Tax arbitrage 2020 - Coronavirus edition

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https://www.wsj.com/articles/losing-money-is-a-winning-pandemic-tax-strategy-for-some-companies-11596879000?mod=hp_lead_pos5

 

There’s a simple rule for corporate tax planning in 2020: If you’re going to lose money, lose a lot of money.

 

That’s because companies can now use losses incurred before and during the pandemic to offset up to five years of past profits. What makes this moment particularly attractive: Congress is letting companies get refunds of taxes they paid at the 35% corporate rate that existed before 2018 rather than at today’s 21% rate.

 

Companies can generate big losses now by packing deductions into 2020 and pushing income into the future. Nearly two dozen large publicly traded companies are already reporting more than $2 billion in combined tax benefits using this rate arbitrage, according to a review of securities filings. Tax advisers and experts expect more soon.