Business Taxes

Tax Provisions for Businesses

1. Loan forgiveness and financial assistance programs –
   1. Forgiveness of certain loans, EIDL grants and certain loan repayment assistance provided by the CARES Act is excluded from gross income.
   2. Deductible expenses paid with amounts excluded from income are allowed
   3. Tax basis and other tax attributes are not reduced as a result of the exclusion.
2. Paid sick and family leave credits – refundable payroll tax credits are extended through March 31, 2021. Can use daily self-employment income from 2019 rather than 2020 to compute the credit.
3. Employee retention tax credit –
   1. Extended through June 30, 2021
   2. Credit rate increased from 50% to 70% of qualified wages
   3. Year-over-year gross receipts decline reduced from 50% to 20%
   4. of employees to determine relevant qualified wage base increased from 100 to 500
   5. New employers in 2020 can now claim the credit.
4. Charitable deductions for Corporations – extends increased deduction limit from 10% to 25% through 2021.
5. Farmer NOL carryback – farmers can choose 2-year carryback vs 5-year carryback provided in CARES Act. Can also revoke prior waiver to carry back NOL.
6. Business meals – for tax years 2021 and 2022, 100% of business meals can be deducted. The deduction limit remains at 50% for 2020.
7. Retirement plan provisions
   1. Minimum age for distributions during working retirement – allows pension distributions to workers age 59 ½ or older who are still working (age 55 for certain construction and building trade workers).
   2. Temporary rule preventing partial plan termination – for plan years including the period of March 13, 2020 thru March 31, 2021, IRS assessment of plan termination is deferred until March 2021 if number of active participants covered by the plan on March 31, 2021 is at least 80% of the number covered on March 13, 2020.

Tax Extenders (not previously noted)

Five-year Tax Extensions (to align with TCJA provision lapse date)

1. Look-through treatment of payments between related controlled foreign corporations for purposes of Subpart F
2. New Markets tax credit
3. Work Opportunity tax credit
4. Empowerment Zone tax incentives
5. Special expensing rules for certain film and live theatrical production costs (Sec 181)
6. Employer credit for paid family and medical leave enacted in TCJA
7. Expanded exclusion of employer-provided educational assistance, including student loan repayment benefits enacted in CARES Act

Two-year Extensions:

1. 26% credit amount for Investment tax credit for solar and certain other Sec 48 energy property
2. Residential energy efficient property tax credit (offshore wind projects are eligible)

One-Year Extensions:

1. Renewable energy and energy efficiency incentives (alternative fuel, second generation biofuels, nonbusiness energy property, two-wheeled electric plug-in vehicles, fuel cell vehicles, construction of energy efficient homes, renewable electricity production)
2. Indian employment credit
3. Mine rescue team training credit
4. Health coverage tax credit
5. Accelerated (3-year) cost recovery for racehorses two years old or younger