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Posted on: December 21, 2020

12/21/2020: Key provisions of COVID Relief Package

Trumbull Economic Development

This document will be updated as we further analyze the provisions of the legislation. 

Temporary Debt Restructuring (TDR) Relief 

Provides a one-year extension to January 1, 2022 of a CARES Act provision passed in March allowing lenders leeway for how they treat troubled debt, thus making it easier to provide flexibility to the terms of a lease. 

Paycheck Protection Program (PPP) 

  • Full deductibility for business expenses paid with PPP proceeds. 
  • A second round of PPP loans for struggling businesses that have seen a 25% drop in revenues, including $15 billion in funding for live entertainment venues, movie theaters, and museums that are experiencing significant revenue loss  

Bankruptcy 

The bill includes S. 4479 (Sen. Thom Tillis, R-NC), a set of temporary commercial bankruptcy provisions to help commercial landlord and tenants, particularly small businesses. Another provision gives small tenants the benefit of more time to defer rent in their bankruptcy case as well as repay the deferred rent over time. 

 Direct Relief for Consumers 

  • $600 for adults making up to $75,000 and $600 for each dependent child. 
  • $300/week additional unemployment benefit through March 14, 2021. 
  • Establishes first-ever emergency federal residential rental assistance program ($25 billion) to be distributed by state and local governments. Extends existing CDC eviction moratorium through January 31, 2021. 
  • Relief for cancellation of indebtedness on principal residence 

 Tax Items 

  • Full deductibility for business expenses paid with PPP proceeds (as noted above). 
  • New Markets Tax Credit (NMTC) and Work Opportunity Tax Credit (WOTC) are extended for 5 years. 
  • Section 179 energy efficient buildings with updated standards and deduction is indexed for inflation. 
  • Energy efficient commercial buildings deduction. This provision allows an increased deduction for buildings that meet above-industry standards of energy efficiency in the year they are placed in service. The energy efficiency standards are updated and the deduction rate is indexed to inflation. 
  • Minimum low-income housing tax credit rate. This provision establishes a 4% rate floor for calculating credits related to acquisitions and housing bond-financed developments for purposes of the low-income housing tax credit. 
  • Expansion of Low-Income Housing Tax Credit in Disaster Zones. Increases the low-income housing tax credit allocations in states that experienced the most serious disasters in 2020. The increase is equal to $3.50 multiplied by the number of residents in qualified disaster zones and is capped at 65% of the state’s 2020 credit allocation. 
  • Depreciation of residential rental property over 30-year period. This provision provides that the recovery period applicable to residential rental property place in service before January 1, 208 and held by an electing real property trade or business is 30 years. 
  • Employee retention tax credit (ERTC) modifications. The provision extends and expands the credit through 6/30/2021 and retroactively allows employers who receive Paycheck Protection Program (PPP) loans to qualify for the ERTC.  

Other 

  • Extends the deadline for states and localities to use CARES Act funds to 12/31/21.  

12-21-20

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