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2020 Year-End Business Tax Planning

Disaster loss refund

President Donald Trump’s COVID-19 disaster declaration designated all 50 states as disaster areas. Under this provision, a business could claim a COVID-19 related disaster loss occurring in 2020 on 2020 return or on a 2019 amended return for a quicker refund.

Refund for bonus depreciation

CARES Act allows companies to immediately deduct the 100% cost of many types of business investments. The legislation expands bonus depreciation to apply to a qualified improvement property (QIP). QIP applies to almost any improvement to the interior of a building that is either owned or leased.

The law allows businesses to choose whether to reflect the additional retroactive deduction on 2020 tax return or amend both the 2018 and 2019.

2020 losses for prior year refunds

The CARES Act allows businesses to use current losses against past income for immediate refunds. Net operating losses from tax years 2018, 2019 and 2020 can be carried back five years for refunds against prior taxes.

Impact of PPP loan of your income

The IRS issued a ruling earlier this year that business owners can not deduct expenses that were paid the by the PPP loan funds. That is another way for the IRS to say - taxable income. It is time to take a look at your P&L to figure out how all this money will affect your taxable income for 2020.

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