SBA PPP loan thread

[hubbahubba]

Originally Posted by jmg

With the QBI deduction possibly going away with Biden's tax plan, I'm trying not to push anything into 2021.

Great point.... Can he do it for 2021 if 2021 is already started? Or would it be 2022? I don't remember...

[stevenc]

IRS has announced all PPP loans are to be taxed in year 2020 REGARDLESS of whether you have actually applied for forgiveness or received forgiveness.

https://www.irs.gov/pub/irs-drop/rr-20-27.pdf

[hubbahubba]

Originally Posted by stevenc

IRS has announced all PPP loans are to be taxed in year 2020 REGARDLESS of whether you have actually applied for forgiveness or received forgiveness.

https://www.irs.gov/pub/irs-drop/rr-20-27.pdf

Thank you for posting.

[4Hockey4]

Originally Posted by stevenc

IRS has announced all PPP loans are to be taxed in year 2020 REGARDLESS of whether you have actually applied for forgiveness or received forgiveness.

https://www.irs.gov/pub/irs-drop/rr-20-27.pdf

Bit more complicated and IRS is using horrible loop hole, and its being fault everywhere.

PPP said the monies sent won't be taxed, IRS says but expenses it covers can't be written off. Net/Net but what a slight of hand...not sure they don't change that.

[4Hockey4]

Originally Posted by jmg

Ahh forgot about the $100k cap. What if you laid off before the loan date? Is there still a reduction?

They give you 2 date options to use for comparison, 2019 used on App. or beginning of 2020..like 2 month average FTE

[4Hockey4]

HEROES act about to pass. Common sense prevails ?

Sherr: Correct. The AICPA has sent in letters to Congress saying that we understand the congressional intent of the PPP legislation was to allow both the nontaxable treatment of the forgiveness and also tax business expenses — we think Congress intended to make those deductible as well.

Bonner: Does Congress agree with that reading of its intent?

Sherr: Yes, they haven’t acted quite yet, but it was in the HEROES bill [Health and Economic Recovery Omnibus Emergency Solutions Act, H.R. 6800]; the bill that House Democrats passed for the next round of stimulus did include deductibility for PPP expenses. Expenses that you use your loan forgiveness for would be deductible under the House-passed Democratic bill. Both their bigger bill and their skinnier version had that in it, so we’re happy to see that it was in what passed the House, and also there is bipartisan support in the Congress for this. There’s three bills that are out there: S. 3612, H.R. 6821, and H.R. 6754. All would allow deductibility for the expenses that you are getting PPP loan forgiveness for, as well.

[RickFLM4]

Originally Posted by 4Hockey4

HEROES act about to pass. Common sense prevails ?

Sherr: Correct. The AICPA has sent in letters to Congress saying that we understand the congressional intent of the PPP legislation was to allow both the nontaxable treatment of the forgiveness and also tax business expenses — we think Congress intended to make those deductible as well.

Bonner: Does Congress agree with that reading of its intent?

Sherr: Yes, they haven’t acted quite yet, but it was in the HEROES bill [Health and Economic Recovery Omnibus Emergency Solutions Act, H.R. 6800]; the bill that House Democrats passed for the next round of stimulus did include deductibility for PPP expenses. Expenses that you use your loan forgiveness for would be deductible under the House-passed Democratic bill. Both their bigger bill and their skinnier version had that in it, so we’re happy to see that it was in what passed the House, and also there is bipartisan support in the Congress for this. There’s three bills that are out there: S. 3612, H.R. 6821, and H.R. 6754. All would allow deductibility for the expenses that you are getting PPP loan forgiveness for, as well.

I disagree with tax deductions for reimbursed expenses but good for whoever this works out for, I guess.

[4Hockey4]

But the intent was always for this to be a tax free event, whats the point of giving money in time of crisis to take 30%+ back

Its going to work for anyone that got a PPP loan.

it'd be like taxing welfare checks...wait lol

[RickFLM4]

Originally Posted by 4Hockey4

But the intent was always for this to be a tax free event, whats the point of giving money in time of crisis to take 30%+ back

Its going to work for anyone that got a PPP loan.

it'd be like taxing welfare checks...wait lol

It’s disallowing a deduction for an expense you didn’t actually pay. If you pay the expense without reimbursement, you get a deduction. If you aren’t out cash for the expense because you are reimbursed with a forgivable loan, it shouldn’t be a deductible expense. Otherwise you get free money to pay the expense and then also get to deduct an expense you paid with the free money. That makes zero sense to me. If you want to think of it as taxing the free money, so be it.

And I believe unemployment benefits are taxed if you are looking for an analogy.

[4Hockey4]

Otherwise you get free money

that was always the point, taxing the PPP monies or not allowing the write off, is the same thing. Its not both.

The intent originally that 100% would be a non tax event, I was involved in a couple of the national calls, and the hypocrisy was astounding, but it is politicians. AND its a loan unless you qualify for forgiveness, maybe they should not allow expense for the loan proceeds too

They are making it right, logically and morally, now legally.

#NiceTryIRS

[RickFLM4]

Originally Posted by 4Hockey4

Otherwise you get free money

that was always the point, taxing the PPP monies or not allowing the write off, is the same thing. Its not both.

The intent originally that 100% would be a non tax event, I was involved in a couple of the national calls, and the hypocrisy was astounding, but it is politicians. AND its a loan unless you qualify for forgiveness, maybe they should not allow expense for the loan proceeds too

They are making it right, logically and morally, now legally.

#NiceTryIRS

Agree to disagree. We will all be paying for it later anyway.

[4Hockey4]

Yep, and btw, unemployment, in general isnt taxed, or very little. Avg unemployment is $325/week. With standard deduction, exemption and credits. Zero tax incurred. (assuming no other income for year)

Thats the intent.

(also if "disallowing an expense that you actually didn't pay" was an issue, mucho tax law goes out the window, with all the jobs...but thats my years of corp tax and IRS audit coming out )

[RickFLM4]

Originally Posted by 4Hockey4

Yep, and btw, unemployment, in general isnt taxed, or very little. Avg unemployment is $325/week. With standard deduction, exemption and credits. Zero tax incurred. (assuming no other income for year)

Thats the intent.

(also if "disallowing an expense that you actually didn't pay" was an issue, mucho tax law goes out the window, with all the jobs...but thats my years of corp tax and IRS audit coming out )

People that are employed for a portion of the year at a normal salary, followed by unemployment with extra $600/week (or whatever it was) for part of the year will absolutely be paying tax on unemployment. I hope you aren’t advising anyone otherwise.

[hubbahubba]

Funny, I received my coupons for estimated q4 taxes this morning from my CPA. It was a staggering amount because of PPP expenses that are not now deductable. If they become deductable, and I get to keep all this money, what a boon. While it is reasonable (in my case) to do as Rick says and I still come out ahead, I am pullling for a DEM bill to pass, who would have thought? FWIW, I promise to make good use of the money and expand jobs in many ways as best I can if I can keep it. Thanks for posting, gentlemen.

[MisterF80M3]

When is the last day to apply for forgiveness?

Also, since we are talking about tax-related things. What are you guys doing with gross profit at the end of the year? My CPA says the only option I have is to give myself a bonus. I have a C corporation. Just getting a second opinion.

[jmg]

Originally Posted by MisterF80M3

When is the last day to apply for forgiveness?

Also, since we are talking about tax-related things. What are you guys doing with gross profit at the end of the year? My CPA says the only option I have is to give myself a bonus. I have a C corporation. Just getting a second opinion.

I believe it was extended to 24 weeks from disbursement earlier this year. You can apply before that 24 weeks is up.

2020 has been such a strange year. Q1 and Q2 were full of contracts made before the pandemic, so I thought I would be taking a Q3 and Q4 hit with nothing in the chamber as late as July. Then things picked up and I'm up from 2019.

[4Hockey4]

Originally Posted by RickFLM4

People that are employed for a portion of the year at a normal salary, followed by unemployment with extra $600/week (or whatever it was) for part of the year will absolutely be paying tax on unemployment. I hope you aren’t advising anyone otherwise.

smh

I didn't say if someone made $100k and had 2 weeks of unemployment they wouldn't pay taxes.

Unemployment, in itself, will not be taxed. If someone was ONLY on unemployment for the year, (most get no where near $600, for this stupid arguments sake, lets use the average nationwide of $325/week) they would not pay taxes.

Again, the intent of the PPP was free money, no tax event, and IRS tried to pull one, its being fixed, as it should be.

You countering the actual intent of the PPP monies, is well, pointless and incorrect. (its not a theory, it literally states it in long boring write up)

Last word to Rick

Cheers

[RickFLM4]

Originally Posted by 4Hockey4

smh

I didn't say if someone made $100k and had 2 weeks of unemployment they wouldn't pay taxes.

Unemployment, in itself, will not be taxed. If someone was ONLY on unemployment for the year, (most get no where near $600, for this stupid arguments sake, lets use the average nationwide of $325/week) they would not pay taxes.

Again, the intent of the PPP was free money, no tax event, and IRS tried to pull one, its being fixed, as it should be.

You countering the actual intent of the PPP monies, is well, pointless and incorrect. (its not a theory, it literally states it in long boring write up)

Last word to Rick

Cheers

The CARES Act provided for $600 / week additional unemployment on top of state benefits through July 31. This was a point of contention because there were some workers making more through unemployment benefits than working. The fact that unemployment income is offset or partially offset by deductions doesn’t mean it’s not subject to taxation.

Congratulations on your windfall.

[4Hockey4]

I disagree with tax deductions for reimbursed expenses but good for whoever this works out for, I guess.

Every company that got it, paid it to employees to keep them employed, and said companies afloat ie the intent....so those lottery winners.

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Holy fuck I hope you are not in tax

I said unemployment, not cares, not salary...its offset, and is not taxed

You are wrong on both accounts, and only thing you have is to continue to move goal posts, typical internet strawman.

If anyone actually needs tax or PPP thoughts, PM me, I spent years as tax head in CPA firm, AICPA tax audit work, and corp tax for Rolls Royce International, now I run/advise many small and mid market companies
#Windfall #LastWord

Happy Holidays Rick

[RickFLM4]

Originally Posted by 4Hockey4

I disagree with tax deductions for reimbursed expenses but good for whoever this works out for, I guess.

Every company that got it, paid it to employees to keep them employed, and said companies afloat ie the intent....so those lottery winners.

-----------------------------------------------------------

Holy fuck I hope you are not in tax

I said unemployment, not cares, not salary...its offset, and is not taxed

You are wrong on both accounts, and only thing you have is to continue to move goal posts, typical internet strawman.

If anyone actually needs tax or PPP thoughts, PM me, I spent years as tax head in CPA firm, AICPA tax audit work, and corp tax for Rolls Royce International, now I run/advise many small and mid market companies
#Windfall #LastWord

Happy Holidays Rick

So typical for a tax guy to twist simple concepts around and miss the forest through the trees in the process. I suspect you are not so stupid that you do not understand what I have pointed out. Rather, you are likely just too ethically challenged to admit it. But again, congrats on the double dip.

[4Hockey4]

Originally Posted by RickFLM4

So typical for a tax guy to twist simple concepts around and miss the forest through the trees in the process. I suspect you are not so stupid that you do not understand what I have pointed out. Rather, you are likely just too ethically challenged to admit it. But again, congrats on the double dip.

I'm speaking conceptually. I got zero funds, but I did get 3 struggling companies funds to pay their employees, and come out the other side of this, standing. Free monies, like CARES check, and was the intent of both, no tax ...good job individuals double dipping

I'm not a tax guy, I did taxes for a few years early on. I consult as a CFO for small and mid market young companies. Its big picture, with focus on the minutia. I have to put all the pieces together to ensure their success.

Now say a 4th thing that has nothing to do with intent of PPP monies or that unemployment monies dont end up taxed.

(Is this like boomer/FoxNews/Trump righteous outrage ? or were you actually involved with some PPP loans, and thats why you are on here strawmanning ? )

Sorry actual PPP folks, normally I would have had my say and laughed and moved on, but sometimes, its just too much fun. I'm done I swear, but the chuckle was good. Merry Christmas !!

[RickFLM4]

Originally Posted by 4Hockey4

I'm speaking conceptually. I got zero funds, but I did get 3 struggling companies funds to pay their employees, and come out the other side of this, standing. Free monies, like CARES check, and was the intent of both, no tax ...good job individuals double dipping

I'm not a tax guy, I did taxes for a few years early on. I consult as a CFO for small and mid market young companies. Its big picture, with focus on the minutia. I have to put all the pieces together to ensure their success.

Now say a 4th thing that has nothing to do with intent of PPP monies or that unemployment monies dont end up taxed.

(Is this like boomer/FoxNews/Trump righteous outrage ? or were you actually involved with some PPP loans, and thats why you are on here strawmanning ? )

Sorry actual PPP folks, normally I would have had my say and laughed and moved on, but sometimes, its just too much fun. I'm done I swear, but the chuckle was good. Merry Christmas !!

I think my objection is pretty clear. Double dipping, which is precisely what this is, shifts burdens to everyone else. You can choose to deflect and talk out your ass as much as you want but it doesn't change anything.