Tax Updates

Federal Legislation – Tax Implications

As you might know, the Senate late Wednesday night approved a historic $2 trillion relief package in response to the economic and health situation. It includes many new and revised tax provisions. The House is set to vote on it shortly, perhaps Friday morning, and the President plans to sign it into law. (Approval Friday is the widely held expectation, but keep in mind that some expected legislative timelines have shifted during Congress’ response to the current situation.)

• Retail Glitch: The legislation fixes the “retail glitch,” which will be particularly helpful for restaurants and retailers, allowing them to write off certain qualified improvement costs more rapidly.

• Tax Net Operating Losses (NOLs): The limitation on NOL carrybacks would be modified for individuals and businesses to allow for NOLs arising in a tax year beginning in 2018, 2019, or 2020 to be carried back five years.

• Limitations Eased: There is an easing of limitations on the ability to deduct interest expense, active business losses and charitable contributions.

• Retirement Accounts: The bill allows for tax-favored "coronavirus-related" distributions from certain retirement plans of up to $100,000.