Lee B

"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.

My own return info went thru today, where it wouldn't yesterday, because my 2019 return hadn't been processed yet.

Given the software I am using, all of my 941s are paper filed. The IRS will have records of all the EFTPS payments made by my clients, so it will all sort itself out eventually. Frankly, I am not concerned, since none of my clients pay by check.

Sounds like the practice of Elderlaw

I think, we're in the twilight zone now

I do payroll processing and I haven't seen anything and a search doesn't turn up anything

My point exactly

It's amusing in tax scenarios like this one where it's not black & white, how many practitioners try to create their own alternate facts and theories about what to do. Especially since the IRS position in this area has been basically unchanged since the 1950s.

In Payroll News today, the IRS announced the paper processing suspension also includes all Employment Tax Forms i.e. 94x etc. This will be interesting since less than 30 % of all Forms 941 are actually efiled .

Actually you are wrong, the minimum wage in Seattle is currently $13.50 per hour. Perhaps you are thinking of the small suburb of SeaTeac where it is $ 15.00.

It depends on the state, some states like MS and FL have very low unemployment benefits, so that in those states even with the extra $ 600 a week some employees may not be making more. For example I believe Florida's maximum weekly benefit is $ 275.