Lee B

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 !

The administration is considering moving the July 15th filing deadline back to September 15th or even December 15th ? Moving the July 15th filing deadline any further back would just make a difficult situation worse for any states or cities that rely on Income Tax Revenue. In addition it would further compress estimated tax payments into a really short time frame.

When you add in the additional hurdles of FTE calculations and an employee by employee review of "Did any employee have more than a 25 % decrease in wages?", it will be the rare employer that gets 100 % of their PPP loan forgiven. The way the law was written strongly favors employers that pay weekly or biweekly with no employee turnover and little or no decrease in hours worked or rates of pay.

WMIUAWGA

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 ?