| Current Law / CARES Act (HR 748) |
HEROES Act | Whitehouse (S 3640) / Doggett (HR 6579) Bills |
|---|---|---|
| Total Revenue Loss over 10 years: $160 billion per Joint Committee on Taxation (JCT) | Total Revenue Gain from CARES Act: TBD, but could be at least $135 billion | Total Revenue GAIN from CARES Act: Not Available |
| Sec 2304 – Permits excess losses generated by pass-through businesses in 2020, 2019 and 2018 to offset non-business income over $500,000 for joint filers ($250,000 for others). Would lose $135 billion; JCT determined 82% of the benefit would go to those making over $1 million in 2020, with an average tax cut of $1.6 million this year. | Sec 20301 -- Repeals Sec 2304 and permanently prohibits pass-through businesses from using losses to offset non-business income over $500,000 for joint filers ($250,000 for others). | Repeals Sec 2304 and permanently prohibits pass-through businesses from using losses to offset non-business income over $500,000 for joint filers ($250,000 for others). |
| Sec 2303 – Allows both C-corps and pass-through businesses to carry back NOLs generated in 2020 and the pre-pandemic years of 2018 and 2019 to offset income earned during a 5-year period, including 3 pre-TCJA years when the corporate income tax rate was 35% and the top personal income tax rate was 39.6%, (thereby creating a tax arbitrage opportunity with the current 21% corporate rate and 29.6% top pass-through rate). Would lose $25 billion over 10 years (loses $89 billion in first two years after which it becomes revenue positive). | Sec 20302 -- Limits the NOL carry-back period to 2018 and 2019, removing the tax arbitrage opportunity created by the CARES Act. | Limits the NOL carry-back period to 2018 and 2019, removing the tax arbitrage opportunity created by the CARES Act. |
| Disallows businesses to carry back losses generated in 2018 but permits NOL carry-backs from 2019 (a pre-pandemic year) and 2020. No provision for an advance on 2020 NOL refunds (but the possibility to generate liquidity now from a 2019 carryback). | Limits businesses to NOL carrybacks from 2020, disallowing the pre-pandemic years of 2018 and 2019. Allows businesses an advance on estimated refunds from 2020 NOL carrybacks. | |
| Permits businesses both big and small to carry back NOLs. | Limits eligibility for carrying back NOLs to businesses with less than $15 million in gross receipts, as was done during the 2009 stimulus (the American Recovery and Reinvestment Act). | |
| Ensures that companies paying excessive executive compensation and engaging in significant stock buybacks do not qualify for this relief. | Ensures that companies paying excessive executive compensation and engaging in significant stock buybacks do not qualify for this relief. |