CARES Act Amends TCJA Provisions

On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. While the Act is primarily focused on the coronavirus epidemic, the Act made a few significant changes to provisions enacted by the Tax Cuts and Jobs Act (TCJA). The Act:

• Allows net operating losses (NOLs) arising in 2018, 2019, or 2020 to be carried back five years and exempts NOLs from the 80% taxable income limitation for years beginning before 2021;
• Amends section 163(j) to allow taxpayers to deduct up to 50% of their adjusted taxable income (up from 30%), plus interest income and floor plan financing income, for taxable years beginning in either 2019 or 2020 and to allow taxpayers to use the adjusted taxable income for their last taxable year beginning in 2019 to determine their section 163(j) limitation for any taxable years beginning in 2020; and
• Corrects a drafting error in the TCJA that prevented qualified improvement property from being eligible for full expensing under section 168, effective as if originally included in the TCJA.

Read the Act: CARES Act
Read More: Legal Alert: CARES Act initial topic briefing – a primer for companies


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