Pub. 3 2021 Issue 1

11 nebraska society of cpas W W W . N E S C P A . O R G performing services as eligible wages from January 1, 2021, to June 30, 2021 (employers with more than 100 employees may only receive employee retention credits for wages paid to employees while they are not providing services due to business suspension or a significant decline in gross receipts for the period of March 12, 2020, to December 31, 2020); and • Expanding eligibility, for the January 1, 2021, to June 30, 2021, period, to receive employee retention credits to include employers who experience a 20 percent reduction (instead of 50 percent reduction) of quarterly gross receipts compared to the prior year quarter or prior quarter. The coronavirus relief bill clarifies that businesses will now be eligible to participate in both the employee retention credit and PPP loan programs. Under the CARES Act, employers who had PPP loans forgiven were ineligible for the employee retention credit program. The coronavirus relief bill also allows new employers that weren’t in existence for all or part of 2019 to claim the credit and permits public colleges, universities, and medical and hospital facilities to claim the credit. Tax Credits for Paid Coronavirus Leave The FFCRA, whichwent into effect April 1, 2020, provides up to 80 hours of emergency paid sick leave, and up to 12 weeks of partially paid emergency family leave, to employees of certain employers who are unable to work due to COVID-19-related reasons. The FFCRA expires by its own terms onDecember 31, 2020, but the coronavirus relief bill extends the payroll tax credit for paid sick leave and paid family leave through and until March 31, 2021. Deduction for Business Meals The coronavirus relief bill includes a 100 percent deduction for business meal expenses for 2021 and 2022. Previously, business meals were subject to a 50 percent deduction limitation. Charitable Contribution Deduction The CARES Act provided an above-the-line charitable deduction in 2020 of up to $600 for married joint filers and $300 for other filers who made cash contributions to certain public charitable organizations. This above-the-line charitable contribution deduction is extended through 2021. The CARES Act also increased the percentage limitations on certain charitable contributions made by individuals and corporations in 2020. The coronavirus relief bill extends those increased limits to contributions made in 2021. In light of this, individual taxpayers may claim an unlimited itemized deduction for charitable contributions to public charities (other than donor- advised funds) for 2020 and 2021; the limit was previously 50 percent of AGI. In the case of corporations, the usual 10 percent of AGI limitation is increased to 25 percent for the 2020 and 2021 tax years. Qualified Disaster Relief Payments The percentage limitations for charitable contributions of qualified disaster relief payments made by a corporation are suspended for contributions paid during the period beginning on January 1, 2020, and ending 60 days after the date of a qualified disaster declaration. To qualify, contributions must be paid in cash; must be made to qualified charitable organizations; must be made for relief efforts in one or more qualified disaster areas; and the taxpayer must receive contemporaneous written acknowledgment that such contribution was used (or is to be used) for such relief efforts. t For more information, contact Jeff Schaffart or Nicholas Bjornson at Koley Jessen at jeff.schaffart@koleyjessen.com or nicholas. bjornson@koleyjessen.com, respectively. Schaffart solves complex tax and legal issues by providing timely, pragmatic advice to private equity sponsors, general counsel, management teams, and business owners. Bjornson’s practice focuses on federal, state, and international taxation of corporations, partnerships, and individuals.