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A fix of the qualified improvement property drafting error in the Tax Cuts and Jobs Act has made its way into the final version of the Senate’s coronavirus relief package.
Senate Finance Committee Chair Chuck Grassley, R-Iowa, released a section-by-section analysis of tax provisions in the final version of the bill, as lawmakers continue to squabble over specific language in the legislation.
Although Grassley did not release legislative text, his summary includes many provisions, including the fix to the retail glitch, that are likely to be included in a final bill when it’s released.
The tax provisions in the summary remain largely the same as an earlier draft circulated on March 22, including the Democrat-backed exception of an employee retention credit to companies that had to fully or partially suspend operations because of an order by the government.
Another change is temporarily waiving excise taxes on distilled spirits used in making hand sanitizers to help combat a shortage.
The fix to the retail glitch would allow a quicker write-off period for qualified improvements, which has previously been a point of contention between the two parties.
Individuals making less than $75,000 can still expect to receive a $1,200 check, while those with children will get an extra $500 per child.
The bill would temporarily repeal the taxable income limitation that made it harder for companies to use current losses against past profits and allow them to claim a refund. A net operating loss arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years, according to the legislation.
The bill would also raise the interest deduction limit from 30 percent of adjusted taxable income to 50 percent for tax years beginning in 2019 or 2020. The summary also notes that employers and self-employed individuals will be able to defer their payroll tax obligations.
Individuals will also be able to claim an above-the-line deduction for charitable contributions up to $300. The bill would suspend the 50 percent gross income limitation for individuals for 2020, while increasing the 10 percent limitation to 25 percent for corporations.