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Senate "Phase III" Bill

March 20, 2020

On Thursday March 19, 2020, Senate GOP Leader Mitch McConnell unveiled his opening bid for a "Phase III" bill to respond to the economic impact, on both individuals and businesses, of the coronavirus pandemic.

The measure includes direct payments to individuals and a variety of tax and non-tax lending provisions to help struggling businesses. Many of the tax items, will be of interest to Company's cashflows and financial statements. Certain provisions notable include:

  • Net operating loss carryback: Provisions allowing a 5-year carryback of net operating losses for 2018, 2019 or 2020 losses.
  • Suspension of net operating loss limitation: Provisions allowing temporary removal of 80% net operating loss limitation (also modification of pass-thru loss limitation).
  • Section 163(j) interest: Provisions allowing an increase from 30% to 50% on the interest deduction limitation for 2019 and 2020.
  • Acceleration of corporate refunds in relation to Alternative Minimum Tax credit refunds.
  • Technical corrections: Provisions modifying the 2017 tax reform act regarding qualified improvement property, Section 965 over payments, and downward attribution rules.

Please keep in mind that this is only the beginning stage of the bill. Congressional Democrats have voiced their disapproval with the bill, and given the need to obtain Senate Democrat support and for a measure to pass the Democratically-controlled House, they will undoubtedly have changes. More to come.

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