LUTZ BUSINESS INSIGHTS
Tax-Related Provisions for Businesses
The CARES Act introduced several retroactive business tax changes. A highlight of the modifications include the following:
- Qualified improvement property is now 15-year property instead of 39-year property effective 1/1/2018.
- The modification corrects an oversight from the TCJA (Tax Cuts and Jobs Act) affecting certain restaurant and retail businesses property. Now, this property once again qualifies for bonus depreciation.
- Net operating losses (NOLs) for years starting in 2018-2020, can be carried back 5 years.
- The NOL 80% limitation has been suspended until tax years starting in 2021.
- In other words, the taxable income limitation on the use of the NOL will be temporarily removed to allow the NOL to fully offset income back to 2013 at the earliest.
- Excess business losses removed until 2021.
- The limit on deducting businesses losses in excess of $250,000 (single) or $500,000 (joint) will be temporarily repealed backdated to 2018, not taking effect until 2021.
- Business Interest Limitation Adjustments
- 163(j) business interest expense limitation is now 50% (instead of 30%) for tax years beginning in 2019 (except partnerships) and 2020.
- 163(j) business interest limitation adjustments for 2019 partnerships are made at the partner level partially in 2019 and partially in 2020 subject to special elections.
- Full recovery of corporate AMT credits for tax years beginning in 2019.
- AMT was repealed as part of the TCJA (Tax Cuts and Jobs Act). Corporate AMT credits were to be available as refundable credits over several years ending in 2021.
Updated 4/2/2020 at 12:00 PM
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