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No, you don't need to do that. PTP losses are limited, even if you have basis. See and print the PTP summary tab in the K1 input form. When a PTP has income, you can use any carryover losses up to the amount of income. All losses are deducted on a final disposition. When a PTP is sold (OR PARTIALLY SOLD), you will get a worksheet showing the adjustment to basis AND the portion of gain that will be ordinary income (on form 4797). The brokerage statement of investment sales will show the original basis of the investment. On the 8949, enter codes BO in column f. B for basis adjustment and O for other. (Enter BMO if ther are multiple transactions on that line as well. BMOW if wash sales are in the mix. Codes are entered alphabetically.) Net the basis adjustment and the 4797 portion by ADDING the basis adjustment and SUBTRACTING the 4797 adjustment. This might seem backwards, but it's not, because 8949 adjustments are adjusting the gain/loss, not the basis. Then go to 4797 and enter a part II gain for the amount of the ordinary income adjustment. There is a drop down where you can choose the K1 that was sold or partially sold. It's extremely easy to miss partial sales because the K1 isn't marked final. You have to carefully read all the attachments each year with the K1. And you're supposed to attach 751 statement to the return. I have a generic 751 statement typed into a blank ATX statement for just this purpose, but I seriously doubt any problem could arise by not attaching this statement. Thankfully, I've never had to test that hypothesis. https://www.thetaxadviser.com/issues/2018/apr/reporting-publicly-traded-partnership-ordinary-income.html

I never thought of it as being any other way. It would be absurd to allow a tax deduction for an expense which was paid by a third party. If I volunteer to pay my client's payroll and rent, common sense would indicate they wouldn't expect to take a tax deduction for it.

Because you are awesome like that. Tom Modesto, CA

This makes sense. I can only see two logical ways of dealing with the forgiven amounts (grant) designed to keep your employees tied to your business while receipts are down: 1) Include the grant as income and deduct the expenses paid by it. 2) Exclude the grant from income and don't deduct the expenses paid by it. Business is business. And, yes, if you received a grant while your gross receipts did not suffer as much as the grant amount, your net income is higher. And your tax bill is higher. Your business made money. Surely we can explain this just as we educate the ones who call asking if they should take a raise at work. If not, they can return the money to save the tax.

P. S. Well after a barrage of material relating to the risk of having a hobby farm supplied by yours truly and one of Black Bart's "Come to Jesus" talks the client "Saw the Light" and has agreed that he must show a profit with his farm return at least every other year or so. This will surely lay this to rest. Thank goodness.

I have a customer who is on their 8 week clock, but cannot open. They hope to open during week 8. For them, paying a retention bonus makes sense for PPP forgiveness, as well as to entice some employees to get off the dole. It is a fine line as some want to stay on their 39 weeks of dole, as it is more income, but a rehire offer ends their UI eligibility. The employer is likely to "ask" who wants to work, with the retention bonus, rather than just rehire or quit option. Those who do not return will never be offered their position back. They are rehiring some now, and working them part time, with full time payment, doing things they can do while closed. -- EmployER paid retirement contributions are plainly countable as forgivable expenses. The dilemma is a moral one, as it is with any item you pay in your 8 week window which is not normal during that specific 8 weeks. If, for example, you would have paid into an SEP at some point during the year, and pay the same amount during the 8 weeks, that is just a timing issue, which many can live with (unknown about the bank auditor). If you start a new SEP plan, as a way to maximize, then it gets grey (at least). If you start an SEP or make an extra contribution, just to maximize, it may be harder to live with. If there is a deeper audit, by someone who gets payroll processing, then any out of cycle items could be flagged. Many employers will be altering their payroll cycle to weekly, with a payday on or about day 1. Many employers will be paying three months of health care expenses during their 8 weeks. Easy, and probably will not be questioned, as it is just a matter of paying the third item a little earlier than normal, such as the day the bill comes in instead of the due date. Watching out for easy to see prepayments will likely be needed. I suspect, but we cannot know yet, banks will have a set of audit guidelines. They will want actual tax type forms, check stubs/direct deposit records, and other actual documents, lease, retirement plans, etc. The bank has no incentive either way, as they are fully insulated (and paid well) as long as they perform good faith. I have been approached by a few people looking to back build payroll records, which I kindly decline (there are experts saying use some sort of payroll software, not hand done payroll). PPP forgiveness, can be easy, if one just pays as normal and does not worry about forgiveness maximization. Those that seek to optimize will work at it a little. Those that want to maximize will work at it a bunch, and take some risks. Likely, by judging carefully the bank's application process details, one can make a reasonable guess as to their forgiveness "details".

I have successfully scanned and electronically deposited torn checks. Using non-glossy tape is important, and lining it up well also.

I thought this article presented a very balanced, reasonable perspective on the PPP loan and how to think & act regarding under-spending (less than full loan forgiveness if it appears likely). https://www.forbes.com/sites/tomhager/2020/04/21/you-need-to-change-your-thinking-paycheck-protection-program-ppp/#4bc590e197c0

Phone rings yesterday. I pick up. I know, don't ask me why, but I did. What can I say? I don't have caller ID, and sometimes it's google, and I can just slam it back down. Retiree Caller: You know that stimulus payment? Me: (Thought Bubble: Just yes or no, Rita, yes or no.) Yes. RC: Is it taxable? Me: (TB: Don't adlib, Rita, yes or no.) No. RC: Is the interest [income it will earn in the bank CD I'm putting it in] taxable? Me: (TB: WTH do you think?? Are you kidding me right now?? Yes or no, yes or no, yes or no...focus...) Yes. God is working in my life, y'all.

Kinky!