The CARES ACT and Its Hidden Provisions – William D King Talks About America’s Support for Business

As businesses in America begin to open back up, several business owners search for ways to move from surviving to thriving. And many have got the Paycheck Protection Program (PPP) loans and other emergency loans and grants from the SBA or their respective state. These funds enable a business to survive, that is, to pay bills and get by. And if those loans have to be “forgivable,” they need to get used for essential purposes like mortgage, rent, payroll, and many more.

Insights by William D King

How can one get the cash infusion of extra capital to assist the businesses to move back to the expansion mode? Is there any way to obtain cash to help with the new acquisitions, marketing efforts, and other growth plans that would enable businesses to play offense? The answer is yes! All these ways are present in some of the provisions in the CARES Act.

The provisions are available in three allied areas, which can offer big Tax Refunds for a business when combined together. The three areas are:

  • Engineering-based cost segregation
  • Excess Loss Limitation (ELL) Rules
  • Net Operating Losses (NOL)

The Net Operating Losses and the CARES Act

The provisions for Net Operating Loss and Excess Loss Limitation Rules in the CARES Act got changed. Based on the rules of TCJA (Tax Cuts and Job Act), any business that has a Net Operating Loss can carry the losses to forthcoming profitable years. Also, it can only carry 80% at a time.

A Net Operating Loss is actually the net loss for a year attributed to casualty or business losses. It is applicable to both large and small organizations. For instance, if X organization makes about 1.6 million revenue and has an expense of $3 million, they have an NOL of tentatively $1.4 million.

Amidst the pandemic outbreak chaos, several businesses were labeled as “non-essential” and got shut down and had zero income. However, on the other side, a business could be local. William D King says that if you incurred losses between 2018 and 2020 and generated revenue between 2013 and 2019, you can make use of the loss for offsetting past income to have access to a potential refund.

It is considered relevant. Are you wondering why? It’s because it provides the business an instant refund of past taxes. If you took a $500,000 loss to 2015, it might help create a tax refund of $175,000. You might contrast this with the rule before, where the loss could be carried forward at a tax rate of 21%. Hence, it’s a $175,000 benefit against $84,000 future benefit.

Are you wondering what could have happened if you don’t have losses in these years? It could be that the last few years were beneficial for you. It is here the engineering-based cost segregation gets combined with ELL and NOL provisions of the CARES Act. It can enable you to get a big Tax Refund from IRS.


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