Does it sound like a radical idea to invest in your business right now, maybe?
However, if you are among those who are able and willing to make CAPEX investments in their business then you might very well benefit from new provisions in the CARES act. While I will discuss how the new tax benefits can impact a solar project, the principals and ideas apply to any CAPEX investment you’d make in 2020 or maybe did make in 2018 or 2019.
On page 73 of the recently signed into law, CARES Act you’ll find this:
What this means for property owners who complete their solar project in 2020 is that you can deduct nearly the entire cost of the project in 2020 under the favorable 100% bonus depreciation rules. If this creates a net operating loss for 2020, the loss can then be carried back up to 5 years to offset taxable income recognized in prior years. Using this tax benefit is a way to raise capital AND eliminate an operating cost at the same time.
There are a lot of businesses that won’t earn taxable profits in 2020. Now, however, it’s possible to get the benefit of doing a CAPEX project now, but going as far back as 2015 and adjusting your tax returns. If in any of those years you made a profit and paid taxes, you can get that cash back into your business by making investments now.