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IRS FAQs Address NOL Carry backs of Certain Exempt Organizations:

The IRS has published a list of Frequently Asked Questions (FAQs) that addresses the carry back of NOLs by certain tax exempt organizations under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The FAQs provide that in determining the Unrelated Business Taxable Income (UBTI) of an exempt organization with more than one unrelated trade or business in a tax year beginning after 12/31/17, CARES Act NOLs (i.e., those arising in tax years 2018-2020) must be siloed so that each unrelated trade or business calculates its NOL separately.

Interest Rates to Decrease for Third Quarter 2020:

The interest rates for tax overpayments and underpayments for the quarter beginning on 7/1/20 will decrease from the prior quarter. For noncorporate taxpayers, the rate for both underpayments and overpayments will be 3%. The 3% rate also applies to estimated tax underpayments for the third quarter of 2020. For corporations, the overpayment rate will be 2%, with a 0.5% rate applicable to overpayments exceeding $10,000. The underpayment rate for corporations will be 3%, except for large corporate underpayments, which will be 5%. Rev. Rul. 2020-13 and News Release IR 2020-113

Expense Deductibility When a Paycheck Protection Program (PPP) Loan Is Forgiven:

The IRS has provided guidance regarding the deductibility for federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a loan pursuant to the PPP under Sec. 7(a)(36) of the Small Business Act. The Notice clarifies that, under IRC Sec. 265, no deduction is allowed for an expense that is otherwise deductible if payment of the expense results in forgiveness of a covered loan pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the income associated with the forgiveness is excluded from gross income under Sec. 1106(i) of the CARES Act. A taxpayer may receive debt forgiveness of a covered loan for payments made during the eight-week covered period of (1) payroll costs, (2) interest on a covered mortgage obligation, (3) covered rent, and (4) covered utilities [subject to certain limitations addressed in Sec. 1106(d) of the CARES Act].

Extended Tax Relief for Certain Students Whose Education Loans Were Discharged:

In Rev. Procs. 2015-57, 2017-24 , and 2018-39 , the IRS announced that taxpayers, who took out federal and private student loans to finance attendance at schools owned by Corinthian College, Inc. (CCI) and American Career Institutes, Inc. (ACI) and whose loans were discharged, didn’t have to recognize gross income as a result of the debt discharge.

Draft Form for Advance Payment of Employer Credits Due to COVID-19:

The IRS has released a draft of Form 7200 (Advance Payment of Employer Credits Due to COVID-19), which employers may use to request an advance payment of the tax credits for qualified leave wages or qualified retention wages. Employers that file Form 941, Form 943, Form 944 , or Form CT-1 may use the form. Before filing Form 7200 , employers should first reduce their employment tax deposits to account for the credits. Then, employers can use Form 7200 to request the amount of the credit that exceeds their reduced deposits. Employers will need to reconcile any advanced credits and reduced deposits on their 2020 employment tax return.

Congress Passes Families First Coronavirus Response Act:

Congress has passed, and President Trump has signed, the Families First Coronavirus Response Act. Among other things, the Act (1) requires certain employers to provide paid leave benefits to employees affected by the coronavirus outbreak; (2) expands unemployment benefits and offers grants to states to process and pay claims; and (3) mandates coverage of coronavirus testing with no cost-sharing.

Foreign Housing Cost Exclusions for 2020:

A U.S. citizen (or U.S. resident alien) living abroad can elect to exclude the foreign earned income and housing cost amount from gross income (subject to certain limitations) (IRC Sec. 911). The Section 911 housing cost exclusion is calculated based on the number of days physically present in the foreign location. In addition, the IRS allows a higher housing cost ceiling for taxpayers living in certain high-cost geographic locations (relative to the U.S.).

IRS Finalizes Tuition and Fees Deduction Form:

The IRS has finalized Form 8917 (Tuition and Fees Deduction) and its instructions. The tuition and fees deduction expired at the end of 2017, but was reinstated by the Taxpayer Certainty and Disaster Tax Relief Act of 2019 for tax years beginning in 2018. The January 2020 revision of Form 8917 and its instructions will be used for years after 2017. The IRS will no longer update Form 8917 annually—it will only be updated when necessary.

IRS Provides Relief for Reporting Required Minimum Distributions:

Enacted on 12/20/19, the Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the start date for Required Minimum Distributions (RMDs) from age 70 1/2 to age 72. Recently, the IRS announced that it is providing relief to financial institutions that were expected to provide RMD statements to IRA owners by 1/31/20.

Extended Tax Relief for Certain Students Whose Education Loans Were Discharged:

In Rev. Procs. 2015-57, 2017-24 , and 2018-39 , the IRS announced that taxpayers, who took out federal and private student loans to finance attendance at schools owned by Corinthian College, Inc. (CCI) and American Career Institutes, Inc. (ACI) and whose loans were discharged, didn’t have to recognize gross income as a result of the debt discharge.

2020 Standard Mileage Rates:

Beginning 1/1/20, the standard mileage rates for cars, vans, pickups, and panel trucks will be 57.5 cents per mile for business purposes, 17 cents per mile for medical or moving purposes, and 14 cents per mile for charitable purposes. However, the rates cannot be used to claim an itemized deduction for unreimbursed employee travel expenses or for moving expenses (except for certain members of the U.S. Armed Forces).

Five-Minute Tax Briefing - 2019

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