Lee B

Health Insurance, Dental Insurance, Long Term care Insurance & all Medicare premiums. (Pub 535 )

With respect to rentals being a trade or business there is no one specific cite. There are some court cases, probably one of the most important going back to the early 1940s. You need to do some online searches, there are a number of in depth analyses by various tax experts.

I was not aware that social security provided any insurance ?

Thank you for making realize how fortunate I am that my practice is primarily small business write up, payroll and business entity tax preparation.. I just counted and I only have 6 non business 1040s that I do and 3 of those used to be business returns. Truly, I have not had a single one of these calls. Now I feel like I am sitting underneath a Double Rainbow !

Copied from The Tax Advisor: How to make the IRC Sec 266 election? You can make the IRC Sec 266 election when you are filing with original return for the year for which the election is made with the following statement: “For tax year ………., taxpayer hereby elects under Code Section 266 and IRS Regulations 1.266-1 to capitalize, rather than deduct, property taxes, mortgage interest, insurance expenses, and other miscellaneous carrying costs on the property at ……………………………… Remember the Section 266 Election is an annual election available for Investment Property.

Actually the CARES ACT didn't say keep it, it just didn't say anything to tell the IRS not send these checks.

Copied from the Journal of Accountancy: AICPA Says Treasury and SBA PPP Loan Forgiveness Application Leaves Many Questions The forgiveness application form does help address some administrative items such as providing additional clarity around “costs incurred but not paid” during the covered period, which is aligned with a recommendation by the AICPA. May 19th, 2020 The Treasury Department and Small Business Administration have released a loan forgiveness application form for the CARES Act’s Paycheck Protection Program (PPP), which had been urgently sought by CPA firms and their small business clients in recent weeks. The document and related instructions partially address some outstanding issues but leave others unaddressed and, more importantly, still do not provide enough flexibility for those who receive funds, according to the American Institute of CPAs. The forgiveness application form does help address some administrative items such as providing additional clarity around “costs incurred but not paid” during the covered period, which is aligned with a recommendation by the AICPA. However, major issues remain. In particular, small businesses need flexibility on when the 8-week period should start or need to have the covered period extended to more than 8 weeks. “It’s clear the application form and instructions provided yesterday are not enough,” said Erik Asgeirsson, president and CEO of CPA.com, the AICPA’s business and technology arm. “Some of the most pressing issues are not addressed and in other areas it appears new questions have arisen.” As the AICPA has emphasized throughout this process, questions surrounding guidance make critical decisions unnecessarily challenging and complex for PPP loan recipients and those who are considering applying for the program. That’s why the AICPA created a loan forgiveness calculator this week that reflected both SBA guidance at the time and additional recommendations from the institute. Both the calculator and the underlying recommendations were designed to create a commonly accepted approach to PPP loan forgiveness, and were made in consultation with an AICPA-led small business funding coalition whose members provide services and support to businesses that employ more than 75 million people. “The AICPA loan forgiveness calculator provided more support and details than the SBA loan forgiveness application, and we will continue to encourage Treasury and SBA to leverage our recommendations,” said Mark Koziel, CPA, CGMA, the AICPA’s executive vice president of firm services. “We will now reconcile our calculator with this form and publish an updated version with additional recommendations and direction for our 44,000 CPA firms.“ The updates to the AICPA forgiveness calculator are expected to be available by Monday. The revised calculator will be available at www.aicpa.org/SBA. In addition, the AICPA will be reviewing in detail the loan forgiveness application along with our updated recommendations at the AICPA’s weekly Town Hall Meeting this Thursday."

I would really prefer not to use an out of cycle payroll !

I wholeheartedly agree. I make a donation every year and the benefits that I receive being a member of this community far exceeds the dollars that I donate!

Exactly, years ago I picked up some new clients who included 3 brothers who jointly owned some commercial rental property. The CPA who had previously prepared the returns had treated the situation as a joint venture reported on the Schedule E of each brother. I followed the joint venture approach for several years, until the IRS sent my clients a letter forcing them to file a Form 1065.

It appears that due to intense criticism and pressure, that there will be significant changes to the PPP Loan and forgiveness process. We will have to see what happens.

Every client that has a PPP Loan will be receiving their lender's version of this form to fill out, so while this will be a good reference it will not be the form our clients will actually fill out.

I just finished skimming thru the forms and instructions for the PPP Loan Forgiveness Application. My largest client is a multi-location restaurant with 70 employees. This will be just as time consuming as preparing their Form 1120 and they have hundreds of assets. Currently I have 4 clients that have received a PPP Loan and 2 more that are waiting to be finalized. I think the absolute minimum I would charge to do one of these applications is $500 and that's for a client with 2 or 3 employees. For larger clients this will be a lot of work. Now I know what I will be doing next month.

I haven't seen anything that supports WC being a qualifying expense. Given your previous lengthy postings about ethical considerations, if a business doesn't really need the PPP funds in order to survive, wouldn't the ethical and moral thing to do be to return the PPP funds so that some other business that really needs the funds be able to receive that money ?

They only threw out $ 4,000 or $ 5,000 worth of food, so it's not worth it. However some of the agricultural losses both for the farmers and the processors have been huge. I have a client who has a bicycle store next to the U of O Campus. With no students on campus, her business is totally devastated. Her losses are all lost sales. I doubt that her shop will ever reopen.

My largest client is a modest sized local restaurant chain. They had to close one of their restaurants for 2 weeks because one of their employees said she had tested positive for Covid-19. So they ended up throwing out some of the food inventory at this location. They are a C Corporation and their 2019 return is already filed and taxes paid. So would you amend the 2019 tax returns, deducting the cost of the food thrown out, asking for a refund? (About 10 days after they had closed this location, the employee received a letter from the Health Dept saying that her test had come back negative?)

Copied from Accounting Today: "A declared disaster Under Code Section 165(i), if a taxpayer has a loss in a disaster area attributable to a federally declared disaster, the taxpayer may elect to treat the loss as occurring in the immediately preceding taxable year. For the first time in U.S. history, the entire nation was declared a disaster zone on March 13, 2020. “The coronavirus pandemic is nationwide and not geographically specific,” indicated Bill Smith, managing director in the national tax office of Top 100 Firm CBIZ MHM. “For both individuals and businesses, this is an opportunity to reduce their 2019 amount due.” “For example, a taxpayer owns 20 restaurant franchises, and gets a shut-down order on March 20. The taxpayer might suffer several hundred thousand dollars in loss due to food spoilage,” he explained. “Or a taxpayer owned stock in an industry hit by the pandemic, and decides to sell and take a loss. It shouldn’t matter whether the sale is before the declared date of the disaster — a disaster is always declared after the damage is done." Has anyone ever used this before. How would you use this to reduce 2019 taxes?

Plus the Fed has committed to do "whatever it takes", none of which shows up in the federal budget numbers. We're already way beyond "Quantitative Easing" !

Yes, exactly

I don't see any justification for her to have an EIN. The same business name can be used as her dba . Or set up a SMLLC called "Jane Smith LLC" then set up her old business name as a dba of the SMLLC.

"But the act was written so quickly that no one bothered to ensure that money wouldn’t be sent to the dead, said Nina Olson, a former IRS official and current executive director of the Center for Taxpayer Rights. Olson estimates that the IRS may have mailed thousands of checks, potentially worth tens of millions of dollars, to people who the agency should have known had breathed their last." . . . . . ."Olson, of Taxpayers Rights, concurred. “There’s no legal interpretation,” she said. “I don’t know how they’re basing their decision” to ask for the money back. Every week, the IRS receives a master death file of every American who has died." . . . . . "Olson, then the National Taxpayer Advocate, for the IRS, testified before Congress about the mix-up. During questioning, U.S. Rep. Lloyd Doggett, D-Texas, pointed out that his late mother had been granted $300. The IRS then did not make an effort to have that money returned. “Just like 12 years ago, (the law) could have said ‘don’t send it to people who are deceased,’” Olson said. ‘But they didn’t. Now they’re putting it on the taxpayers of the world to correct the mistake"

The back yard must be fairly nice if he can rent it for parties and weddings, is he also providing services which would put it on Schedule C. After all you can't just rent a backyard with only grass, bushes and trees?

Copied from IRS eNews: "1. Act Wednesday for chance to get quicker Economic Impact Payment; timeline for payments continues to accelerate With a variety of steps underway to speed Economic Impact Payments, the Treasury Department and the Internal Revenue Service urged people to use Get My Payment by noon Wednesday, May 13, for a chance to get quicker delivery. The IRS, working in partnership with Treasury Department and the Bureau of Fiscal Services (BFS), continues to accelerate work to get Economic Impact Payments to even more people as soon as possible. Approximately 130 million individuals have already received payments worth more than $200 billion in the program’s first four weeks. Starting later this month, the number of paper checks being delivered to taxpayers will sharply increase. For many taxpayers, the last chance to obtain a direct deposit of their Economic Impact Payment rather than receive a paper check is coming soon. People should visit Get My Payment on IRS.gov by noon Wednesday, May 13, to check on their payment status and, when available, provide their direct deposit information."

For most small blue collar business taxpayers, these ethical questions that you raise, are not really considered. For these people the signing of legal documents of any kind is just something you have to do, then you move on.

What would you consider substantial authority, they're making it up as they go along !