Net Operating Loss (NOL) Opportunities 

  • The CARES Act now allows NOLs arising in tax years 2018, 2019, and 2020 to be carried back 5 years and claim refunds against the taxes already paid. Say for example, a taxpayer that had net operating losses in 2018 and/or 2019, and may have losses in 2020 as well, is now eligible to carry back those losses for five years.  Doing so will allow the taxpayer to receive a refund from the IRS now, instead of having the tax benefit deferred to future years.
  • The CARES Act now allows applying 100% of the NOLs to the carryback years, as opposed to 80% before the CARES Act.

 

Deal with Qualified Improvement Property (QIP)

In the CARES Act, Congress finally corrected the error that it made in the TCJA in regard to depreciating QIP.

QIP is any improvement to the interior portion of a non-residential real property if you make the improvement after you place the building in service.

If you have any such property on your 2018 or 2019 return, it is reported as a 39-year property. You now can change it to 15-year property, making it eligible for bonus depreciation as well as Section 179 expensing. Doing so will allow you to expense the entire cost of the improvement in year 1 as opposed to depreciating it over a period of time.

Please contact me if you would like to discuss any of the strategies above. I look forward to hearing from you.