Page 12 - may-june 2020

...Continued from page 11 to corporations is increased to 25% of taxable
income, and corporations may carry forward
Department and I R S announced on March 21, contributions made in excess of the 25% limitation
2020, that: for five years.
1. The federal income tax filing due date 4 Finally, the limitation on deductions for
was automatically extended from April 15, 2020, contributions of food inventory is raised from 15%
to July 15, 2020, without penalties or interest, to 25%. Although § 2205 is entitled “Modification
regardless of the amount owed This extension of Limitations on Charitable Contributions During
includes an extension to July 15 of the first quar- 2020,” this change purports to be effective for
ter estimated income tax payments that would all “taxable years beginning after December 31,
have been due April 15, but does not extend the 2019 ”
second quarter estimated income tax due date
of June 15 Tax-Related Provisions of the CARES Act for Busi-
2 This extension applies to all taxpayers, nesses
including individuals, trusts and estates, corpora-
tions and other non-corporate tax filers, and those Payroll Tax Credit
who pay self-employment tax Employee Retention Credit for Employers
3 Taxpayers are entitled to this extension Subject to Closure Due to COVID-19 – § 2301
without taking any additional actions Section 2301 of the CARES Act creates a
4 This extension applies only to federal payroll tax credit for any eligible employer This
income tax payments (including payments of tax tax credit provides eligible employers with a credit
on self-employment income) and income tax re- against employment taxes in an amount equal to
turns due on April 15, 2020, in respect to a taxpay- 50% of the “qualified wages” for each employee,
er’s 2019 taxable year and not for the payment or that are paid or incurred between March 13, 2020
deposit of any other type of federal tax, or filing and December 31, 2020, not to exceed $10,000
of any federal information return See IRS Notice per employee
2020-18 and 2020-20 for additional details 1 In order to qualify as an “eligible em-
ployer,” a business must have carried on a trade
Increased Charitable Contributions for Individuals or business during 2020 and meet either of two
and Corporations qualifications with respect to a calendar quarter:
Modification of Limitations on Charitable (1) the operation of the trade or business was
Contributions During 2020 – § 2205 fully or partially suspended during the calendar
1 In addition to allowing qualifying $300 quarter due to orders from an appropriate gov-
charitable contribution deductions for non-itemiz- ernmental authority limiting commerce, travel, or
ing taxpayers, § 2205 of the CARES Act increases group meetings (for commercial, social, religious,
the limits for qualified charitable contributions or other purpose) due to COVID-19; or (2) such
made by itemizing individuals and corporations calendar quarter beginning with the first calendar
(but not those contributions made to supporting quarter following December 31, 2019, for which
organizations under I R C § 509(a)(3) or donor gross receipts (within the meaning of I R C §
advised funds under I R C § 4966(d)(2)), as well as 448(c)) for the calendar quarter are less than 50%
food inventory contributions of gross receipts for the same calendar quarter
2 The 50% of adjusted gross income lim- in the prior year, and ending with the calendar
itation for individuals (previously raised to 60% by quarter for which gross receipts are greater than
the Tax Cuts and Jobs Act of 2017, P L No 115-97 80% of the same calendar quarter in the prior
(“TCJA”)) is now 100% of adjusted gross income, year
and an individual can carry forward contributions 2. “Qualified wages” is defined differently
which exceed 100% for five years. for business with less than 100 full-time employees
3 The 10% limit previously applicable in 2019

12 Alabama Propane Gas Association | May / June 2020