Specifically, due to an oversight in The Tax Cut and Jobs Act of 2017, QIP was classified as 39-year recovery property which was ineligible for 100 percent bonus depreciation. The Act makes technical amendments to qualified improvement property (QIP) (i.e., qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property). Technical Amendments Regarding Qualified Improvement Property The Act temporarily and retroactively increased the limitation on the deductibility of interest expense under IRS Code Section 163(j) from 30 percent to 50 percent for taxable years beginning in 20. Modification of Limitation on Business Interest In general, the Act repeals the excess loss limitation under IRS Code Section 461 for tax years beginning after Januand before Janu(i.e., 2018, 20). Modification of Limitation on Losses for Other Than Corporate Taxpayers Special rules apply for NOL carrybacks that are carried to years in which the taxpayer included income from its foreign subsidiaries under IRS Code Section 965. Accordingly, NOL’s can generally be used to fully offset taxable income with respect to any taxable year beginning before January 1, 2021. The Act also temporarily suspends the 80 percent taxable income limitation on the use of an NOL. The Act temporary repeals the prohibition on the carryback of net operating losses (NOL) by permitting the carryback of NOLs arising in a taxable year after Decemand before Janu(i.e., 2018, 20) to each of the five taxable years preceding the taxable year of the NOL. In general, employers and self-employed individuals may delay the payment of the employer portion of social security taxes and self-employment taxes, respectively, for the period beginning on Mathrough 2020, by paying 50 percent of such taxes on Decemand the remaining 50 percent on December 31, 2022. Employers receiving small business interruption loans under the Small Business Act are not eligible for the credit.ĭelay of Payment of Employer Payroll Taxes Further, the allowable credit is reduced for credits under the Families First Coronavirus Response Act. ![]() The maximum wages, including health plan expenses, that may be taken into account for all calendar quarters is up to $10,000 for each employee. ![]() ![]() ![]() For employers with not more than 100 full-time employees, all wages paid to an employee qualify. In general, the Act provides that certain employers are eligible for a refundable credit against employment taxes for each calendar quarter equal to 50 percent of wages paid after Maand before Januto employees during a calendar quarter.Įligible employers are those employers carrying on business during 2020 the business of which was: (i) fully or partially suspended during a calendar quarter due to orders from a governmental authority limiting commerce, travel or group meetings, or (ii) whose gross receipts for any calendar quarter beginning after Decemare less than 50 percent of the gross receipts for the same calendar quarter in the prior year (and ending in the first calendar quarter for which the gross receipts are greater than 80 percent of the gross receipts for the same calendar quarter in the prior year).įor employers with more than 100 full-time employees, wages are defined as wages paid to employees who are unable to provide services due to COVID-19 circumstances in (i) or (ii) above. This alert addresses certain of the more salient business provisions of the Act. The Coronavirus Aid, Relief and Economic Security Act or CARES Act, passed on March 27, 2020, offers fiscal and economic stimulus to individuals and businesses impacted by the COVID-19 pandemic.
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