As of January 1, 2016, Pennsylvania’s Capital Stock and Foreign Franchise tax (CST) has been
eliminated. The CST was imposed on certain entities, primarily corporations and limited
liability companies (LLCs) doing business in Pennsylvania. The elimination of the CST does
not affect the Corporate Net Income Tax. However, if your corporation or LLC is taxed as an S
Corporation, your entity may need to file final Pennsylvania corporate income tax return for
2015. For additional information on the elimination of the CST from the Pennsylvania
Department of Revenue website, click here.
The elimination of the CST may offer new planning opportunities when considering the right
choice of entity to use in Pennsylvania. The traditional entity of choice in Pennsylvania for
real estate investment has been the limited partnership (LP). Why? One primary reason was
that LP’s were not subject to the CST. With the elimination of the CST, the LLC may now offer
a more efficient structure for real estate investment. For example, an LP often involves the
need to create 2 entities, the LP itself to acquire the real estate, and a second entity to serve
as the LP’s general partner. The need for a second entity may be eliminated with an LLC.
If you are looking to start a new business, or considering a real estate investment, we can
help. For more information, please contact us today at 215-572- 8111.
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Stern & Eisenberg is a leading regional firm serving twelve states and the District of Columbia. For over forty years, Stern & Eisenberg has built a collaborative, diverse, high-performing team environment which promotes data-driven decision-making, creates innovative opportunities, and allows for performance, operational, and technological seamlessness across its multi-state footprint. Click here to contact the S&E Value Department.