COVID‐19 Relief Laws Benefit Nonprofit Organizations

Date01 June 2020
Published date01 June 2020
Legislation creating a $2.2 trillion economic stabilization package to com-
bat the COVID-19 pandemic became law on March 27, when President Trump
signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L.
No. 116-136). This was the third, and most massive, COVID-19 emergency relief
act passed by Congress in March. There are several features of the act of direct
interest and import to nonprofit organizations.
Modification of Charitable Deduction Limitations
For individuals, the 60-percent-of-adjusted-gross-income limitation on the
charitable contribution deduction is suspended for 2020. For corporations, the
10-percent-of-taxable-income limitation is increased for the year to 25 percent.
The limitation on deductions for contributions of food inventory in 2020 has been
increased to 25 percent, from 15 percent, of taxable or net income. These modifi-
cations are inapplicable in instances of contributions to supporting organizations
and donor-advised funds (Act § 2205).
Above-the-Line Charitable Deduction
The act brings back an above-the-line (universal) charitable contribution
deduction for individuals. This deduction (available, of course, to nonitemizers) is
limited to cash contributions to public charities and operating foundations of no
more than $300 made in 2020. This deduction is not available in the case of gifts
to supporting organizations and donor-advised funds (Act § 2204).
Paycheck Protection Program
Title I of the CARES Act is the Keeping American Workers Paid and Employed
Act. One of the features of this act is the Paycheck Protection Program, adminis-
tered by the Small Business Administration (Act § 1102). This is an expanded SBA
loan guarantee program, backed by the federal government, designed to make
funds available to qualified entities by means of banks and other lenders. Eligible
entities include “nonprofit organizations,” defined as tax-exempt organizations © 2020 Wiley Periodicals, Inc.
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Analysis of current developments in tax
and related law for nonprofit organiza-
tions and their professional advisors.
Volume 37 Number 6
June 2020
Also in This issue...
Filing Deadlines Extensions 3
Availability of Disaster Relief
Payments 4
IRS Inventories FY 2019 EO
Accomplishments 4
IRS Ruling Issued as to Rents
From Real Property 6
Briefs Filed in Mayo Clinic Case 6
App Promoter Fails to Qualify as
Exempt Business League 7
Conservation Deed Amendment
Clauses May Be Permissible 7
Eyewear Gifts Appraisal Doomed
Charitable Gift Deduction 7
Recent IRS Private Letter Rulings 8

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