b'$FINANCE & TAXESHIGH FIVE for YOUR 2020 BUSINESS TAXESNEW LAWS BRING RELIEFBY JOAN M. RENNER CPA, CGMA, SHAREHOLDER, RENNER AND COMPANY, CPA, P.C.T addressdevastatinglossesfromtheCOVID-19five years and used to offset prior year income to get o pandemic, new laws will bring businesses some relief ona refund of taxes previously paid.Previously, NOLs their 2020 tax returns.The CARES Act has loosenedarising after 2017 could only be carried forward.The limitsondeducting2020businessinterestandnetoperatingCARES Act opens up not only 2020 losses, but also losses, and the Consolidated Appropriations Act of 2021 (CAA)2019and2018losses,forthisfive-yearcarryback, has clarified favorable tax treatment for PPP forgiveness. providing much-needed cash to businesses that paid taxes in previous years.Heres a rundown of five high points you may see on your 2020 tax return. The CARES Act also allows more loss to be applied to each year.Previously, not only were NOLs arising in 1 Your PPP will not be taxed. loanstosmall2018, 2019 and 2020 limited to being carried forward, when you did get to apply them in a future year, you TheCARESActcreatedforgivablecould only offset up to 80% of taxable income.The employersunderthePaycheckProtectionProgramCARES Act removed the 80% limit on the amount of (PPP) to pay payroll and other specific costs.Sectionincome that can be offset by an NOL for 2018, 2019 1106(i) of the CARES Act provides that any PPP loanand 2020.Now the NOL deduction for 2018, 2019 forgiveness shall be excluded from gross income. and 2020 can offset up to 100% of income.The 80% limit comes back in 2021.2 Expenses paid by PPP will beto theNOLs created in 2020 Lossesexpiredif deductible. useddeductible expenses4 can be carried forward. expirationfor Initially, the IRS announced that no deduction wouldPreviously,unusedNetOperating be allowed for otherwisenot used to offset future income within 20 years.The extenttheyweretoobtainPPPforgiveness. CARESActeliminatedthe20-year Disallowing these deductions could leave a businessNOL carryovers.Now unused losses can be carried owing a boatload of tax with no cash left to pay it. forward indefinitely, until they can be used to offset Fortunately, the CAA clarified Congress intent thatfuture income.expenses qualifying for PPP forgiveness are deductible.TheCAAsaysnodeductionshallbedeniedor5 More business interestthatwasnot reduced, no tax attribute shall be reduced, and no basis increase shall be denied by reason of the exclusion fromcan be deducted.gross income of a PPP loan effective for taxable yearsPreviously, a business deduction for business interest ending after March 27, 2020. was generally limited to 30% of adjusted taxable income.Anybusinessinterestexpenseabove 3 NOLs can be carriedarises when businessdeductible, but could be carried forward to future years without any expiration.The CARES Act temporarily back for a refund. raises the limit on how much business interest can be A Net Operating Loss (NOL)deducted in one year, allowing businesses to deduct deductions for the year are more than business incomebusiness interest up to 50% of adjusted taxable income for the year.NOLs arising in 2020 can be carried backfor 2019 and 2020.FINANCE & TAXES 8 FOGHORN'