Tax Conformity – Still Active

 

The House and the Senate each have their own version of Tax Conformity bills this year. The main issue at hand is the cap amount for deductions of business expenses for the PPP Loans. Both bills allow for a business that received a PPP loan to exclude the forgiven loan amount from their income, however each instils a cap for maximum deduction to cover one’s business expenses related to their PPP Loans. The Senate version creates a $100,000 cap, while the House version only allows one to deduct up to $25,000 for business expenses related to their PPP loan. We are very grateful that the Senate increased the cap to $100,000 and will continue to work on this issue with regard to the House version of the legislation.

HB 1935 - Watts - Income tax, state; conformity with the Internal Revenue Code. (Passed the House 55-Y 43-N)

  • Advances Virginia's date of conformity with the Internal Revenue Code from December 31, 2019, to December 31, 2020. The bill adds exceptions to such conformity for suspension of the overall limitation on itemized deductions and the reduction in the medical expense deduction floor for taxable year 2017 and taxable years on and after January 1, 2019, and for the provisions of the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) related to the net operating loss limitation and carryback, a loss limitation applicable to taxpayers other than corporations, and the limitation on business interest. The bill also includes an individual income tax deduction in taxable year 2020 for business expenses funded with forgiven Paycheck Protection Program loans up to $25,000 and an individual income tax subtraction in taxable year 2020 for up to $25,000 in Rebuild Virginia grants.

SB 1146 - Howell - Income tax, state; conformity with the Internal Revenue Code (Passed the Senate 39-Y 0-N)

  • Advances Virginia’s date of conformity with the Internal Revenue Code from December 31, 2019, to December 31, 2020. The bill adds exceptions to such conformity for suspension of the overall limitation on itemized deductions and the reduction in the medical expense deduction floor for taxable year 2017 and taxable years on and after January 1, 2019, and for the provisions of the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) related to the net operating loss limitation and carryback, a loss limitation applicable to taxpayers other than corporations, and the limitation on business interest. The bill contains an emergency clause.