Pass Through Entities Take the RELIEF Act Grant as a Subtraction

Recently, one of our MSATP members wrote to Tax Pro Help at Maryland Taxes regarding the Pass Through Entity grants. We would like to pass on the tax tip received from their legal department.

PTEs take the RELIEF Act grant as they would any subtraction.

 State modifications are passed through to the members and not added to or subtracted from a PTE’s federal income. A PTE’s RELIEF Act subtraction should be treated like any other PTE subtraction. Any RELIEF Act subtractions should be passed to the members on the Maryland Schedule K-1, part C., Line 5, and detailed in Part G. The description in Part G should include the name of the grant and/or granting agency. The PTE does not need to provide with its return any Form 1099G with respect to a COVID grant.

We hope this information helps and thank the legal department at Maryland Taxes for their help!