Lee B

It's a state mandate in Oregon & Washington too, but I don't see how the mandate makes it a "qualifying" expense.

Tom, it is not obvious and the online webinar sponsored by the OSCPA that I attended late last week did not mention WC as being a qualifying expense. In addition a reading of the actual language of the bill does not even hint of WC being included. Does a prepayment of 12 months of WC insurance premiums really meet the definition of incurred ?

Christian, You certainly have some "interesting" clients.

Tom, the actual language in the bill is "incurred and paid"

"Since the Treasury Department and the Small Business Administration is making this up as they go along, any advice that I give you is subject to change and should not be used to make any decisions." This is tongue in check, unfortunately it's also reflects the situation that we are in.

Attended an online webinar several days ago, which discussed this issue. It creates some real problems, the resolution of which will not be resolved until the Treasury/SBA releases their forgiveness guidance. Let 's say your client writes paychecks monthly on the 5th and you received your PPP funds on the 21st of April. Does this means that only the last 10 days of the Pay Period qualify for forgiveness. You write your normal paychecks on June 5th. All PPP Loan qualifying expenses must be paid no later than June 30th. Does this mean that your wages incurred in June but not paid until July 5th don't qualify. In this hypothetical example only 40 days of wages out of the 8 week period qualify and this client will never get anywhere near 100 % forgiveness. Hopefully, guidance will not start the 8 week clock until the 1st day of the next pay period beginning after PPP funds are deposited in your client's bank account and if the 8 week qualifying period extends beyond June 30th then that will be allowed.

AICPA supports bill that would make PPP-funded expenses deductible By Alistair M. Nevius, J.D. "Legislation introduced in the Senate on Tuesday would overrule an IRS notice and clarify that ordinary expenses funded by Paycheck Protection Program (PPP) loans are deductible by taxpayers. The bill, the Small Business Expenses Protection Act of 2020, S. 3612, is currently in the Senate Finance Committee and is supported by the AICPA. The PPP was created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136. Under Section 1106(b) of the CARES Act, an eligible recipient of a covered loan can receive forgiveness of indebtedness on the loan in an amount equal to the sum of payments made for the following expenses during the eight-week covered period beginning on the covered loan’s origination date: (1) payroll costs; (2) any payment of interest on any covered mortgage obligation; (3) any payment on any covered rent obligation; and (4) any covered utility payment. Section 1106(i) excludes from gross income any amount forgiven under the PPP. The IRS last Thursday issued Notice 2020-32, which says that taxpayers receiving loans through the PPP are not permitted to deduct normally deductible expenses to the extent the expenses were reimbursed by a PPP loan that was then forgiven. The IRS notice reasoned that Sec. 265(a)(1) prohibits an otherwise allowable deduction under any provision of the Code, including Secs. 162 and 163, for the amount of any payment of an eligible Section 1106 expense to the extent of the resulting covered loan forgiveness (up to the aggregate amount forgiven) because that payment is allocable to tax-exempt income. If enacted, S. 3612 would overturn that position and allow taxpayers to deduct covered expenses paid or incurred by an eligible recipient of a PPP loan that is forgiven under Section 1106(b). On Tuesday, the AICPA sent a letter to Sens. Tom Carper, D-Del., John Cornyn, R-Texas, Charles Grassley, R-Iowa, Marco Rubio, R-Fla., and Ron Wyden, D-Ore., commending their efforts and supporting S. 3612."

If she reported the cash income and filed a schedule c then she shouldn't have any problem

I used to have an Indian restaurant as a client, the two meats in their entrees were goat and chicken.

I don't know what services you offer or what software you use. However, can you do everything you need on Apple products ?

"Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) According to the IRS, Sec. 265(a)(1) prohibits an otherwise allowable deduction under any provision of the Code, including Secs. 162 and 163, for the amount of any payment of an eligible Section 1106 expense to the extent of the resulting covered loan forgiveness (up to the aggregate amount forgiven) because that payment is allocable to tax-exempt income. This is consistent with the purpose of Sec. 265 to prevent a double tax benefit. The IRS cited Rev. Rul. 83-3 for the proposition that deductions must be decreased to the extent the associated expense is allocable to amounts excludable from gross income." Copied from Forbes: "The Paycheck Protection Program offers an alluring loan of up to $10M tax free. If you comply, you don’t even have to pay it back. What’s more, there is no forgiveness of debt income when your loan is forgiven, something that is standard fare if you are relieved of paying back debt. However, IRS Notice 2020-32 confirms you can’t claim tax deductions, even for the wages, rent, etc. that are normally fully deductible. The CARES Act provisions for small business include the Paycheck Protection Program, which calls for up to $10 million in forgivable loans to cover employee payroll, and immediate tax credits that are designed to do the same thing. AICPA Position: "The CARES Act itself does not address whether deductions otherwise allowable under the Code for payments of eligible Section 1106 expenses by a recipient of a covered loan are allowed if the covered loan is subsequently forgiven as a result of the payment of those expenses. The AICPA believes strongly that the IRS’s interpretation denying deductions of expenses forgiven under the PPP program is contrary to Congress’s intent. Chris Hesse, CPA, chair of the AICPA Tax Executive Committee, said: “In effect, the IRS guidance means that the taxability provision [Section 1106(i)] has no meaning. Why waste the ink to say that for purposes of the Code, the loan forgiveness is not includible in income, if the government will just take away deductions in the same amount?” Because it believes the intent of the CARES Act was to allow businesses to deduct all of their ordinary and necessary expenses — including any expenses used in determining PPP covered costs — the AICPA plans to seek legislative clarification. “We’re hopeful that we’ll see movement on the legislative front early next week,” according to Edward Karl, CPA, AICPA vice president–Tax Policy & Advocacy." I was just thinking about the potential impact on a Schedule C Taxpayer who could have to pay both additional Income Tax and SE Tax on these non deductible expenses. The moral of this story is: 1. Sometimes what seems to be too good to be true . . . . . . . 2. Always look inside your boots before you put them on . . . . . . 3. Sometimes there actually is a lump of coal in your Xmas Stocking

I thought punctuation marks and special characters were not allowed ?

Based on my reading of the available info on irs.gov, this will not happen, however taxpayers that don't receive a stimulus rebate or received a smaller rebate than they had coming, will be able to claim it as a credit on their 2020 tax return.

John, that's pretty profound !

I wouldn't do it

"The U.S. Treasury Department is planning to instruct people whose deceased relatives received coronavirus stimulus payments to return the money to the federal government, according to a department spokesman. The Treasury is aware that some individuals who have recently died received the $1,200 economic impact payments and plans to issue guidance in the coming days, the spokesman said."

I must say that you have the most interesting client tax situations Where do you find these people ?

It really depends on the $ amount of leases/rent/utilities. What I am doing is having my clients pay bonuses to their employees.

Back in 2008, there Stimulus checks sent to 72,000 deceased taxpayers

I would either use the IRS Caculator or do a 2020 tax projection

This situation was probably handled incorrectly in the year he received his Partnership Interest for his expertise, which should have been recorded as SE Income equal to the value of the Partnership Interest at the time he received it.

"Thousands of Internal Revenue Service employees volunteered to go back into their offices Monday after the agency offered incentive pay to those who handle "mission-critical" work. That includes answering calls from taxpayers and opening mail -- which has been piling up in trailers since the government work-from-home orders took effect last month. The workers are spread across 10 different locations around the country. All workers who report in person will see at least a 10% increase in base salary for at least the next four weeks. Those who are reporting to mailrooms -- which have been deemed higher risk -- will get a 25% boost . . . . . . . . . . .An email sent to staff last week said that workers must keep their faces covered while in the buildings, but would have to bring their own mask . . . . . ."

Christian, Based on your posts, you already knew what you were going to do, so why even ask the question(s)?

Yes, I suppose I am fortunate, I only have one small write up/payroll client, a bicycle store who is is closed by executive order, and a small auto repair shop/payroll client who is closed by choice. The rest of my clients are functioning normally or fairly well under partial restrictions.

Monthly write up and payroll processing is mostly what I do, and I am not having any problems.