Dear Clients, Business Associates and Friends:
A.B. 10519 / S.B. 8411, signed by gov. 6/17/20. The New York FY 2020-2021 State Budget Bill enacted in April 2020 (Budget Act) decoupled the New York State and New York City corporate and personal income taxes from certain federal tax provisions enacted under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (i.e., P.L. 116-136). Recently signed state legislation further decouples New York City business income taxes from additional CARES Act provisions. More specifically, new law provides for the following amendments to the New York City Unincorporated Business Tax (UBT), General Corporation Tax (GCT), Banking Corporation Tax (BTX) and Business Corporation Tax (BCT):
1. Regarding the UBT, the bill decouples from the CARES Act amendments related to:
The temporary repeal of the loss limitation for individuals, estates and trusts under IRC section 461(l) for tax years beginning before January 1, 2021 (under CARES Act section 2304);
The new federal five-year carryback for net operating losses arising in the 2018, 2019, and 2020 tax years, as well as the temporary repeal of the 80% of income limitation for tax years beginning before 2021 (under CARES Act section 2303); and
Modifications to the limitation on business interest expense deduction under IRC section 163(j)(10) for tax years beginning in 2019 and 2020 (under CARES Act section 2306), including provisions addressing partnerships and the election to use 2019 adjusted taxable income (ATI) in 2020 for computing the interest expense deduction (note: the provision allowing 50% of ATI to compute interest expense deduction in 2019 and 2020 was previously decoupled from under the Budget Act legislation);
2. Regarding the BTX and GCT, the bill decouples from the CARES Act amendment provisions described in 1b) and 1c) above; and
Regarding the BCT, the bill decouples from the CARES Act amendment provisions described in 1c) above.
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