March 27 Federal Tax Posts Summary

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has passed the Senate and, as of this writing, awaits a vote in the House. The bill contains several provisions that address the burdens on individuals as a result of the coronavirus (COVID-19) pandemic. Among other things, it provides recovery rebates of up to $1,200 for singles and $2,400 for married couples filing jointly (plus $500 per qualifying child) subject to income-based phaseouts; waives the 10% penalty tax on early retirement account withdrawals for coronavirus-related distributions; and temporarily waives the required minimum distribution rules for certain retirement accounts. Contact us for more information.

As many Americans are forced to stay home to help stop the spread of the coronavirus (COVID-19), businesses are losing revenue and having to lay off employees. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes provisions to help businesses survive, including a new employee retention tax credit; deferral of the employer portion of payments of certain payroll taxes; a modification of the net operating loss rules by providing a five-year carryback and temporarily removing the 80% limitation for carryforwards; changes to the business interest deduction; and an expansion of the ways the Small Business Administration can help small businesses. Contact us for details.

The IRS has provided guidance on how taxpayers can report the election to roll over gains from the sale of empowerment zone assets in 2018. The empowerment zone rules were retroactively extended through Dec. 31, 2020. Businesses and individual residents within such a zone are eligible for tax incentives. One incentive is the deferral of capital gains tax on the sale of qualified assets that are replaced with other empowerment zone assets (a “rollover of gain”). If a taxpayer is eligible to roll over gain from empowerment zone assets in 2018, he or she will need to file Form 1040-X to claim the rollover and deferral of gain. For more information: IRS.GOV: Instructions for Schedule D (Form 1040) Rollover of Gain from Empowerment Zone Assets is Available for 2018