Details of Public Law 116-260, section 304 , Other Disaster-Related Tax Relief Provisions

Contributions paid beginning on 1/1/2020 and ending 60 days after 12/27/2020

Personal casualty losses arising in a qualified disaster area, on or after the first day of the incident period of a related qualified disaster

Charitable Contributions

The provision establishes a new category of qualified disaster relief contributions, for which corporations are allowed a deduction up to 100 percent of taxable income. A qualified disaster relief contribution is defined as any qualified contribution (per section 2205(a)(3) of the CARES Act) if the contribution is paid during the period beginning on 1/1/2020, and ending on the date that is 60 days after 12/27/2020, and is made for relief efforts in one or more qualified disaster areas.

The provision also requires the taxpayer to obtain a contemporaneous written acknowledgment from the organization receiving the donation that the contribution was or is to be used for disaster relief efforts. An election is also required to be made to apply the provision to the contribution.

The provision is applied first to qualified contributions (under the CARES Act section 2205(a)(2)(B)) without regard to qualified disaster relief contributions and then separately to the qualified disaster relief contributions.

Personal Casualty Losses

The provision adds special rules for individuals who have a net disaster loss for any taxable year. Net disaster loss is defined as the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in IRC section 165(h)(3)(A)). Qualified disaster-related personal casualty losses are defined as personal casualty losses that arise in a qualified disaster area, on or after the first day of the incident period of a related qualified disaster.

For qualified disaster-related personal casualty losses, the per-casualty floor is increased from $100 to $500. Additionally, the 10 percent adjusted gross income (AGI) limitation does not apply to the net disaster loss. The 10 percent AGI limitation applies only to the excess of the personal casualty losses over personal casualty gains reduced by the net disaster loss amount.

The provision treats the net disaster loss as an addition to the standard deduction of the individual, rather than as an itemized deduction. For alternative minimum tax purposes, the disallowance of the standard deduction does not apply to the increased amount attributable to the net disaster loss.

Charitable Contributions

Under the CTL, California does not conform to IRC section 170, but instead has standalone law that is generally similar to federal law allowing corporations a deduction for charitable contributions. California does not conform to the federal increased 100 percent of taxable income deduction for charitable contributions.

Personal Casualty Losses

Under the PITL, California generally conforms to the federal charitable contribution rules under IRC section 165 as of the specified date of 1/1/2015, and as a result, does not conform to the federal special rules for qualified disaster-related personal casualty losses arising in a qualified disaster area.

20/21 21/22 22/23 23/24 N/A $ (320,000,000) $ (46,000,000) $ (21,000,000)