CARES ACT Tax Ideas

CARES ACT- Major Tax Law Changes= Refunds

The CARES Act, signed into law on March 27, 2020, includes many major tax law changes that can be used by business owners to increase deductions and claim refunds of prior taxes paid. Below is a brief description of four major tax law changes:

  1. Qualified Improvement Property: If you made qualified improvements to the interior of commercial real estate in 2018 or 2019, we can help you amend your returns to write-off 100% of the cost of the improvements and claim a refund of prior income taxes paid.
  2. Limited Business Interest Expense: If your 2019 business interest expense was limited, we can help you amend your returns to write-off additional interest expense and help you get the economy moving again.
  3. Excess Business Losses: If your 2018 or 2019 business losses were limited, we can help you amend your returns to deduct additional losses and increase the balance in your bank account.
  4. Net Operating Loss Carryback: Any Net Operating Loss (NOL) generated in 2018, 2019, or 2020 can be carried back up to five years and be used to put cash into your pocket. This includes any NOL's generated or increased due to items # 1, 2, or 3 listed above.

Please contact RDG + Partners with your tax related questions. We will review your tax returns and determine how you can take advantage of the significant tax law changes from the CARES Act.

Other RESOURCES

Frequently Asked Questions: Awaiting SBA Guidance

For payroll paid during the covered period is it based on the date paid or is it based on when the payroll was incurred? Is there a limit on how much an employee can make compared to the most recent quarter if it is not in excess of $100,000 on an annual basis? Is rent, utilities, interest, etc. in arrears eligible for forgiveness if paid during the covered period? What about amounts paid in advance? For employees laid off prior to 4/27 and hired back by 6/30 is there a time period they must remain employed in order to avoid a reduction in loan forgiveness? How do you define FTE? Is it 30, 35 or 40 hours? We know non-mortgage interest is a covered cost, but is it also eligible for forgiveness? How do you measure the 25% reduction amount for payroll? For example, from 1/1/20 to 3/31/20, do you look at number of hours, rate per hour, or just total compensation during that period? If you bonused people during Q1 of 2020 that is not a part of their normal compensation, is that included when looking at the 25% reduction for payroll? What is “transportation” with regards to being a utility? Does this include mileage, gas for vehicles, etc.? Does “rent” include all leases (building, vehicle, equipment, copiers)? If not, what does it include? If a business hires new employees after 2/15/20, can they be included in the FTE count for the 8-week period? Are there any restrictions on compensation (increases) for related parties (mother, father, brother, sister, child, etc.)?

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RDG+Partners wants to be the primary advisor for motivated business owners. The firm is committed to providing boutique level accounting, tax and business consulting services to the Rochester, NY community.