CARES Act

Generate More Cash Flow for Your Business

The CARES Act & Commercial Property Owners

During uncertain financial times, provisions of the 2020 CARES Act offered business owners a way to generate cash flow through lower taxes or even refunds from a prior year. Although there are many benefits provided to business owners through the CARES Act, two specific items significantly benefit commercial property owners.

How Your Business Can Benefit from the CARES Act Legislation

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Net Operating Losses (NOLs):

  • Allows for a five-year carryback of NOLs arising in 2018, 2019, and 2020
  • Allows NOLs to offset 100% of income

Impact: When an engineering-based cost segregation study is applied, large depreciation deductions may be taken as a net operating loss in 2019. You can carry back this loss for five years and apply it to the gains made in those years.

Result: When your tax professional applies these calculations to your 2019 return, this will result in a tax refund now providing cash flow in a time of need.

Example: John Smith has an income for the past five years and a loss in 2019.

John’s immediate tax benefit this year is $115,677.50.

Year Income Taxed PaidLoss Carry Back Refund Due
Total Refund$115,677.50
2014$75,000.00$14,606.25$75,000.00$14,606.25
2015 $150,000.00 $35,071.25 $(150,000.00)$35,071.25
2016 $400,000.00 $115,529.25 $(200,000.00)$66,000.00
2017 $350,000.00 $95,906.75
2018 $195,000.00 $44,089.50
2019$(425,000.00)
Year Income Taxed PaidLoss Carry Back Refund Due
Total Refund$115,677.50
2014$75,000.00$14,606.25$75,000.00$14,606.25
2015 $150,000.00 $35,071.25 $(150,000.00)$35,071.25
2016 $400,000.00 $115,529.25 $(200,000.00)$66,000.00
2017 $350,000.00 $95,906.75
2018 $195,000.00 $44,089.50
2019$(425,000.00)

Qualified Improvement Property:

Corrects Congressional oversight in the Tax Cuts & Jobs Act (TCJA) and now defines Qualified Improvement Property as 15-year property. Any Qualified Improvement Property acquired and placed in-service after 9/27/2017 is eligible for 100% Bonus Depreciation.

Impact: You can now retroactively apply bonus depreciation to Qualified Improvement Property. This generates cash flow now to help address your cash flow needs.

Allowing us to perform a cost segregation study on your commercial property will reduce your taxable income, increasing your cash flow today. Contact us to learn more.