §265 and Reg. §1.265-1, no deduction is allowed for any amount otherwise deductible if it is allocable
to one or more classes of income (other than interest) that is wholly exempt from tax (whether or not any
amount of income of that class or classes is received or accrued)
 The purpose of §265 is to prevent a double tax benefit
 §265 also applies tax-exempt income that is earmarked for a specific purpose and the deductions are incurred
in carrying out that purpose
 Because the loan forgiveness amount is a “class of exempt income,” borrower should eliminate the deductions
relating to that class of income
 In addition, the expenses are subject to disallowance under case law and published rulings that deny
deductions for otherwise deductible payments for which the taxpayer receives reimbursement
Many legislators have stated that expense disallowance was not intended, and legislation has been
proposed to restore the deductions (S. 3612, the Small Business Expense Protection Act of 2020)
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Taxation of Loan Forgiveness (cont’d)
 Example: B has gross income of $500 and expenses of $300. B received a PPP loan for
$100, and expects 100% loan forgiveness
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Taxation of Loan Forgiveness (cont’d)
 Assuming the PPP Remains taxable, Year-end Considerations:
 Pay Extra Bonuses
 Accelerate expenses
 Partner by Partner income allocations
 Tax Return Extensions for further guidance
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Polling
Question #2
Did your business apply for PPP Loan
Forgiveness?

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State Pass-through Entity Taxes

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Pass-through Entity Taxes as a Growing
Trend for the States
SALT Limitation: Before passage of the TCJA, individuals who itemized deductions
could deduct their state tax payments in full as Itemized Deductions, on their federal Form
1040, U.S. Individual Income Tax Return. The TCJA put into place a $10,000 state and local
tax deduction limitation.
After TCJA several states immediately proposed or instituted workarounds that
leveraged the charitable contribution rules:
• New York
• New Jersey
• Connecticut
The intended result is that payments under these systems would be re-
characterized as fully deductible charitable contributions for federal income tax
purposes.

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State’s First Workaround
In June 2018, the IRS issued Notice 2018-54 indicating that regulations will be issued to disallow these backdoor
SALT deductions.
 “The proposed regulations will make clear that the requirements of the Internal Revenue Code, informed by substance-over-form
principles, govern the federal income tax treatment of such transfers. The proposed regulations will assist taxpayers in understanding the
relationship between the federal charitable contribution deduction and the new statutory limitation on the deduction for state and local
tax payments.”
August 2018, proposed regulations were issued.
 The proposed regulations made clear that if a taxpayer made a payment to one of these government created charities, and expects to
receive a state or local tax credit in return for the payment, then the benefit the taxpayer receives would reduce any charitable
contribution deduction (i.e. the a quid pro quo principle).
June 2019, these proposed regulations were finalized, effective August 12, 2019.
Example: A, an individual, makes a payment of $1,000 to a state charitable organization. In exchange for the
payment, A receives or expects to receive a state tax credit of 70 percent of the amount of A's payment to the
organization. A's charitable contribution deduction is reduced by $700 (0.70 × $1,000). This reduction occurs
regardless of whether A is able to claim the state tax credit in that year. Thus, A's charitable contribution deduction
for the $1,000 payment to X may not exceed $300.
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Pass-through Entity Taxes as a Growing
Trend for the States (cont’d)
New SALT Workaround: In theory, the premise of a pass-through entity tax
workaround is straight-forward. By imposing an income tax directly on the pass-
through entity, which is not limited in the amount of state taxes that it can deduct for
federal purposes, a state's tax on pass-through entity income now becomes a full
deduction for the pass-through entity for federal income tax purposes.
Some states that have passed similar workarounds include: Connecticut, Louisiana,
Maryland, New Jersey, Oklahoma, Rhode Island, and Wisconsin.
 Maryland, New Jersey and Rhode Island allow the individual owners of the pass-
through entity an income tax credit for their share of the pass-through entity tax paid
by the entity.
 Louisiana, Oklahoma, and Wisconsin reduce the owners' state taxable income by the
income included and taxed on the pass-through entity's return.

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What is the NJ BAIT?
On Jan. 13, 2020, New Jersey Gov. Phil Murphy signed legislation creating the Business
Alternative Income Tax (BAIT), an elective entity-level tax on pass-through businesses
for tax years beginning on or after Jan. 1, 2020.
Pass-through entities can elect to pay New Jersey income tax at the entity level, and
the owners would receive a credit on their personal returns for the entity-level tax
paid.
Purpose: This effectively eliminates the federal limitation on the SALT deductions of
$10,000 imposed by the 2017 Tax Cuts and Jobs Act.

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Making the NJ BAIT Election
At least one partner/member/owner subject to New Jersey’s gross income tax (“GIT”) on its share
of the distributive proceeds of the entity to elect to be taxed at the entity level.
The legislation allows for a “pass-through” entities (i.e. partnership, S corporation, LLC) with at
least one member subject to GIT make the election.
 Requires S Corporations that made the NJ S-Corp election.
In order to make a valid election, the flow-through entity must have the consent of:
 all members; or
 an officer, manager, or member of the electing entity who is authorized to make the election.
The annual election must be made on or before the original due date; by March 15 (calendar year
taxpayers).

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Making the NJ BAIT Election – Other
Considerations
A retroactive BAIT election cannot be made after the return's
original due date (without extensions) and any revocation of the
BAIT election must be made before the original due date of the
PTE's return.
 The pass-through entity’s tax return is due on the 15th day of the
third month after the close of the tax year. For calendar year
taxpayers, this would be March 15.
The election must be made annually on or before the original
due date (without extensions) of the entity’s New Jersey return.

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Polling
Question #3
Will you elect into a state pass-though
entity tax like NJ BAIT?

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Calculating the NJ BAIT Tax
To calculate the amount of tax due, the pass-through entity must determine
the sum of each member’s share of distributive proceeds attributable to the
pass-through entity for the taxable year.
The four tiers of income tax rates are as follows:
 5.675% for distributive proceeds under $250,000
 6.52% for distributive proceeds between $250,000 and $1,000,000;.
 9.12% for distributive proceeds between $1,000,000 and $5,000,000
 10.9% for distributive proceeds over $5,000,000.
• Note, this is comparison to the top New Jersey Tax Rate of 10.75 percent.
Tax must be calculated on every member's share of distributive proceeds
including tax exempt members; such as exempt IRC 501(c)(3) entities and
retirement plans.

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NJ BAIT Example
Law Firm AB, LLC has 2 New Jersey resident members
with a total of $2M in distributive proceeds that is 100%
sourced to New Jersey. Partners are each 50% members.
 The distributive proceeds sourced to New Jersey are allocated
$1,000,000 to Member A and $1,000,000 to Member B.
 Using the tax table, tax is calculated on the $2M = $154,288.
 The elective entity tax is $154,288.
 Each New Jersey resident member’s share of the entity level tax
equals ($154,288*50%) = $77,144

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NJ BAIT Example
Assuming both resident members file
MFJ:
 If BAIT was not elected, the total federal
income tax on $2M would yield federal taxes
of $614,430 ($307,149 each).
 If BAIT was elected, the total federal income
tax on $2M would yield federal taxes of
$557,721.
 This is a total savings of $57,086.
• $28,543 per partner
Partner A With NJ BAIT
Election
No BAIT
Income $1,000,000 $1,000,000
BAIT Tax Deduction $(77,144) $-
Federal Taxable Income $922,856 $1,000,000
Federal Tax $278,606 $307,149
Savings: $28,543 $-

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State Pass-Through Tax Benefits
By passing through a net amount of income reduced by the SALT deduction, the owner
is able to fully deduct their State taxes for federal purposes.
Additionally, the owner would not be double taxed in their resident state, as a credit to
offset the entity tax is passed through to the owner.
For New Jersey the BAIT only calculates tax on state-connected income, businesses that
are most likely to benefit from this election would be businesses with significant New
Jersey presence.

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State Pass-Through Tax Risks and
Considerations
2 Weeks Ago:
1) IRS Challenges: There is uncertainty if the IRS will challenge such workaround. If they do and prevail;
various implications such as loss of SALT deduction benefit, higher effective tax rates, and amended returns
may need to be considered.
2) Non-Resident Credits: The resident state of a non-resident member may not allow a resident credit on
their individual returns for taxes paid at the entity level.
3) Duplicate Estimate Payment Requirements. NJ does not alter existing non-resident withholding
requirements for those pass-through entities that elect to pay the BAIT. Therefore, overlapping payment
requirements may be necessary if individual non-resident taxpayers are subject to both regimes. (This is only
for estimated payments, not the actual tax itself).

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State Pass-Through Tax Risks and
Considerations
As of November 9, 2020:
1) IRS Challenges: There is uncertainty if the IRS will challenge such workaround. If they do and prevail;
various implications such as loss of SALT deduction benefit, higher effective tax rates, and amended returns
may need to be considered.
2) Non-Resident Credits: The resident state of a non-resident member may not allow a resident credit on
their individual returns for taxes paid at the entity level.
3) Duplicate Estimate Payment Requirements. NJ does not alter existing non-resident withholding
requirements for those pass-through entities that elect to pay the BAIT. Therefore, overlapping payment
requirements may be necessary if individual non-resident taxpayers are subject to both regimes. (This is only
for estimated payments, not the actual tax itself).

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State Pass-Through Tax IRS Response
Notice 2020-75:
Announces rules to be included in forthcoming proposed regulations. Specifically, the
proposed regulations will clarify that State and local income taxes imposed on and paid
by a partnership or S corporation on its income are allowed as a deduction by the
partnership or S corporation in computing its non-separately stated taxable income or
loss for the taxable year of payment, and therefore are not subject to the State and local
tax deduction limitation for partners and shareholders who itemize deductions.

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Income Tax Nexus

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Remote Employees May Create Nexus for Entities
in New States
Businesses that responded to Covid-19 by moving employees out of physical
business locations and to remote work may create nexus in new states.
 Allowing teleworking employees to work anywhere with an internet connection can
create tax obligations or liabilities for businesses because having remote workers in a
state where the business doesn’t otherwise have nexus, can create nexus in that state.
 Thus, measures taken by businesses to keep their workforce safe and adhere to
government closure orders may create nexus, and thereby new state tax filing and
payment obligations.

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States’ Nexus Policies Require Careful Attention
Some states announced that a temporary presence of teleworking employees due to the
pandemic will not create nexus.
 NJ – Temporary waiver
 PA – Will not seek to impose CNIT for temporary activity from Covid
 Phil – Temporary waiver
Other states announced that they will not change nexus standards regarding teleworking
or have not addressed it.
 NY – Continues to assert nexus over employees working from home, whatever the reason.
In the absence of affirmative guidance providing an exception to a state’s nexus position
due to teleworking, businesses should assume an unchanged nexus standard.
Even when dealing with states that provided nexus exceptions, business should be aware
that if teleworking becomes the new normal, any temporary nexus waivers will not provide
long-term protection.

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Income Tax Apportionment

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Remote Work May Impact Apportionment of
Corporate Income
Apportionment is the process multi-state entities use to divide taxable
income among states. States lack uniformity in their apportionment formulas
and sourcing methods.
 Many states use, or are phasing in, a single-sales-factor apportionment formula.
 Other states use a three-factor apportionment formula that includes a payroll factor.
 A few states continue to use a three-factor apportionment formula but may apply
different weights to each of the factors.
An entity in a state that uses a three-factor apportionment formula must
include, in the payroll factor, income from services performed by its
employees teleworking from that state.

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Stay Abreast of State Corporate Income Tax
Sourcing Rules
Businesses with employees teleworking from different states may have to adjust apportionment
calculations for state-specific sourcing rules. Biggest issues involve services.
 Businesses with increased numbers of remote workers in states that use market-based sourcing(a major trend
among states and representing a disproportionately high percentage of the GNP) should not face
apportionment issues due to their own remote workers.
 NJ and NY S-Corps and C-Corps use market based sourcing and single sales factor.
 NJ partnerships use a 3 factor formula and Cost of Performance.
 NY partnerships source revenue to NY based on the office the sale if negotiated and a 3 factor formula.
 PA uses market based sourcing and a single sales factor.
 States with cost-of-performance sourcing rules for sales of services could prove problematic. Businesses with
offices in one state, and a newly remote workforce in other states, may be required to source sales to states
where their remote workers perform services for their customers.
While an increase in remote workers may not cause major apportionment issues for many
businesses, they should monitor states with a payroll factor or a sales factor that sources receipts
based on cost of performance.

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Philadelphia Revenue Sourcing
Recently the City of Philadelphia announced that for purposes of its business
taxes, service providers with offices in Philadelphia that have employees
working outside of Philadelphia who would otherwise be working in
Philadelphia must source the revenues derived from their services to
Philadelphia.

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Polling
Question #4
Do you expect to allow employees to work
remotely permanently?

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Convenience of Employer Rule

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Convenience of Employer Rule
New York, Pennsylvania and the City of Philadelphia have implemented what is
referred to as the “Convenience of the Employer” test. Generally, in a state that
applies this test, wages earned by a nonresident are allocated to the employer's
location unless the nonresident works from an out-of-state location due to the
necessity of the employer rather than the convenience of the employee
NJ and PA issued relief as a result of COVID-19. NY has not. Covered later.

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“Employer Necessity” Test
Under new guidance, telecommuter must prove two elements
 Telecommuting days are “normal” work days
 Telecommuter’s home office is a “bona fide employer office”

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Normal Work Day
“A normal work day means any day that the taxpayer performed the usual
duties of his or her job. For this purpose, responding to occasional phone calls
or emails, reading professional journals or being available if needed does not
constitute performing the usual duties of his or her job.”

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Bona Fide Employer Office
“In order for an office to be considered a bona fide employer office, the office
must meet either:
 The primary factor, or
 At least 4 of the secondary factors and 3 of the other factors.”

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Primary Factor
“The home office contains or is near specialized facilities. If the employee’s
duties require the use of special facilities that cannot be made available at the
employer’s place of business, but those facilities are available at or near the
employee’s home, then the home office will meet this factor….”

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Secondary Factors
Four of the following factors:
The employer requires the employee to work from home as a condition of employment
The employer has a bona fide business purpose for establishing an office in the precise
location where the employee lives
The employee performs some of the core duties of his job at his home office
The employee meets or deals with clients, patients or customers on a regular and continuous
basis at his home office
The employer does not provide the employee with designated office space or other regular
work accommodations at one of its regular places of business
The employer reimburses the employee for substantially all of the expenses related to the
home office; or The employer pays the employee rent for the home office space and
furnishes or reimburses the employee for substantially all the supplies and equipment the
employee uses.

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Other Factors
Three of the following factors:
The employer maintains a separate telephone line and a separate phone listing for the telecommuter’s home office
The employee’s home office address and phone number are listed on the company’s letterhead or business cards
The employee uses a specific area of his home, separate from the living area, exclusively for work
The employer’s business is selling products at wholesale or retail, and the employee keeps an inventory of the products or
product samples at home to use for work
Business records of the employer are stored at the employee’s home office
The home office location has a sign indicating that it is a place of business of the employer
The employer’s advertising material shows the employee’s home office as one of the employer’s places of business
The home office is covered by a business insurance policy or by a business rider to the employee’s homeowner insurance
policy
The employee is entitled to and actually claims a deduction for home office expenses for federal income tax purposes
The employee is not an officer of the company

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Remote Working Residency Issues

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State Residency Issues & Covid-19
Residence is commonly thought of as a person’s domicile—the place that a person considers
to be their permanent home.
Many state statutes define “resident” to include both individuals who are domiciled in the
state and individuals who spend a significant amount of time and maintain a residence there.
AKA “statutory residence”.
In each state, a tax resident is, generally speaking, a person that is either (1) domiciled in the
state or (2) not a domiciliary, but maintains a permanent place of abode in the state and is
present in the state for more than 183 days during the taxable year.
State credits for taxes paid

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NY/NYC - “resident” includes an individual who maintains (or whose spouse
maintains) a permanent place of abode in New York for substantially all of the
taxable year and spends at least 184 days in New York during the year.
New York/New York City

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NY FAQ - 10/19/20
If you are a nonresident whose primary office is in New York State, your days
telecommuting during the pandemic are considered days worked in the state
unless your employer has established a bona fide employer office at your
telecommuting location.
NJ bill S-3064 to examine legal efforts to thwart NY and generate NJ tax
revenue.

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Pennsylvania
PA – A person is considered a statutory resident of if they spend > 184 days in
PA and maintain a place of abode in PA.
Pennsylvania Department of Revenue has published guidance on its website
that states that if an employee is working from home temporarily due to the
COVID-19 pandemic, the Department would not consider that as a change to
the sourcing of the employee’s compensation.
If PA based employer, employee compensation remains PA source and
withholding required (unless reciprocity).

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Philadelphia
Wage Tax Policy issued on May 4, 2020. Employees of Philadelphia-based
employers who are required to work outside the city (such as due to COVID-19)
are exempt from the city’s wage tax for days spent fulfilling that work.
Employer may continue to withhold Phil. wage tax from nonresident
telecommuting employee’s compensation but not required to do so.

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New Jersey
NJ - “resident” includes an individual who maintains a permanent place of
abode in New Jersey for the entire year and you spent more than 183 days in
New Jersey
A permanent home does not include residences that are maintained only
during a temporary period to accomplish a specific purpose, such as a
temporary job assignment. Similarly, a home only used for vacations is not
considered permanent.

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New Jersey
The Division’s guidance states: “New Jersey sourcing rules dictate that income is
sourced based on where the service or employment is performed based on a
day’s method of allocation. However, during the temporary period of the
COVID-19 pandemic, wage income will continue to be sourced as determined
by the employer in accordance with the employer’s jurisdiction.”

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NYC UBT Tax

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NYC Unincorporated Business Tax
The New York City UBT subjects non-corporate entities to a 4%
The UBT is an entity-level tax that is imposed directly on an unincorporated
business and applies regardless if its owners live outside the city.
Single receipts factor allocation formula. Amount of New York City gross income
by total gross income from all jurisdictions.
“Convenience of employer” rule, as of now, only applies to personal income tax,
not business taxes. NYC Admin Code 11-508(c)(3)(C) sources service receipts
for the UBT to the location where the services were performed.

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QUESTIONS?
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