Partnership Benefits in the CARES Act: Amending for QIP, Applying 163(j) Relief, Calculating Loan Forgiveness

Description

The CARES Act included the long-awaited correction to QIP life. The retroactive change in the life of this property from 39 to 15 years allows businesses to amend their 2018 and 2019 returns to take advantage of the shorter life. Almost all partnerships, however, fall under the mandates of the Bipartisan Budget Act (BBA). The BBA requires that these prior period adjustments are handled as administrative adjust requests (AARs) in the current year. Due to the current economic state, many of these partners will have losses in the current year and would not benefit from this relief.

Partners can report these adjustments on amended returns for prior years, as explained in Revenue Procedure 2020-23. Practitioners must comply with the procedures in this Rev Proc to ensure partners benefit from this correction.

Partnerships that elected to be treated as a real property trade or business (RPTB) to circumvent interest limitations under 163(j) were not eligible to elect bonus depreciation. Here too, relief is available in Revenue Procedure 2020-22, which allows revocation of the previous election. Again, practitioners must understand when and how to qualify for this relief.

Listen as our panel of partnership experts addresses calculating loan forgiveness, QIP changes, complying with Revenue Procedures 2020-23 and 2020-22, and other areas unique to partnerships and the underlying partners. Questions abound concerning recent relief and how it applies to these flow-through entities.