COVID‐19 Relief Laws Benefit Nonprofit Organizations

• DOI: http://doi.org/10.1002/npc.30726
• Date: 01 June 2020
• Published date: 01 June 2020

THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

COVID-19 RELIEF

LAWS BENEFIT

NONPROFIT

ORGANIZATIONS

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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DOI:10.1002/npc

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