The following are the relevant general business tax provisions under the Coronavirus Aid, Relief and Economic Security Act.
Please see a detailed overview of these provisions.
TCJA revisions
Several provisions from the TCJA are altered, including:
- Net operating losses: Net operating losses can now offset 100% of taxable income for 2018, 2019 and 2020, rather than the 80% under the TCJA. Net operating losses incurred in these years can now be carried back to the previous five years for a refund.
- Loss limitations for noncorporate taxpayers: Internal Revenue Code section 461(l) regarding the limitations of “excess business losses” incurred by noncorporate taxpayers is deferred until 2021.
- Section 163(j) interest limitation: A taxpayer’s adjusted taxable income limit increased to 50% from 30% for the 2019 and 2020 tax years.
- Qualified improvement property: Fixing the “retail glitch,” qualified improvement property is now 15-year property, eligible for bonus depreciation, and is retroactive to 2018.
- Refundable tax credits: Unused minimum tax credits (MTC) are allowed to be refunded in 2018 and 2019.
Employee retention credit
Quarterly credits are available to employers that have experienced a full or partial suspension in their operations due to COVID-19 against certain employer payroll taxes, subject to certain restrictions.
Payroll tax deferral
Payment of the employer (not employee) portion of the FICA 6.2% payroll tax liability is deferred with half coming due in 2021 and remaining half due in 2022. The deferral applies to 50% of self-employment tax liability as well.
We will continue to closely monitor the economic and tax changes and communicate important information to you timely and accurately. We are always available by phone or email to address your questions and concerns.