How do my wife and I divide college savings between our two sons — we’re questioning whether our method is fair

My wife and I have two sons, 17 and 15. We are both firm believers in the value of higher education.

We saved for our sons’ college educations by contributing between $2,000 and $7,000 every year to separate investment accounts since they were born (not in a 529 plan). The older son will start college this fall and has been awarded scholarships that effectively give him a full ride, including room and board. The younger son will start college in two years and will likely get scholarships to reduce his college expenses to between $15,000 and $20,000 per year, including room and board.

We conservatively estimate there will be a surplus of $180,000 in their combined college funds after paying for their bachelor’s degrees. We would like to use the surplus to pay for their post-graduate degrees, if they choose. Otherwise, we’d like to use the money to make a positive impact on their financial futures, such as a down payment on a house, or a college fund for their own children.

We also want to prevent any feelings of animosity between them later in life because we gave more money to one than the other.

Our thinking all along has been to keep the money for each son separate. Each account will have about the same value when the son enters college. We’d use the money in the account to pay for his bachelor’s degree and graduate degree, and if there’s any remainder, use it to help him at a later time. However, we’re now questioning if that method of dividing up the money is actually the most fair and the best use of the funds.

Our older son didn’t really work harder to earn his scholarships. He’s just incredibly smart (for lack of a better word) and school is much easier for him. Our younger son is still a straight-A-student and will do well in college. He works harder to earn his grades, but he’s not going to reach the same level of purely academic prowess in high school, and it’s unlikely he’ll receive as much scholarship money, but we’d like to see him reach the same level of education without having to work even harder to pay for it. Additionally, there may not be enough money to send both sons to graduate school. However, if one son decides to go to graduate school and the other does not, the extra money could still be used for education, as it was originally intended. Of course, there’s the potential for delaying graduate school a few years, too.

We also want to prevent any feelings of animosity between them later in life because we gave more money to one than the other.

Lastly, if there actually are funds remaining after paying for college, we’re looking for suggestions on how to use it to improve our children’s financial future. Note that we don’t need it for ourselves. We aren’t what we consider wealthy, but our retirement planning is on track, we have a six-month emergency fund, our house will be paid off in four months, and we have no other debt.

Answer No. 1: Financial Fairness

Questions of fairness present many parents with a conundrum. Do you save equally for each child’s college education, or do you save more for one child than the other?

Should you save equally for both children, since you love both children the same?

Or, should you save more for the younger child, since college will cost more by the time they enroll, due to tuition inflation?

Luckily, the rule of thumb to save $250 a month from birth for an in-state four-year public college and $550 for a four-year private college usually does not change over a few years difference in age, because the amounts are rounded to the nearest multiple of $50. Otherwise, the amount would need to be adjusted annually according to college tuition inflation. So, you could choose to contribute the same amount for each child.

Yet, even if you try to save equally for both children, the cumulative savings will likely differ because you started saving for each child at different times. Interest rates, fees and the resources you can afford to contribute will change over time. If you start saving for both children at the same time, as opposed to starting for each child at birth, the younger child will accumulate more savings because of a longer time horizon. There will also be differences in risk tolerance due to differences in the time horizon.

That doesn’t seem fair, unless you set the same savings goal for each child.

If you save in parent-owned 529 plan accounts, as opposed to custodial bank or brokerage accounts, you can rebalance the funds between the children by transferring money from one 529 plan account to the other.

But, there will also be differences because each child is unique.

What if one child doesn’t go to college? Or wins a full scholarship? Or their college costs are covered because they enroll at a U.S. Military Academy? What if one child enrolls at a high-cost private college and the other at a low-cost public college? What if one child goes on to graduate school and the other doesn’t? What if one child majors in a more lucrative field of study and the other pursues a lower-paying career? What if one child suffers from an illness or disability and needs more help?

Some families may run out of money for the younger child because they didn’t save enough for the older child, placing the younger child at a disadvantage.

No matter what you do, feelings may be hurt. If you give the same amount of money to both children, the younger child will be forced to borrow more, burdening them with more student loans. If you give more money to the child with the greater costs or needs, the other child might resent that.

It may help to distinguish between paying for college and other purposes. If there’s leftover money after you’ve fulfilled your promise to help them pay for college, perhaps you can split it evenly among the children. Your commitment was to pay for college, perhaps even a particular type of college, and not to provide a specified sum toward college costs.

Splitting the leftover money evenly lets each child choose how to use their share of the money. They could use it to buy a car, pay for a wedding, save it for a down payment on a home, start a business, get a head start on retirement savings, build a college fund for their own children or repay their student loans.

Communication with the children can help avoid acrimony. Be honest and transparent about how you decided how much to contribute to each child’s college education. Be clear that differences in the savings account balances are not a reward for good behavior or a measure of your love for each child. Rather, you are addressing your children’s needs, and each child’s situation is different.

Answer No. 2: Titling of Account

It is important to understand the titling of the investment accounts, since that can affect the possible uses of the money. The main options are a Totten trust account and a custodial account.

A Totten trust or payable on death account, which is titled “parent in trust for child”, passes to the child outside of probate upon the death of the child. The parent can use the money for any purpose and has no duty to use it for the benefit of the child.

A custodial account, which is titled “parent as custodian for child”, is established under the Uniform Transfer to Minors Act (UTMA) or Uniform Gift to Minors Act (UGMA). The money is legally the property of the child and must be used for the benefit of the child.

Thus, if the college savings funds are in a custodial brokerage account, the money cannot be given to a sibling.

This is in contrast with a 529 college savings plan where a parent is the account owner and the child is the beneficiary. The account owner can change the beneficiary to a member of the family of the current beneficiary, such as a sibling.

(There is also a different type of 529 plan, called a custodial 529 plan, where the child is both account owner and beneficiary. If the child has not yet reached the age of majority, the custodial 529 plan account is managed by a custodian. However, the custodian cannot change the beneficiary on the custodial 529 plan account.)

The money could also be in a brokerage account in the parent’s name, in which case the parent can use the funds to pay for either child’s college education, or for any other purpose.

The titling of the account can also affect the child’s eligibility for need-based financial aid. If the money is in a custodial bank or brokerage account, it is reported as a student asset on the Free Application for Federal Student Aid (FAFSA). If the money is in a custodial 529 plan account, or in the parent’s bank or brokerage account, it is reported as a parent asset on the FAFSA.

Student assets are assessed more heavily on the FAFSA than parent assets. The student’s eligibility for need-based financial aid is reduced by 20% of the student assets. Parent assets, on the other hand, are assessed on a bracketed scale with a top bracket of 5.64% after subtracting a small asset protection allowance based on the age of the older parent. Thus, $10,000 in a child’s custodial brokerage account will reduce aid eligibility for $2,000 and $10,000 in the parent’s name will reduce aid eligibility by at most $564.

Mark Kantrowitz is Publisher and VP of Research for, the most popular guide to saving and paying for college.

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Be prepared to wash your own hair and pay a COVID-19 fee. Your trip to the hair salon won’t be the same after the lockdown

Americans on lockdown have been eagerly waiting for hair stylists and nail salons to open so they can touch up gray roots and tend to ragged cuticles.

But clients returning to salons in states where they’re back in business should brace for a radically different experience: Gone are the days when groups of friends could hang out while getting mani-pedis together. And getting your stylist caught up on your love life, or any other unnecessary chatter, is now a relic of the pre-outbreak world.

Beauty salon and barbershop clients should also prepare for the possibility of being charged higher prices, or a fee to cover the cost of extra disinfecting and equipment. They should be ready to wash their own hair before their appointment and wait in their car until it’s their turn in the chair. Many salons have ended walk-in appointments, which means the days of suddenly chopping off your hair after a traumatizing break-up are over for the time being.

Beauty salon and barbershop clients should prepare for the possibility of being charged higher prices, or a fee to cover the cost of extra disinfecting and equipment.

Going to the salon during the pandemic is “going to be a bare-bones experience,” said Steven Sleeper, executive director of the Pro Beauty Association, a trade group representing independent salon owners. “It’s going to be stripped down and back to the basics and getting your service and getting out,” he said. “It’s not going to be warm and fuzzy, at least for a while.”

For many clients, there will be no more browsing through hair serums for sale in the salon, sipping a complimentary glass of wine, or paging through magazines. Those extras have been banned in many states. Cut-throat shaves in the barbershop chair may also be another luxury that bites the dust.

Customers should assume that their salon won’t look or feel the way it did before the coronavirus pandemic swept the U.S. — and if it does, they “should be really concerned,” Sleeper said. In many states, masks are mandatory for salon employees and customers, and so are symptom and temperature checks for both parties.

No hugs, no blowouts, no unnecessary conversation

The Washington, D.C. salon Rose and Sparrow recently told clients they can only bring their phone and wallet into the salon — no purses, books or crafts allowed. Also off limits: using the bathroom, hugging your stylist, blowouts and unnecessary talking. “Please keep conversation to a minimum (we can barely breathe in these masks),” customers were told in an email.

The risk of not following such protocols was highlighted recently in Missouri, where a hair stylist may have exposed up to 140 people to the coronavirus after working for eight days while they had symptoms of the virus.

Somewhere between one-half and two-thirds of U.S. beauty salons were back in action as of late May, Sleeper estimated, operating under varying restrictions depending on which state they’re in. The Centers for Disease Control and Prevention haven’t issued specific guidelines on how beauty-salon workers and barbers should protect against infecting themselves and their customers, but many states have detailed protocols the industry must follow, which the Pro Beauty Association has been tracking.

In Connecticut, for example, salons will be allowed to reopen on June 1, but services that require the removal of a face mask, like waxing upper lips or trimming beards, won’t be allowed. In Alabama, salons opened May 11 at 50% capacity, and in Florida, walk-ins and group appointments are prohibited, which could put a temporary end to the time-honored tradition of bridesmaids getting their nails done together.

Customers may also notice fewer gray heads at the salon: In states such as Arkansas and Texas, reopening guidelines suggest people age 65 and over stay home from the salon.

Some hair salons have reopened, and they aren’t quite as bustling as they were before the pandemic. Empty chairs are the new normal in states that limit the number of people who can be in a salon at one time.

Daisy McGuire

Urban Halo Salon in Arlington, Va. is warning customers about the mini envelopes often used for cash tips: “If you choose to leave a tip, please do not lick the envelope,” it says on its website. The salon is also charging a $5 “sanitation fee” — a measure many salons are taking temporarily to cover the expense of extra cleaning and equipment.

‘It’s kind of make-or-break right now to stay in business’

At Goldie x Bob, a four-chair boutique salon in Denver, Colo., customers will now see a $3 “PPE surcharge” on their bill. So far, clients seem to be fine with the extra charge, said Liz Burns, Goldie x Bob’s creative director and lead stylist. “They are so happy to be getting their hair done that they don’t care,” she told MarketWatch.

Goldie x Bob is struggling to meet pent-up demand, said co-owner Bruce Brothers, who also co-owns a Boulder salon and a Denver barbershop with his husband. At all three locations, demand was “bone-crunching” when the online booking system opened up again. “Within the first 10 minutes we were booked solid through the end of the month,” Brothers told MarketWatch.

That sounds like great news for his business, but it’s not: The salons are “suffering from under capacity,” he says. “Our 16-chair salon is restricted to five stylists and five customers at a time (no front desk allowed) and yet we have a five-figure rent in Boulder,” he said.

‘It does feel a little less energetic, but there’s also so much joy — the clients are so happy to be getting their hair done, and I think it’s given them a stronger appreciation for our industry.’

— Liz Burns, creative director and lead stylist at Goldie x Bob, a Denver salon

Goldie x Bob has added $20 to its basic haircut price; men and women both pay between $100 and $130. Burns and other employees in leadership roles also took temporary pay cuts. Overall, clients have been extremely grateful and supportive of the changes, but one customer protested the price hike, Burns said. “She thought it was a strong-arm kind of move,” she said. “I just had to explain to her the reality of it. It’s kind of make-or-break right now to stay in business.”

Only 35% of adults are comfortable visiting businesses such as salons

While salons like Goldie x Bob are seeing a surge in appointment bookings, there’s also evidence of some skittishness on consumers’ part. Only 35% of adults said they would feel comfortable visiting local, non-essential businesses such as restaurants, bars, theaters, or hair or nail salons in the coming weeks if they reopened, even with enhanced safety measures, a May 18 BankRate survey found. More than half (55%) said they thought businesses were reopening too soon, and more than 43% said they expected to shop less in public than they did before.

Higher prices are one of many changes Goldie x Bob unveiled when it reopened May 12. Clients are screened for coronavirus symptoms, and they have to sign a waiver affirming that they understand the salon’s new policies. Customers must arrive alone, with washed hair, and wait outside until contacted. Both stylist and customer must wash their hands after check-in. Clients can’t touch products displayed in the salon, and they can’t pay with cash, even for tips. The salon has also added 30 minutes to every appointment to allow time for cleaning, Burns said.

‘It does feel a little less energetic, but there’s also so much joy’

The face masks that clients are required to wear create some unusual challenges for stylists, Burns said. It can be difficult to judge how a cut looks on a client when part of their face is obscured, and it’s harder to see how a client is reacting to a stylist’s handiwork.

“You’re always kind of reading the client, their body language, their expression — but with this mask over half their face, it feels a little more impersonal,” Burns said. “When you’re using your eyes to create a shape and you can’t see part of the canvas, you just have to use your best judgment.”

With no hugs and no chitchat, clients may feel robbed of one of the unique aspects of the beauty industry: the relationship between customer and stylist, which can elevate a cut and color to a quasi-therapy session when customers are friendly with their stylists.

In many states, going to the salon could be a lonelier and quieter experience, because only a few clients and staff are allowed inside at once. Before the pandemic, Goldie x Bob was “a very social place” where customers brought along guests and clients liked to catch up with their stylists, Burns said. “Now it feels more sterile because we’re having to take safety precautions,” she said.

But while there may be less chitchat now, it will never go away completely, she added.

“I don’t think you’re ever going to stop people chatting with their stylists, masks or not. People are still doing it,” she said. “It does feel a little less energetic, but there’s also so much joy — the clients are so happy to be getting their hair done, and I think it’s given them a stronger appreciation for our industry.”

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With over 35 million people filing for unemployment since March, $1,200 stimulus checks are only a Band-Aid for Americans

More than 130 million stimulus checks are already winding their way to millions of Americans. They’re a key part of the government’s $2.2 trillion CARES Act, but furloughed and laid-off workers say a maximum $1,200 payment is not nearly enough to see them through what could be an even bigger economic crisis than the Great Recession.

Approximately 2.4 million unemployed Americans applied for unemployment benefits last week using the traditional method of reporting initial claims, but the real number was almost 1 million higher if applicants made eligible through a new federal relief program are included. Some 35.5 million people have applied for jobless benefits through their states.

Roughly 8.1 million new claims have been filed via a new federal program that has made self-employed workers and independent contractors such as writers or Uber

drivers eligible for the first time ever. Total new claims since mid-March: almost 44 million. Some of these claims had their applications rejected, while others found a new job and still others returned to work.


analyzed income data in the 98 cities with the highest number of families per capita to determine their monthly expenses and estimate how much of a household’s monthly expenses $3,400 in economic impact payments would cover. That’s two $1,200 stimulus checks, plus $500 each for two dependents.

There’s growing concern among many Americans that businesses won’t restart in time to save them from paying the rent, their mortgage and going hungry.

That size stimulus check would cover 45% of one month’s average $7,531 budget for two-parent, two-child families, according to the study.

Families in McAllen, Texas, will benefit the most, with the stimulus checks covering 96% of their $3,500 monthly bills. Families in San Francisco, Boston, Bridgeport, Conn. and Washington, D.C. make between $158,000 and $189,000, and would only qualify for a small stimulus payment.

But most households will still struggle to make ends meet if those parents are out of work. “In 8 of the top 10 cities, the economic impact payment only covers between 60% and 71% of the estimated monthly budget for a family of four. The stimulus payment will cover 50% or more of one month’s estimated expenses in just 34 of the top 98 metro areas,” the report found.

The money can’t come soon enough for the nearly 35 million people who are out of work, and others worried about bills and rent due to the coronavirus pandemic. The Internal Revenue Service is sending $1,200 to individuals with annual adjusted gross income below $75,000 and $2,400 to married couples filing taxes jointly who earn under $150,000, plus $500 per qualifying child.

Dispatches from a pandemic: Letter from New York: ‘When I hear an ambulance, I wonder if there’s a coronavirus patient inside. Are there more 911 calls, or do I notice every distant siren?’


The payouts — formally dubbed “economic impact payments” — reduce in size above the $75,000 per year/$150,000 per year household income threshold and stop at $99,000 per year for individuals and $198,000 per year for married couples. The money will appear automatically in your bank account if the IRS has your account information on file from previous years’ tax returns.

‘People whose jobs are deemed important enough to risk coronavirus exposure at work are also bringing home less income in the process.’

However, there’s growing concern among many Americans — especially those who are most in need of the checks and already have bills piling up — that the economy won’t restart in time to save them from paying the rent, their mortgage and going hungry. (For those whose information isn’t on file with the IRS, they can submit their details here and here.)

Fast-food and counter workers would need to work 107 hours, or 2.5 weeks of full-time work, to earn $1,200, working at a rate of $11.18 per hour, LendingTree also found in a separate study of the 100 most common occupations in which workers earn less than $75,000 per year, as per 2019 Bureau of Labor Statistics data. Restaurant hosts and hostesses would need to work 104 hours.

Many essential workers, from child-care workers to home-health aides, have to work the longest. “People whose jobs are deemed important enough to risk coronavirus exposure at work are also bringing home less income in the process. Workers in these occupations earn between about $11 and $16 per hour,” the report said. (The federal minimum wage is $7.25 per hour.)

In total, U.S. workers have lost $1.3 trillion in income, amounting to a median of nearly $9,000 per worker, according to research published Tuesday by the Society for Human Resource Management and Oxford Economics. Some 20% of the loss, or $260 billion, represents workers who remained employed. These workers either accepted a lower pay or reduced hours.

(Jeffry Bartash contributed to this story.)

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Congress could kick China listings off U.S. stock exchanges, but it won’t happen overnight

The bill rushed unanimously through the U.S. Senate and spun into the news cycle as if it were a certainty.

As the thinking goes, the House and then the president will shuffle this legislation into law, forcing Chinese companies listed on U.S. exchanges to play by the same transparency rules as those from other parts of the world.

Senate bill would require Chinese companies to establish that they are not owned or controlled by a foreign government and submit to an audit that the Public Company Accounting Oversight Board can review.

Normally, powerful entities would make the passage of this “anti-China” bill an uphill battle. The Nasdaq
the NYSE
the Securities and Exchange Commission and Wall Street in general largely oppose the move and the yanking of billions of dollars from their pocketbooks. And House Speaker Nancy Pelosi said Thursday that her side of the Capitol was willing to look at the issue, but no vote was promised.

But the legislation comes amid a striking U.S. political competition of sorts to show who is toughest on China — and during the crucial few months before the presidential election.

Also from Tanner Brown:U.S.-China relations are bad and getting worse, with major ramifications for trade and investment — and the U.S.’s presidential election

Even if a variation of the bill does eventually pass, already-listed firms will have three years to comply. That is ample time for China to increase the attractiveness of its own bourses, and for Chinese companies to prepare for a relatively smooth landing back home — likely Hong Kong for larger already-listed companies, and the growth boards for smaller startups, according to Peking University’s Paul Gillis.

China has already opened more attractive doors for public fundraising. After the decade-old Nasdaq-like ChiNext welcomed tech startups in Shenzhen, neighboring Shanghai learned from the pains and successes of that venture and unveiled the Science and Technology Innovation board, or Star Market, last year. Its niche is profit-losing tech-focused startups that show promise and otherwise might list in New York.

As of now, some 200 Chinese companies are listed in the U.S. — some in ways more transparent than others — possess a total market value of more than $1.8 trillion, according to the U.S.-China Economic and Security Review Commission.

Their departure would represent a big flight of capital from U.S. exchanges, a diminution of U.S. tax revenue, a loss to investors and, some would argue, a prestige hit for Wall Street as the center of global finance.

But it would also mean those willing to buy into U.S.-listed firms from China wouldn’t be duped like they were recently by Luckin Coffee, whose shares

resumed trading this week after a six-week freeze. Luckin’s American depositary receipts tumbled 36% on Wednesday from their closing price on April 6, after which trading was halted by Nasdaq. The stock plummeted 89% in the first quarter of this year. It ended the week at $1.38, against a closing level above $40 as recently as March 6.

Nasdaq has informed the onetime Starbucks

rival that it faces delisting after it disclosed that some employees fabricated $300 million in sales. Luckin is appealing the decision, but if it’s delisted investors would lose essentially all equity, a “wipeout” for which one analyst warned investors to prepare.

A Luckin Coffee location in Beijing on Jan. 15, before the fast-expanding chain — billed as a potential Starbucks slayer — was engulfed by controversy.


Opinion:Luckin Coffee shows how risky Chinese IPOs can be, but investors are just not listening

“A lot of these companies, by the way, have already had scandals and cost investors a lot of money, because of their failure to be transparent in their reporting,” White House economic adviser Larry Kudlow told Fox News. “The Chinese government forbids that kind of transparency.”

The painful delisting decision may still be bothering Wall Street and the SEC, but lawmakers appear ready for action.

“We want investors to understand what they’re investing in,” said Sen. John Kennedy, a Louisiana Republican and a co-sponsor of the Senate bill. “And those reports have to be accurate or you get in a lot of trouble.”

Tanner Brown covers China for MarketWatch and Barron’s.

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As 30 public companies vow to keep $100 million in CARES Act loans, here are tax changes America needs right now

The COVID-19 pandemic demanded quick and drastic federal government intervention to save jobs and keep the economy from going into a total tailspin. But the legislative process was quick and dirty — with all the inevitable errors, omissions, and unintended consequences.

You know that’s true when the Los Angeles Lakers and the Ruth’s Chris Steak House chain qualified for potentially forgivable “emergency loans” under the Small Business Administration’s Paycheck Protection Program (PPP). The Lakers got $4.6 million for their “emergency” and Ruth’s Chris got a cool $20 million. While the Lakers and Ruth’s Chris Steak House paid back their PPP loans, it was only after attention from the media. Good grief. We can certainly do better with the next round(s) of COVID-19 relief.

“The Lakers qualified for and received a loan under the Payroll Protection Program,” the Lakers said in a statement last month. “Once we found out the funds from the program had been depleted, we repaid the loan so that financial support would be directed to those most in need. The Lakers remain completely committed to supporting both our employees and our community.”

“We intended to repay this loan in adherence with government guidelines, but as we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment,” Cheryl Henry, President and Chief Executive of Ruth’s Hospitality Group, which owns Ruth’s Chris Steak House, said in a statement.

More than 230 received over $1 billion in PPP loans, according to an analysis of public filings through April 27, The Wall Street Journal reported. At least 30 public companies with market capitalizations of between $4.5 million and $560 million have said they’d keep more than $100 million in total, the paper reported. The Treasury Department ruled that companies with access to other sources of capital are not qualified to receive PPP loans.

Since I’m just a tax guy, let’s focus on federal tax changes that would allow us to do better. Here are some suggestions.

Targeted tax relief for businesses

Businesses small and large need more financial relief, including more tax relief. But let’s direct any new tax relief to where it will do the most good. For instance:

Expand family business payroll tax break for hiring your children

Under our current federal payroll tax regime, owners of businesses that are treated as sole proprietorships and spousal partnerships for tax purposes can hire their under-age-18 children, and the children’s wages are exempt from Social Security, Medicare and federal unemployment (FUTA) taxes. For details, see this previous Tax Guy column.

Great. Right now, hiring your kids and keeping money in the family could be a financial life preserver. The no-federal-payroll-taxes break is an added and valuable bonus. And we are looking for more ways to help family businesses. Right? So, let’s temporarily extend the no-federal-payroll taxes deal to cover under-age-25 children. That could help more family business owners and their offspring stay on their feet.

Expand 100% first-year bonus depreciation break for real estate expenditures

Under our current federal income tax regime, businesses that spend money on so-called qualified improvement property (QIP) can write off the entire amount in Year One. That’s because QIP expenditures are eligible for 100% first-year bonus depreciation through the end of 2022. Great. However, the Tax Code currently defines QIP as the cost of an improvement to an interior portion of a nonresidential building — excluding expenditures for the enlargement or internal structural framework of the building. That’s a very limiting definition. Many buildings will need to be re-purposed in response to COVID-19, and many things may need to be done on the outside.

• Think converting square footage formerly occupied by a large retail store into a large food court with multiple family-owned restaurants and adequate spacing to get through the COVID-19 mess and whatever comes next. You might need to enlarge the building, and you might need to make changes to the structural framework to get the project done. Let’s include those expenditures in the definition of QIP so owners and lessees of such buildings can claim 100% first-year bonus depreciation for their expenditures.

• Think converting square footage formerly occupied by a large departed business into hotel-style individual office suites and meeting rooms that can be reserved by employees who now work primarily from home. Adequate spacing would be a very good idea. You might need to enlarge the building, and you might need to make changes to the structural framework. Let’s include those expenditures in the definition of QIP so owners and lessees of such buildings can claim 100% first-year bonus depreciation for their expenditures.

• Creating and expanding outdoor venues with adequate spacing will probably be a huge trend. Think outdoor restaurant dining areas, outdoor bars, outdoor music venues, outdoor wedding venues, and maybe the reemergence of drive-in movie theaters. And more. As the Tax Code currently reads, expenditures for these projects don’t count as QIP, so 100% first-year bonus depreciation cannot be claimed. Let’s fix that.

Key Point: Many businesses will be lucky to break even this year. Many will lose money. Duh. For these businesses, being able to claim 100% first-year bonus depreciation for real estate QIP expenditures can potentially create or increase a net operating loss (NOL) that can then be carried back to earlier tax years. You can then claim refunds for taxes paid in those earlier years. Anything that creates or increases an NOL can be a business life-saver, because taxes paid in earlier can be recovered.

PPP loan forgiveness: expand list of qualified expenditures and allow tax deductions for those expenditures

The current rules for Paycheck Protection Program (PPP) loans stipulate that they can be forgiven only if at least 75% of the loan proceeds are used to cover qualified payroll expenses. That’s misguided. Continuing to pay employees doesn’t help a business that doesn’t need workers until its business model can be recalibrated to survive COVID-19 and whatever might come next. The PPP loan scheme should be renamed and retargeted to allow eligible businesses to spend loan proceeds on whatever is needed to survive.

For instance, a family restaurant might need to reconfigure its interior space, add an outdoor bar and dining pavilion, and replace its entire food inventory. Until those things get done, you don’t need hosts, cooks, servers, and bussers.

Finally, the IRS recently opined that expenses financed by a forgiven PPP loan cannot be deducted for federal income tax purposes. Congress apparently intended the opposite, but a law change may be necessary to fix that glitch. Let’s do it.

Targeted tax relief for individuals

In the COVID-19 era, individuals need financial relief too — including better-targeted tax relief. Here are two suggestions.

Resurrect tax-free moving expense allowances for relocating employees

Before the Tax Cuts and Jobs Act (TCJA), employers could give employees tax-free moving expense allowances or reimbursements (within limits). The TCJA suspended that valuable break for 2018-2025. Under the current rules, if your employer covers relocation expenses, it’s treated as additional wage income subject to federal income and payroll taxes. Ugh. We will surely see many employee relocations in response to COVID-19. Let’s once again allow employers to cover employee moving expenses with tax-free dollars.

Allow home office deductions for employees

For 2018-2025, another TCJA provision suspended federal income tax deductions for an employee’s office in the home used for company business. Even before the TCJA, employee home office expenses were subject to limitations that ensured minimal or no tax-saving benefit in most cases. In light of current realities, let’s allow employees to claim home office deductions whether they itemize or not.

The last word (for now)

These are my thoughts so far. More to come later. Meanwhile, please contribute your own by commenting on this column. There are good ideas out there that I’m not smart enough to ever figure out. Let’s hear them.

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