Lee B

"Self-employed individuals: The bill also provides eligible self-employed taxpayers with a refundable credit against income tax for qualified sick leave equivalent amounts. An eligible self-employed individual is an individual who regularly carries on any trade or business (as defined in Sec. 1402) and would be entitled to receive paid leave under the Emergency Paid Sick Leave Act if the individual were an employee." More detailed guidance is supposedly going to be released this coming week. At the very least, I suspect they will be able to reduce their quarterly estimated payments. This may be a bit of a stretch, but there could advance refunds against their 2020 tax return.

Here is the most current guidance as of late yesterday: IR-2020-57, March 20, 2020 WASHINGTON — Today the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020. The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee's own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus. Key Takeaways Paid Sick Leave for Workers For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees' children's schools are closed or child care providers are unavailable. Complete Coverage Employers receive 100% reimbursement for paid leave pursuant to the Act. Health insurance costs are also included in the credit. Employers face no payroll tax liability. Self-employed individuals receive an equivalent credit. Fast Funds Reimbursement will be quick and easy to obtain. An immediate dollar-for-dollar tax offset against payroll taxes will be provided Where a refund is owed, the IRS will send the refund as quickly as possible. Small Business Protection Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened. Easing Compliance Requirements subject to 30-day non-enforcement period for good faith compliance efforts. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week. Background The Act provided paid sick leave and expanded family and medical leave for COVID-19 related reasons and created the refundable paid sick leave credit and the paid child care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and December 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances. Paid Leave The Act provides that employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee's pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis. An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or child care provider is unavailable for reasons related to COVID-19, and/or the employee is experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services can receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee's pay. An employee who is unable to work due to a need to care for a child whose school is closed, or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional ten weeks of expanded paid family and medical leave at 2/3 the employee's pay. Paid Sick Leave Credit For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee's regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days. For an employee who is caring for someone with Coronavirus, or is caring for a child because the child's school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee's regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period. Child Care Leave Credit In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee's regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period. Prompt Payment for the Cost of Providing Leave When employers pay their employees, they are required to withhold from their employees' paychecks federal income taxes and the employees' share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS. Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS. The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week. Examples If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date. If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000. Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments. Small Business Exemption Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer's business as a going concern. Labor will provide emergency guidance and rulemaking to clearly articulate this standard. Non-Enforcement Period Labor will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. Labor will instead focus on compliance assistance during the 30-day period.

I believe Drake made the changes yesterday.

Robbie, This is a proposed law which has been introduced in the Senate but has not yet been voted on. This proposed law would also grant automatic extensions for all tax returns due April 15th plus some other tax stuff.

"Section 2101. 2020 recovery rebates for individuals Recovery checks of up to $1,200 will be put into the hands of most taxpayers, providing cash immediately to individuals and families. Married couples who file a joint return are eligible for up to $2,400. Those amounts increase by $500 for every child. These checks are reduced for higher income taxpayers and begin phasing out after a single taxpayer has $75,000 in adjusted gross income and $150,000 for joint filers. The IRS will base these amounts on the taxpayer’s 2018 tax return. The rebate amount is reduced by $5 for each $100 a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single taxpayers with incomes exceeding $99,000 and $198,000 for joint filers. The IRS will base these amounts on the taxpayer’s 2018 tax return. Taxpayers with little or no income tax liability, but at least $2,500 of qualifying income, would be eligible for a minimum rebate check of $600 ($1,200 married). Qualifying income includes earned income, as well as Social Security retirement benefits and certain compensation and pension benefits paid to veterans. This ensures relief gets to low-income seniors and disabled veterans."

Copied from the Journal of Accountancy: "The coronavirus relief bill signed by President Donald Trump late Wednesday contains, among its many provisions, several tax credits for employers who provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons. The Families First Coronavirus Response Act, H.R. 6021, passed the House of Representatives on Monday by unanimous consent and passed the Senate Wednesday by a vote of 90–8. Here is a look at its tax credit provisions . Payroll tax credit for required paid family leave Subject to certain limitations, the bill provides an employer payroll tax credit that equals 100% of the qualified family leave wages paid by the employer under the portion of the bill known as the Emergency Family and Medical Leave Expansion Act (Division C of the bill). The Emergency Family and Medical Leave Expansion Act requires employers with fewer than 500 employees to provide public health emergency leave under the Family and Medical Leave Act (FMLA), P.L. 103-3, when an employee is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency related to COVID-19. (Employers with fewer than 50 employees can be exempted from the requirement.) The credit is available for eligible wages paid during a period that begins on a date starting on a date within 15 days of enactment (to be designated by Treasury) and through Dec. 31, 2020. The credit would apply against the employer portion of Sec. 3111(a) old age, survivors, and disability insurance (OASDI) taxes or Sec. 3221(a) Tier 1 Railroad Retirement Act excise taxes. The credit is generally available for up to $200 in wages for each day an employee receives qualified family leave wages. A maximum of $10,000 in wages per employee would be eligible for the credit. If an employer claims the credit, the employer’s gross income will be increased by the amount of the credit (meaning the credit is not taken into account for purposes of determining any amount allowable as a payroll tax deduction, deduction for qualified family leave wages, or deduction for health plan expenses), and no credit will be allowed for wages for which a Sec. 45S family and medical leave credit is claimed. The credit would not apply to the federal government, the government of any state or any subdivision of a state, or any agencies or instrumentalities of these entities. Employers also could elect not to apply the new provision for any calendar quarter. The credit would not apply to the U.S. government, the government of any state or any subdivision of a state, or any agencies or instrumentalities of the foregoing. Employers can elect not to apply the new provision for any calendar quarter. Self-employed individuals: Eligible self-employed individuals would be eligible for a refundable credit against income tax for qualified family leave equivalent amounts. An eligible self-employed individual is an individual who regularly carries on any trade or business (as defined in Sec. 1402) and would be entitled to receive paid leave under the Emergency Family and Medical Leave Expansion Act if the individual were an employee. Wages paid under the Emergency Family and Medical Leave Expansion Act are not considered wages for purposes of the Sec. 3111(a) OASDI tax or the Sec. 3221(a) Railroad Retirement Act excise taxes. Payroll tax credit for required paid sick leave Subject to certain limitations, the bill provides an employer payroll tax credit that equals 100% of the qualified sick leave wages paid by the employer under the portion of the bill known as the Emergency Paid Sick Leave Act (Division E of the bill). The Emergency Paid Sick Leave Act requires employers with fewer than 500 employees to provide up to 80 hours of paid sick time through the end of this year if the employee is unable to work due to being quarantined or self-quarantined or having COVID-19 or because the employee is caring for someone who is quarantined or self-quarantined or has COVID-19 or if the employee is caring for children whose school has been closed because of COVID-19 precautions. (Employers with fewer than 50 employees can be exempted from the requirement.) The credit is effective for sick leave wages paid starting on a date within 15 days of enactment (to be designated by Treasury) and through Dec. 31, 2020. The credit will apply against Sec. 3111(a) OASDI taxes or Sec. 3221(a) Tier 1 Railroad Retirement Act excise taxes. The credit is generally available for up to $511 in wages (for workers who are quarantined or self-quarantined or who have COVID-19) and wages of up to $200 for other workers for each day an employee receives qualified sick leave pay. The credit would be available for up to 10 days per calendar quarter. To prevent double benefits, employers’ gross income will be increased by the amount of the credit (meaning the credit is not taken into account for purposes of determining any amount allowable as a payroll tax deduction, deduction for qualified sick leave wages, or deduction for health plan expenses), and no credit will be allowed for wages for which a Sec. 45S family and medical leave credit is claimed. The credit would not apply to the federal government, the government of any state or any subdivision of a state, or any agencies or instrumentalities of these entities. Employers also could elect not to apply the new provision for any calendar quarter. The credit can be increased by certain qualified health plan expenses of the employer that are allocable to qualified sick leave wages for which the credit is allowed. Self-employed individuals: The bill also provides eligible self-employed taxpayers with a refundable credit against income tax for qualified sick leave equivalent amounts. An eligible self-employed individual is an individual who regularly carries on any trade or business (as defined in Sec. 1402) and would be entitled to receive paid leave under the Emergency Paid Sick Leave Act if the individual were an employee." Some aspects of this will be tricky especially for my larger clients who already provide sick leave.

Interesting, since the IRS eNews article does not mention that. I wish they would get their crap together !

Copied from IRS eNews: "Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due. This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020." There is no mention of including individual estimated payments in the automatic extension!

It's a land improvement, of course it can be depreciated, or if you consider it to be an intangible it could be amortized. It probably depends on whether he purchased the right to park in this space or whether the spot is titled in some fashion like all the different ways a condo can be titled.

In my state of Oregon it would take legislative action, signed by the governor to make this change.

John, I think you have highjacked this discussion thread!

The reason that I was puzzled was that in Oregon, the county forecloses and then puts up the property for auction, so that the winner of the auction doesn't have to try to collect from the previous property owner.

I keep hand sanitizer on my desk for clients to use.

I am puzzled, what kind of tax liens ?

1. The transmission rate is several times higher than the flu. 2. No one has a natural immunity since it's a new bug 3. There is no vaccine for another year or two 4. The mortality rate is somewhere between 10 to 30 times higher than the flu. 5. The 250 positives is illusory since many sick people have yet to be tested. Tom, I hope you're right, but it doesn't look good.

Depending what the L I are, they may be elgible for Section 179, however since Congress still hasn't made any technical corrections to the TCJA, they are definitely not elgible for bonus depreciation.

"On Wednesday, the American Institute of CPAs requested a delay in the tax deadline, along with other tax relief steps to provide relief to all taxpayers in the midst of the pandemic. The AICPA asked the Treasury and the IRS to extend certain deadlines falling on or after March 15, 2020 and before Oct. 15, 2020 to give individuals more time to file their taxes and make payments through Oct. 15, 2020. The AICPA wants an automatic extension to Oct. 15, 2020, without the need for taxpayers to file any forms or request an extension. The Institute also asked the Treasury and the IRS to waive late payment penalties if at least 70 percent of an individual’s current tax due is paid by April 15, 2020, and to waive interest through Oct. 15, 2020. The AICPA also requested the Treasury and the IRS to waive underpayment penalties for 2020 estimated tax payments if they’re paid by Sept. 15, 2020, as well as to extend the IRA contribution deadline. For businesses, the AICPA asked for broad tax relief, requesting the Treasury and the IRS to extend certain deadlines falling on or after March 15, 2020 and before Oct. 15, 2020, to give businesses extra time to file and make payments through Oct. 15, 2020. For businesses too, the AICPA asked for an automatic extension without the need to file any forms or request an extension, and for the Treasury and the IRS to waive late payment penalties and interest through Oct. 15, 2020. The AICPA also asked the Treasury and the IRS to provide appropriate relief for all businesses and tax-exempt organizations regarding elections and filings (including payroll, excise tax, and more."

Different media reports have varying interpretations of what this means. Looks like we will have to wait to see what the Treasury Dept decides.

Tentatively, it sounds like it will be a 90 day extension to pay if you qualify, so it's not going to be blanket extension.

Copied from the Wall Street Journal: "The Trump administration plans to delay the April 15 tax deadline for most individual taxpayers as well as small businesses as part of an effort to mitigate the effects of the spread of the novel coronavirus, Treasury Secretary Steven Mnuchin said Wednesday." Looks like it going to happen

Perhaps it never bothered you before, but it was certainly a problem for many years before I left for Drake.

If as you say there is no change in the in the numbers, I would just mark the the 2019 return as "cash" and move on. It's what I did when I had a kind of similar situation some years ago.

Based on my past experience, if the EIN was not issued by 12/31/19, an attempt to efile the return will be rejected.

Just curious, I don't use QB or QBO. What is so bad about QBO?

Copied from Pub 537: "Example. In 2016, you sold land with a basis of $40,000 for $100,000. Your gross profit was $60,000. You received a $20,000 down payment and the buyer's note for $80,000. The note provides for four annual payments of $20,000 each, plus 8% interest, beginning in 2017. Your gross profit percentage is 60%. You reported a gain of $12,000 on each payment received in 2016 and 2017. In 2018, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2018, 2019, and 2020 are reduced to $15,000 for each year. The new gross profit percentage, 46.67%, is figured on Example—Worksheet B. You will report a gain of $7,000 (46.67% of $15,000) on each of the $15,000 installments due in 2018, 2019, and 2020."