IRS Issues Guidance on CARES Act changes to Section 163(j)

The IRS has issued Rev. Proc. 2020-22 to provide guidance to taxpayers applying the provisions of section 163(j), as amended by the CARES Act. Among other provisions, the CARES Act amended 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. Rev. Proc. 2020-22 explains how taxpayers may elect to use the prior 30% limitation, rather than the new 50% limitation. Section 163(j) also allows farming and real property businesses to elect out of the application of section 163(j), and Rev. Proc. 2020-22 allows taxpayers additional time to make these elections or to withdraw these elections if previously made.

Read More: Rev. Proc. 2020-22


Back to top