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Tobin O’Connor Concino P.C. Practicality in Practice
  • ~ Washington DC Business Law Attorneys ~

Lesser Known Pandemic-Related Tax Credits


Can you believe that 2020 is almost over?  Most years, the sign of the end of the year is a parade of trick-or-treaters bearing increasingly heavy plastic pumpkins full of candy; once they disappear, Christmas carols start playing on the radio of every retail store.  This year is different; there are no holiday celebrations to speak of.  In Washington DC, where we measure time in presidential administrations, once the polls close on Election Day, it is almost the end of the year.  That means that tax season is coming soon, and it is time to start thinking about business taxes.  In that regard, too, this year is different.  2020 has presented unprecedented challenges for small businesses in the Washington DC area and elsewhere, and therefore the CARES Act provides for several tax deductions aimed at helping small businesses recover from the COVID-19 pandemic.  To strategize about these tax deductions and other aspects of your financial plans for the coming year, contact a small business lawyer.

Net Operating Losses

Under current tax law, a business can only apply its net operating losses (NOL) to future tax years.  The CARES Act contains a provision whereby companies can apply their NOL retroactively for up to five years.  For example, if you finished the year 2017 in the black, but you suffered losses in 2020 because of the pandemic, you can use this year’s losses to get a refund on some of the taxes you paid in the more prosperous recent past.

Qualified Improvement Property

Many owners of restaurants and retail stores spent company funds on modifying their spaces to accommodate social distancing, even if they were able to secure grants to cover some of those expenses.  The CARES Act allows businesses to deduct the money they spent on these improvements on their 2020 tax returns.

The Research and Development Tax Credit

You probably spent a lot of time in 2020 thinking about how to change your business model to adapt to the new normal.  Once you got past the initial brainstorming stage, you probably spent money on it, too, even if you received a pivot grant to offset some of the cost.  The good news is that you can get a tax credit for all the money you spent on efforts to pivot your business to enable it to survive in the pandemic and post-pandemic times.

The Section 139 Tax Deduction

In some ways, the pandemic brought out the best in people.  Just one example is the ways in which small business owners used their resources to help as many people as they could.  Even if your business lost most of its revenue, you may have given your employees unprecedented amounts of paid sick leave, and you may have helped them with medical bills and other expenses.  According to the CARES Act, that assistance that you provided to them is tax free.

Contact an Attorney for Help Today

A Washington DC small business attorney can help you develop a pandemic-proof strategy for the coming year.  Contact Tobin O’Connor Concino P.C. for help with your case.


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