There’s a easy rule for company tax planning in 2020: Should you’re going to lose cash, lose some huge cash.
That’s as a result of corporations can now use losses incurred earlier than and through the pandemic to offset as much as 5 years of previous earnings. What makes this second notably engaging: Congress is letting corporations get refunds of taxes they paid on the 35% company fee that existed earlier than 2018 reasonably than at at the moment’s 21% fee.
Firms can generate large losses now by packing deductions into 2020 and pushing earnings into the long run. Practically two dozen massive publicly traded corporations are already reporting greater than $2 billion in mixed tax advantages utilizing this fee arbitrage, in response to a evaluation of securities filings. Tax advisers and specialists anticipate extra quickly.
“We’re going to see a number of the greatest companies within the U.S. financial system profit,” mentioned Rebecca Lester, a Stanford College accounting professor.