On March 19, Senate Majority Leader Mitch McConnell, R-Ky., introduced the Coronavirus Aid, Relief, and Economic Security Act, which would roll back some measures implemented as part of 2017 tax reform and introduce other fiscal stimuli.  The proposal failed to clear the Senate Sunday night.  Another vote is expected later today.

If enacted as drafted, the CARES Act would, among other things:

• Extend the tax return filing deadline for individuals until July 15, consistent with earlier Treasury announcements. 

• Provide direct cash payments of up to $1,200 per adult individual, plus $500 per child (with phase-outs beginning at $75,000 of taxable income). 

• Delay corporate estimated tax payments. 

• Temporarily repeal the "excess business loss" limitation applicable to non-corporate taxpayers, which generally disallows net business losses in excess of $250,000.

• Increase the business interest deduction limitation. As a result, taxpayers generally would be able to deduct business interest expense up to their business interest income plus 50% of EBITDA (instead of 30% under current law).

• Allow taxpayers to offset 100% of their income with net operating losses in 2020 (instead of 80% under current law) and permit taxpayers to carry back 2018, 2019 and 2020 NOLs for up to five years (whereas, under current law, NOLs cannot be carried back).

• Restore the pre-tax-reform limitation on CFC downward attribution (for further discussion of these rules, see here). 

Cadwalader will continue monitoring the CARES Act and other legislative proposals.