SSHB428 2709 4003
HOUSE SUMMARY OF SENATE AMENDMENTS
HB 428 2023 Regular Session Pressly
TAX/INCOME TAX: Extends to estates, trusts, and partnerships the flow-through entity
income exclusion allowed to individuals
Synopsis of Senate Amendments
1.Revises present law relative to elections by which S corporations and other
flow-through entities may be taxed in the same manner as C corporations to
allow for prospective termination of such elections.
2.Provides with respect to applications for prospective termination of such
elections.
3.Establishes conditions which must be satisfied in order for such applications to
become effective.
4.Stipulates that upon the effectiveness of the termination of an entity's election,
no election otherwise allowed by present law shall apply for the succeeding five
taxable years of the entity or its successor.
Digest of Bill as Finally Passed by Senate
Present law provides for all of the following:
(1)An election that authorizes Subchapter S corporations and other flow-through entities
to file income tax returns and pay tax on their La. income as if they were Subchapter
C corporations (R.S. 47:287.732.2).
(2)An exclusion from taxable income for individual taxpayers for net income or losses
received from a flow-through entity which properly filed a La. corporation income
tax return that included the net income or loss (R.S. 47:297.14(A)).
(3)A requirement that any individual taxpayer who utilizes the flow-through entity
exclusion described in paragraph (2) above shall notify the Dept. of Revenue if
changes are made to his federal income tax return due to adjustments to an S
corporation's income or losses (R.S. 47:297.14(B)).
Proposed law makes available to estates, trusts, and partnerships the flow-through entity
income exclusion described in paragraph (2) above. Proposed law also requires estates,
trusts, and partnerships to notify the Dept. of Revenue if changes are made to their federal
income tax returns due to adjustments to an S corporation's income or losses in the same
manner as required by present law for individual taxpayers as described in paragraph (3)
above.
Present law provides that an election by a Subchapter S corporation or other flow-through
entity to be taxed in the same manner as a Subchapter C corporation shall be effective for the
taxable year for which it is made and for all succeeding taxable years until the election is
terminated by the secretary of the Dept. of Revenue. Proposed law retains present law and
provides that an election may also be terminated when an application for prospective
termination of the election is effective.
Proposed law establishes that an application for prospective termination of the election shall
be effective automatically for the subsequent taxable year upon completion of the following:
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(1)The shareholders, partners, or members holding more than one-half of the ownership
interest in the entity consent in writing to the application for prospective termination.
(2)The entity timely submits the application to the secretary of the Dept. of Revenue no
later than Nov. first prior to the close of the taxable year for calendar year filers or
60 days prior to the close of the taxable year for fiscal year filers.
Proposed law stipulates that upon the effectiveness of the termination of an entity's election,
no election otherwise allowed by present law shall apply for the succeeding five taxable years
of the entity or its successor.
Proposed law applies to taxable periods beginning on or after Jan. 1, 2023.
(Amends R.S. 47:287.732.2(A)(3); Adds R.S. 47:203(C), 287.732.2(A)(4)(c) and (d) and
(G), 300.6(B)(2)(e), and 300.7(C)(2)(d))
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