As we previously reported, the CARES Act provides certain retroactive tax benefits. Perhaps most notably for partnerships, for 2019 and 2020, the CARES Act revises the business interest deduction limitation under section 163(j) to allow taxpayers (including partnerships) to deduct business interest expense up to the amount of their business interest income plus 50% of EBITDA (instead of 30% under pre-CARES Act law).
However, since 2018, most partnerships have been prohibited from filing amended tax returns, which limits their ability to take advantage of the benefits that the CARES Act might otherwise confer.
To rectify this issue, the IRS released Revenue Procedure 2020-23, which generally allows these partnerships to file amended tax returns for tax years beginning in 2018 and 2019 before September 30, 2020.
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