Freese, Peralez & Associates, LLC

If your business operates in more than one state and you're not using PTET you're leaving real money on the table.
PTET = Pass-Through Entity Tax. An election that lets your S-corp or partnership pay state income tax at the entity level, where it's a fully deductible business expense bypassing the individual SALT cap entirely.

Why this still matters in 2026: The 2026 SALT cap raised to $40,400 for joint filers. Better than $10K but reverts to $10K in 2030, and phases out at higher incomes. PTET sidesteps the cap entirely.

For a multi-state operator with $5M+ in pass-through income across 3+ states, PTET elections can mean $50K-$200K+ in additional federal deductions annually. Compounding. Where most CPAs get this wrong:
• Each state has its own PTET regime, rate, and election deadline
• Multi-state allocation rules differ some states give resident credits, some don't
• You can elect into one state's PTET for in-state income while another for out-of-state
• Mid-year election deadlines are coming up in many states

California extended its PTET through 2030. NY, Texas, Louisiana, Alabama all have nuances worth running cleanly.

If your effective state tax burden has grown and you've never had a written PTET analysis, that's where the conversation starts.

Monday tax fact most business owners get wrong:

"Federal estate tax exemption is $15M now I'm fine."

Maybe. But you might not be and here's why.

State estate taxes don't follow federal exemption levels. They're set independently, and several states have meaningfully lower thresholds:
• New York: ~$7.16M (no portability between spouses)
• Massachusetts: $2M
• Oregon: $1M
• Illinois: $4M
• Connecticut: ~$13.99M (closest to federal)
• Minnesota: $3M
• Washington: ~$2.193M (with high top rate of 20%)

For an FPA-style client say, a Texas-based real estate investor with $20M net worth, of which $8M is NYC commercial property federal estate tax is zero. New York estate tax is materially non-zero.

The structural complexity: Each state's tax applies to property located within that state (real estate, tangible assets) or based on the decedent's domicile. Trust ownership, LLC layering, and timing of acquisitions can change exposure dramatically.

What to actually do about it:
• Inventory which states your assets touch really touch
• Model state estate exposure independently of federal
• Consider state-specific structuring through properly taxed LLCs
• If you're a Texas resident with significant NY property this is the call before assuming federal solves it

Federal got easier. State complexity didn't.

BOI Reporting U.S. Companies Exempt

Quick public service announcement for anyone who lost sleep over BOI reporting:

If your entity was formed in the United States, you no longer have to file Beneficial Ownership Information with FinCEN.

Period.

The Corporate Transparency Act's BOI reporting requirement created chaos for small and mid-size business owners through 2024 and early 2025. Penalty threats. Filing deadlines. Compliance services charging $200-$500 per entity. For an operator with 6 LLCs, that added up.

Then on March 21, 2025, FinCEN issued an interim final rule that fundamentally narrowed the scope: "reporting company" now means ONLY entities formed under foreign law that have registered to do business in a U.S. state.

What this means in plain English:
• If your LLC, S-corp, or partnership was formed in Texas, Delaware, Nevada or any U.S. state you don't file BOI
• You don't need to update prior filings
• You don't need a compliance subscription to handle this

What still applies:
• Foreign entities (formed under another country's law) doing U.S. business still file
• State-level reporting requirements (Texas Public Information Report, etc.) are unaffected

The reason I'm posting this: I still see business owners and their attorneys assuming the old rule is in effect. Some are still paying for BOI compliance services they no longer need.

Contact us for a discovery call at fpacpa.com

Section 179D dies on June 30, 2026.

If you're a construction firm, developer, architect, or engineer touching commercial or government buildings, that gives you about 5 weeks.

What's at stake: up to $5.94 per square foot in immediate deductions for energy-efficient commercial buildings (when prevailing wage and apprenticeship requirements are met).

The OBBBA repealed Section 179D for projects where construction begins after June 30, 2026. Critically, projects can be placed in service after that date and still qualify, what matters is the construction START date.

Who can claim it:
• Building owners (commercial real estate)
• Manufacturers building or retrofitting facilities
• Architects, engineers, and contractors on government and nonprofit buildings (via allocation letter)

What "begin construction" actually means: physical work of a significant nature OR meeting the 5% safe harbor (incurring at least 5% of total project costs). The IRS has historically respected good documentation. If you're close to breaking ground, getting the documentation right between now and June 30 matters.

The conversation we're having with clients this week: which projects in your pipeline can realistically meet the June 30 trigger, and how do we lock in eligibility before the calendar runs out? If you've got a project in scoping, this is the call to make this week. Not in mid June.

A recent federal court decision has created potential refund opportunities for businesses that paid certain IRS penalties and interest during the COVID disaster period. Learn what the ruling means, who may be affected, and why timing matters.

Read more

https://www.fpacpa.com/what-business-owners-should-know-about-the-kwong-decision

Is your current setup audit-resilient?

A major 2026 trend: IRS scrutiny is becoming more data-driven and complex returns (especially partnerships, S-corps, and multi-entity groups) are where inconsistent reporting gets noticed first.

We’re also seeing more emphasis on third-party matching and new categories of reporting that can trigger notices when books, payroll, and returns don’t reconcile cleanly.

If you own multiple entities, here’s the strategic move:
Don’t wait for an IRS letter to discover your structure is undocumented.

Owners who do best in this environment have:

- clear intercompany agreements,
- consistent owner basis/capital tracking,
- clean classification of repairs vs. improvements, and
- a proactive year-round tax plan.

That’s our lane at Freese, Peralez & Associates: advanced tax strategy for growth-focused businesses not compliance-only filing.

We work with foreign businesses expanding into the U.S. and New Zealand companies are a unique sweet spot.

The biggest trend we’re seeing: NZ founders move fast on sales and hiring… and only later discover they created U.S. tax exposure through entity choice, withholding rules, and “permanent establishment” (PE) risk, especially when remote/hybrid work crosses borders.

Three planning checkpoints that consistently matter:

1. Treaty position & documentation (U.S.–NZ treaty resources are public, but application is fact-specific).

2. Withholding and reporting on U.S.-source payments to foreign persons/entities (rates can differ under treaties)

3. PE risk from people + activity (the OECD’s updated focus on remote work has made this a board-level topic for growing companies)

If you’re expanding into the U.S., you don’t need more paperwork you need a structure that supports growth and reduces avoidable exposure.

Construction and manufacturing leaders: your equipment and asset timing isn’t just operations it’s tax engineering.

Across the market, the hottest planning conversations are about how current rules around bonus depreciation / expensing influence:

fleet replacement timing,
plant upgrades,
lease vs. buy decisions, and
which entity should own assets in a multi-entity group.

Why this matters: in multi-entity structures, the same purchase can generate wildly different outcomes depending on whether it sits in:

the operating entity,
a separate equipment entity, or
a holding company with different income characteristics.

This is exactly where “we just file returns” firms fall short.

At Freese, Peralez & Associates, we help owners model the tax impact before you spend the money, so capex decisions support the bigger plan not just this year’s return.

Manufacturers: R&D is not just white coats and test tubes.

It often includes process improvement, engineering, prototyping, and even software development and the timing of those deductions has been a major pain point in recent years.

What’s trending right now is the return of more favorable treatment for domestic research costs (with ongoing complexity around foreign research, credits, and how you document and classify costs).

Here’s the owner-level takeaway:

✅ If you have multiple entities (ops + IP + services + real estate), where the work is performed and which entity incurs the cost can change the tax outcome materially.

We help growth-focused manufacturing groups build audit-ready documentation and structure the work so the tax benefit actually shows up on the return (and doesn’t get lost in “misc expense” buckets).

➡️ Want to see if your operation qualifies? Visit us online

Wishing a heartfelt Memorial Day to our friends, clients, acquaintances, referral partners, and everyone who has served. Your sacrifice and dedication are deeply appreciated. Enjoy this day of remembrance with gratitude and respect.