2020 Year-End Planning – TCJA Modified Under the CARES Act

By Bobby Hoffman

Several tax provisions under the Tax Cuts and Jobs Act (TCJA) were modified by the CARES Act for 2020 and earlier years providing opportunities to amend prior year returns. Here are highlights for tax planning consideration at 2020 year-end.

• Qualified Improvement Property: A 15-year recovery period is retroactively assigned to qualified improvement property placed in service after December 31, 2017 allowing the property to be depreciated over 15 years or, alternatively to qualify for 100 percent bonus depreciation.

• Net Operating Losses (NOLs): NOLs arising in tax years beginning in 2018, 2019, and 2020 now have a five-year carry-back period with an unlimited carry-forward period and are not limited to 80% of taxable income.

• Business Interest Deduction: Limit increased from 30% to 50% of the taxpayer’s adjusted taxable income for the 2019 and 2020 tax years with special rules for partners and partnerships.

• Excess Business Losses Limitation for Non-corporate Taxpayers:  Does not apply for tax years beginning in 2018, 2019, and 2020.

For more information regarding year-end tax planning, please contact us at 404-255-7400 or info@hoffmanestateaw.com.